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The dollar fell against its major rivals on Monday as risk funds continued to dominate financial markets as gains in U.S. stocks continued. In early trading on Tuesday, the dollar still faced some bearish pressure as investors turned their focus to the minutes of the Federal Reserve’s policy meeting from October 31 to November 1. The U.S. economic calendar will also include existing home sales data, and Statistics Canada will release consumer price index (CPI) data for October.
The U.S. dollar index fell below 104.00 on Monday, hitting its lowest level since the end of August, and extended its losses to around 103.50 on Tuesday. Meanwhile, the benchmark 10-year U.S. Treasury yield fell below 4.4% in Asia, putting additional pressure on the pair.
In the minutes of its November policy meeting, the Reserve Bank of Australia (RBA) said policymakers considered raising interest rates or holding rates steady but believed the case for a rate hike was stronger given rising inflation risks. The Reserve Bank of Australia noted that whether further tightening is needed depends on data and risk assessment. Following strong gains on Monday, AUD/USD continued to move higher during the Asian session and hit its highest level since early August near 0.6600.
ECB Governing Council member François Villeroy de Galhau said on Tuesday that interest rates have reached a high point and will remain at this level for the next few quarters.
GBP/USD ended the first trading day of the week above 1.2500 and rose to its highest level in more than two months above 1.2540 in early European trade on Tuesday.
USD/JPY extended losses for a third straight day on Monday, with daily losses approaching 1%. The pair continued to trade lower on Tuesday, last trading around 147.50, its weakest level since mid-September.
Canadian inflation, measured as changes in the consumer price index (CPI), is expected to fall to 3.2 per cent in October from 3.8 per cent in September. Ahead of this data, USD/CAD was trading within a tight range just above 1.3700.
Canadian CPI Preview: Inflation will weaken further, Canadian dollar awaits rising momentum
Following muted action on Monday, gold gathered bullish momentum and was last up 0.8% on the day, topping $1,990.
