Asian currencies traded mixed on Monday as the Chinese yuan held near its strongest level in more than four years. The U.S. dollar stayed broadly steady while investors prepared for the U.S. midterm elections and a busy week of economic data.
The yuan held near its strongest level in more than four years on Monday, while the U.S. dollar remained broadly steady ahead of the U.S. midterm elections. The dollar index rose 0.1% to 101.94, and USD/JPY gained 0.2% to 157.88, leaving the yen slightly weaker.
Yuan strengthens as exporters convert dollars
The onshore yuan strengthened to 6.659 per dollar on Friday, its strongest level since June 6, 2022. It has gained around 5% against the dollar this year and was heading for a fourth consecutive monthly advance, supported partly by exporters converting dollar earnings into yuan.
The People's Bank of China set Friday's midpoint at 6.7138 per dollar, its strongest fixing since February 2023, although it was substantially weaker than market estimates. Separately, Monday's RatingDog private-sector survey pointed to continued expansion among manufacturers, offering some support for the yuan after the contraction in the official manufacturing PMI.
Euro stays under pressure after Fitch move
The euro remained under pressure after Fitch revised France's credit outlook to negative from stable on Friday, citing worsening debt dynamics. EUR/USD rose 0.1% to 1.1169, still close to a 17-month low of 1.1159 touched earlier.
GBP/USD was nearly unchanged at 1.3386.
Central banks and the midterms set the week
Investors are focused on Tuesday's U.S. midterm elections, which will determine control of Congress. October employment data due Friday will also be important for expectations surrounding the Federal Reserve's next policy move.
The AUD/USD pair slipped 0.1% to $0.7024 ahead of Tuesday's Reserve Bank of Australia decision, with the RBA widely expected to raise its cash rate to 4.85%. The NZD/USD pair, meanwhile, fell 0.3% to $0.5614, extending pressure after the RBNZ unexpectedly kept its rate at 2.75% last week.
The Bank of England and central banks in Norway and Sweden will also announce policy decisions this week.
Source: Investing.com
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