Dollar wobbles while investors await midterms; cryptos skittish
SINGAPORE – The dollar wavered on Wednesday, as traders awaited results from U.S. midterm elections and inflation data that could disappoint hopes for a slowdown in rate hikes, while cryptocurrency markets attempted to steady after news of a bailout of exchange FTX.
The greenback has been under downward pressure from bets on the Federal Reserve easing back on interest rate rises and on China reopening and driving growth.
It touched multi-week lows against the euro, Australian dollar and New Zealand dollar overnight, then edged off those levels early in the Asia session.
The dollar last traded at $1.1006 per euro and bought 145.20 yen, dipping below its 50-day moving average against the yen for the first time in nearly three months.
The U.S. dollar index, which is heading for its best year in almost four decades, is down about 0.9 percent so far this week and hovered at 109.73 on Wednesday.
“We all know the dollar will probably turn at some point – when is the big question,” said Bank of Singapore currency analyst Moh Siong Sim.
“My view is the pullback is consolidation, rather than the end of the dollar uptrend, and that’s because I think the Fed is still not done with the inflation fight unless the data really gives us comfort that inflation is about to ease off for good.”
Early midterm-election results showed several Republican senators had easily won re-election. Investors expect Republican gains, and some analysts view likely Congressional gridlock as a slight negative for the dollar if it limits fiscal spending.
Results could take days to emerge. On Thursday, U.S. inflation data is on the horizon. Economists expect a slowdown in the pace of annual headline inflation to 8 percent.
“Although the Fed may soon slow the pace of its tightening, there remains much more work to be done,” said analysts at ANZ Bank.
The Australian dollar was below overnight highs and just under $0.65 at $0.6496 in morning trade. The New Zealand dollar wobbled 0.1 percent lower to $0.5951.
Sterling held at $1.1539.
Cryptocurrency markets have had a wild few days, and were attempting to find a floor in the Asia session after crypto exchange Binance announced plans to buy rival FTX in a bailout. A surge in withdrawals had left FTX struggling.
FTX’s native token was in freefall on Tuesday and bitcoin lost 12 percent. Bitcoin steadied at $18,398.
