Latest News Stream - Currency

Sterling appreciated to $1.347, its strongest level since mid-September, after the Bank of England raised its key interest rate by 25 basis points to 4%, marking its first increase in more than three years. The vote was split 8-1, with Catherine Mann dissenting in favour of a larger 50 bps hike. Governor Andrew Bailey signaled that further rate increases may be necessary unless the Iran war is resolved, which would help ease the inflationary pressures that prompted the latest hike. Markets have since increased their bets on further monetary tightening, with three additional rate increases now fully priced in by November 2027. The BoE also warned that inflation could peak at 4.9% in the second quarter of 2027, while its adverse scenario projects a sharper rise to 6.2% in the third quarter of next year. Meanwhile, the pound remained supported by broad US dollar weakness, with the greenback falling to a one-month low following a sweeping Democratic victory in the US midterm elections.

The Indonesian rupiah hovered around IDR 18,080 per U.S. dollar on Thursday, up for a second straight session as the dollar index continued to fall, with traders remaining focused on the implications of Democratic wins in the U.S. midterm elections. Locally, sentiment found support from stronger economic data, with Q3 GDP growth accelerating to 5.47% yoy, beating expectations on resilient private consumption and solid manufacturing output. The 2026 state budget targets 5.4% growth, although Finance Minister Suahasil recently indicated that expansion could slightly top the target, reaching 5.5%. Meanwhile, Bank Indonesia's two-stage reserve requirement reduction for commercial banks took effect on Nov. 1, lowering the ratio to 8% from 9%, with a further cut to 7% scheduled for Dec. 1. The measures are expected to inject around IDR 190 trillion into the banking system to support lending without compromising rupiah stability. Investors now await October forex reserves data due Friday.

The Indian rupee strengthened to around 94.5 per dollar, reaching a two-week high as a sharp decline in crude oil prices eased concerns over India’s import bill and external balance. Brent crude fell below $100 amid easing concerns over potential supply disruptions from the Iran conflict, which could reduce oil-related import costs and dollar demand from Indian buyers. At the same time, the Reserve Bank of India’s measures, including a special foreign exchange window for state-owned oil refiners and its FCNR(B) deposit scheme, have helped contain spot-market dollar demand and mobilize foreign currency. However, the central bank may step up dollar purchases to replenish its depleted reserves, potentially limiting further rupee gains. Declining foreign exchange reserves and rising forward dollar liabilities also highlight the limitations of continued intervention in addressing India’s underlying external vulnerabilities.

The South Korean won weakened to around 1,342 per dollar, reversing recent gains as heavy foreign selling of domestic equities, particularly semiconductor stocks, increased demand for the US dollar. Foreign investors sold a net KRW 1.26 trillion worth of South Korean shares, while the KOSPI plunged nearly 4% amid concerns that a Democrat-led US Congress could introduce tighter regulations on AI and data centers. The sharp selloff prompted the Korea Exchange to activate a sell-side sidecar, suspending program trading in KOSPI-listed shares for five minutes. Meanwhile, the won's depreciation came despite broader dollar weakness and a record current account surplus of $61.46 billion in September, supported by robust semiconductor exports. Year to date, the won has depreciated by 6.95% against the US dollar.

The Japanese yen strengthened past 158 per dollar on Thursday, extending gains for a second consecutive session as minutes from the Bank of Japan's September meeting reinforced expectations of further monetary tightening. One board member indicated that there may be room to accelerate interest rate increases as the central bank assessed the effects of Middle East developments, growing demand linked to artificial intelligence, and foreign exchange movements. The BOJ raised its policy rate to a 31-year high of 1.25% in September before keeping it unchanged in October, while signaling that underlying inflation had reached its 2% target, potentially setting the stage for another rate hike in December. The yen also drew support from a weaker US dollar following Democratic victories in the US midterm elections. The decisive outcome eased political uncertainty and lowered expectations that President Donald Trump would resume military strikes against Iran.

The US dollar index declined to around 101.3 on Thursday, extending losses from the previous session as markets continued to evaluate the impact of Democratic gains in the US midterm elections. The decisive outcome eased a source of political uncertainty, supporting a rally in global equity markets, which generally weighs on demand for the greenback. However, AI-related shares came under pressure amid concerns about the potential impact of Democratic control on future data-center investments. The election results also heightened expectations of political gridlock in Washington and reduced the likelihood of President Trump resuming military strikes against Iran. These developments contributed to a sharp decline in oil prices and weakened safe-haven demand for the dollar. Investors are now focused on Friday's key US employment report, with traders currently pricing in a 79% probability of a Federal Reserve rate hike in December.

The Australian dollar strengthened above $0.70, recovering from a two-week low as a weaker US dollar and improved global risk appetite lifted demand for risk-sensitive currencies. Global markets rallied after Democratic victories in the US midterm elections gave the party control of both chambers of Congress, raising hopes of progress toward ending the US-Iran conflict. Fears of an imminent attack on Iran subsequently faded, triggering a nearly 9% drop in oil prices and a broad retreat in the US dollar. The rebound came despite domestic headwinds after the RBA hiked interest rates for a fifth time this year but dropped its tightening bias. Swaps now imply just a 6% chance of another increase in December, while a quarter-point rate cut is fully priced by year-end. Focus is also on RBA Deputy Governor Andrew Hauser, who is due to speak later today about trust in the transmission of monetary policy and may face questions about how lower oil prices could affect the policy outlook.

The Philippine peso appreciated to around 62.9 per US dollar on Thursday, supported by stronger-than-expected inflation data that reinforced expectations of further monetary tightening. Annual headline inflation accelerated to 7.8% in October from 7.2% in September, exceeding forecasts of 7.6% and marking its highest level since February 2023. Core inflation also rose to 5.4% from 4.8%. The acceleration strengthens the case for further Bangko Sentral ng Pilipinas (BSP) rate hikes as policymakers seek to contain price pressures and anchor inflation expectations. The central bank has already raised rates four times this year. Meanwhile, a weaker greenback following Democrats' victories in both chambers of the US Congress provided additional support. Nevertheless, elevated global oil prices continue to pose risks by adding to domestic inflation and increasing the country's import bill and demand for foreign currency, leaving the peso vulnerable despite its latest gains.

The New Zealand dollar rose to $0.564 on Thursday, extending gains from the previous session as the US dollar weakened further following a decisive victory by Democrats in the US midterm elections. The result eased fears of a disputed election outcome but raised the prospect of political gridlock, potentially limiting President Donald Trump's ability to pursue his plans, including launching fresh military strikes against Iran. The resulting decline in the US dollar offset pressure from disappointing domestic jobs report, which prompted investors to scale back bets on a Reserve Bank rate hike in December. Markets are currently pricing in a 60% chance of a rate increase next month, down from around 75% earlier this week. Attention now turns to New Zealand's general election on Saturday, with opinion polls showing a tight race between the ruling centre-right National-led coalition and opposition parties, led by the centre-left Labour Party.

The South African rand strengthened to around 16.5 per USD, reaching a two-week high, boosted by firmer precious metals prices as the dollar weakened following the US midterm election results. The currency also benefited from lower oil prices as South Africa is a net oil importer. A Democratic victory was seen as potentially challenging President Trump's political and economic agenda and influencing US foreign relations, particularly towards Iran. Relations between Washington and Pretoria have deteriorated since Trump returned to the White House last year. Most recently, the US announced plans to remove South Africa from AGOA preferences from next year, citing unspecified concerns over the country's practices, thus putting key export sectors, particularly autos and agriculture, at risk. Meanwhile, South Africans are voting in local elections, which are expected to test support for the ruling African National Congress (ANC) and could shape future coalition arrangements.

The Canadian dollar strengthened sharply to 1.39 per USD in November, reaching a more than two-month high as the greenback retreated broadly following Democratic victories in the US midterm elections. The results prompted investors to reassess the outlook for US growth amid tighter scrutiny of AI investment and potential opposition to data-centre development. The loonie also gained on hopes of easing trade tensions between Canada and the US, as a Democratic majority could constrain some of President Trump’s trade policy decisions. The dispute began in February 2025, when Trump announced broad tariffs on Canadian goods, prompting retaliatory measures from Ottawa. While USMCA-compliant goods were later exempted, additional tariffs remained on steel, aluminum and automotive imports. Meanwhile, Canada posted a C$5.4 billion trade surplus in September, its largest since May 2022 and above expectations of C$4.1 billion.

EURUSD increased to 1.13, the highest since October 2026. Over the past 4 weeks, Euro US Dollar gained 0.42%, and in the last 12 months, it decreased 1.94%.

The Canadian Dollar touched 1.39 against the USD, the highest since September 2026. Over the past 4 weeks, US Dollar Canadian Dollar lost 2.22%, and in the last 12 months, it decreased 1.17%.

The euro extended its gains to $1.125, reaching its strongest level since early October, as investors digested accelerating eurozone inflation while an unexpected sweeping Democratic victory in the US midterm elections weighed on the dollar. Eurozone annual inflation accelerated to 4.0% in October, its highest level since September 2023 and well above the ECB’s 2% target, mainly driven by an energy cost surge. The single currency has also drawn support from increasingly hawkish rhetoric among European Central Bank policymakers. Despite last week’s decision to leave interest rates unchanged, officials signaled that further rate increases may be necessary to contain inflationary pressures and prevent them from spilling over into wages, reinforcing expectations of a tighter monetary policy stance. Meanwhile, the unexpected US election outcome added to pressure on the dollar, while AI stocks and cryptocurrencies also declined amid concerns over tighter regulatory scrutiny.