Forex News
- GBP/JPY retains a positive tone on Tuesday amid the prevailing bullish tone in GBP.
- Intervention risks keep JPY bears on the sidelines, capping gains for spot prices.
- Traders also seem hesitant ahead of the crucial BoE policy decision on Thursday.
The GBP/JPY cross trades near a two-month high during the early European session on Tuesday, with bulls awaiting sustained strength and acceptance above the 212.00 mark before positioning for further gains.
The British Pound (GBP) continues with its relative outperformance amid easing fiscal concerns following the recent UK budget updates. Apart from this, the growing acceptance that the Bank of England (BoE) will hike interest rates on Thursday turns out to be another factor supporting the GBP. In contrast, the Japanese Yen (JPY) remains under pressure amid the uncertainty over the likely timing of the next rate hike by the Bank of Japan (BoJ). This leaves a wide interest rate gap between the UK and Japan, acting as a tailwind for the GBP/JPY cross.
Pound support underpinned as UK Autumn Budget leaves BoE expectations intact
Strategists at DBS highlight the relative resilience of the Pound, noting that the October 28 UK Autumn Budget "did not unsettle the gilt market and market pricing for an interest rate hike at the November 5 Bank of England meeting." Against this backdrop, DBS expects a firmer hawkish tilt from policymakers, arguing that, following the "6-3 vote supporting the September 17 pause, the vote split will likely be 7-2 this Thursday, with more MPC members acknowledging growing inflation risks." This anticipated shift in the BoE’s voting dynamics is seen as reinforcing GBP’s appeal versus the Euro.
Meanwhile, traders remain on high alert amid speculation that Japanese authorities will step in again to prop up the domestic currency. In fact, Japan's Finance Minister Satsuki Katayama said on Monday that the joint FX statement with the US persists and that the government is prepared to act to curb excessive or disorderly JPY weakness. This might hold back traders from placing aggressive bets and cap the GBP/JPY cross as the market focus remains glued to the key central bank event – the highly anticipated BoE monetary policy decision on Thursday.
Nevertheless, the aforementioned fundamental backdrop seems tilted in favor of bulls, suggesting that any corrective pullback is more likely to be bought into and remain limited. Meanwhile, strong follow-through buying is needed to reaffirm the near-term positive outlook and pave the way for an extension of the GBP/JPY pair's recent move higher witnessed over the past month or so.
Pound Sterling Price Last 7 Days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.18% | -0.53% | 0.28% | -0.36% | 0.64% | 1.23% | -1.29% | |
| EUR | 0.18% | -0.38% | 0.46% | -0.19% | 0.84% | 1.44% | -1.10% | |
| GBP | 0.53% | 0.38% | 0.83% | 0.22% | 1.21% | 1.82% | -0.73% | |
| JPY | -0.28% | -0.46% | -0.83% | -0.63% | 0.40% | 0.97% | -1.46% | |
| CAD | 0.36% | 0.19% | -0.22% | 0.63% | 0.99% | 1.61% | -0.95% | |
| AUD | -0.64% | -0.84% | -1.21% | -0.40% | -0.99% | 0.61% | -1.93% | |
| NZD | -1.23% | -1.44% | -1.82% | -0.97% | -1.61% | -0.61% | -2.49% | |
| CHF | 1.29% | 1.10% | 0.73% | 1.46% | 0.95% | 1.93% | 2.49% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- Gold drifts lower as Fed hike bets and rebounding US bond yields lend some support to the USD.
- Hope for Iran diplomacy caps the USD as traders remain on the sidelines ahead of the US elections.
- Tuesday’s release of the US JOLTS Job Openings could also provide some impetus to the bullion.
Gold (XAU/USD) slides below the $3,900 mark during the first half of the European session on Tuesday, eyeing its lowest level since October 2025, set last week amid expectations of further tightening by the US Federal Reserve (Fed). Data released on Monday showed that US manufacturing sector business activity expanded for the 10th consecutive month in October. The Institute for Supply Management's (ISM) Manufacturing PMI came in higher than consensus estimates and rose to 55.5 in October from 54.5 in the previous month. This reaffirmed hawkish Fed bets, which, along with a modest bounce in US bond yields, weigh heavily on the non-yielding yellow metal.
The US Dollar (USD), however, struggles to lure buyers as traders are demonstrating a widespread hesitancy ahead of US midterm elections that will decide control of Congress. Prediction markets strongly favor Democrats winning control of both the House of Representatives and the Senate. Meanwhile, a Republican sweep would be a larger market surprise, which could lift US Treasury yields and the US Dollar (USD). Moreover, hopes for a potential diplomatic resolution to end the US-Iran war might further hold back USD bulls from placing aggressive bets. In fact, US President Donald Trump said on Monday that Iran wants to make a deal to end the war and that such an agreement could happen. Moreover, Iranian Foreign Minister Abbas Araqchi said that consultations through mediators were very intensive.
However, several days of negotiations between Iranian officials and Qatari mediators failed to make a breakthrough despite Tehran's revised proposals to reopen the strategic Strait of Hormuz for two days, provided that the US fulfills a set of conditions. Moreover, a fresh escalation of tensions between Russia and Ukraine keeps the geopolitical risk premium firmly in play. This should act as a tailwind for the USD, suggesting that the path of least resistance for gold remains to the downside. On the economic data front, traders will take cues from the release of US JOLTS Job Openings data for some impetus later during the North American session. The focus, however, will remain on the key US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report, due on Friday.
XAU/USD 4-hour chart
Technical Analysis
The XAU/USD pair maintains a bearish near-term bias beneath the 100-period Exponential Moving Average (EMA) on the 4-hour chart. Adding to this, the overnight failure near the late October swing low and the subsequent slide validates the negative outlook despite a mildly positive Moving Average Convergence Divergence (MACD). Meanwhile, the Relative Strength Index (RSI) near 40.0 hints at only tentative recovery from recently oversold conditions.
Bearish traders, however, would now look to Friday's swing low, around the $3,870 area for potential demand zones, which, if broken, should pave the way for an extension of the well-established downward trajectory. On the topside, immediate resistance is defined by the 100-period EMA at $4,053. A sustained break above this level would be needed to ease downside pressure and open the way for a more constructive recovery phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Societe Generale’s Kenneth Broux and colleagues say AUD/USD is trading below 0.70 after a dovish RBA hike and softer industrial metals. The pair remains largely driven by industrial metals rather than RBA/Fed spreads, with the 200-day moving average near 0.7050/0.7080 seen as a key resistance. Positioning is heavily short, while fading RBA tightening expectations and weaker iron ore have reduced fundamental support.
Dovish RBA and weaker iron ore weigh
"Elsewhere in G10, the RBA earlier today delivered a fifth rate hike of the cycle, hoisting the CRT to 4.85%. The cumulative tightening of 125bp since February leaves the policy rate above the peak of 2011 and at levels last seen before the GFC."
"The accompanying statement was relatively dovish and omitted the reference to “increasing the cash rate target further if needed” while highlighting risks of inflation being above 3% for the coming year and high inflation expectations becoming embedded."
"The dovish tweak, the split vote (6-3) and CRT projection of 4.9% peak in June 2027, suggest this may well be the final hike of the cycle. Governor Bullock reiterated that policy is already restrictive by a range of metrics, including mortgage-servicing burdens, signs of softness in the housing market and estimates showing rates now sit around the upper end of neutral-rate models."
"Markets increasingly view the RBA as being in the final stages of its tightening cycle, while SGX iron ore has retreated to around $90/MT from May's peak near $108/MT, removing an important source of support for the currency."
"AUD/USD remains essentially a play on industrial metals rather than RBA/Fed differentials. The 200dma near 0.7050/0.7080 remains the key hurdle. The level provided support for much of 2026 but flipped to resistance, and a decisive break is required for sentiment to turn bullish."
"Positioning remains heavily skewed against the currency, with short AUD exposure rising to 39.5% of OI, the most bearish reading since February 2025. Fundamentally, some of the AUD's earlier tailwinds have also faded."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- US index futures dip as investors weigh US midterm political risks and rising energy prices.
- Apple and Palantir slip in pre-market trading despite strong broader corporate tech revenue.
- Traders focus on key upcoming earnings from major firms, including AMD, Pfizer, and Shopify.
Dow Jones futures decline 0.5% to trade around 51,880 during the European hours on Tuesday. Meanwhile, S&P 500 futures lose 0.15% to trade around 7,560 and Nasdaq 100 futures remain steady around 28,140.
US stock futures declined as traders adopted a cautious stance ahead of the US midterm elections. Mounting political pressure on US President Donald Trump and the Republican Party has intensified due to elevated energy prices linked to ongoing conflicts with Iran.
Apple shares dropped nearly 3% in pre-market trading following slower sales growth and weaker-than-expected fourth-quarter revenue guidance. Palantir also declined almost 3% despite reporting stronger-than-anticipated Q3 earnings. Meanwhile, Anthropic reported a twelvefold increase in quarterly revenue and outlined plans to invest more than $895 billion over the coming years.
During Monday's regular session, the Dow Jones gained 0.41%, while the S&P 500 and Nasdaq Composite fell 0.51% and 1.07%, respectively, driven by intensifying losses across semiconductor stocks. Investors are now turning their attention to a series of major earnings releases scheduled for Tuesday, including updates from AMD, SMCI, Pfizer, Shopify, and Booking Holdings.
Societe Generale sees blue sweep weighing on Tech and long-end Treasuries
Economists at Societe Generale argue that the political backdrop could remain a headwind for key market segments, noting that their US team “believes a blue sweep is likely and such an outcome may not be particularly conducive to a rebound in Tech stocks and would potentially set up another round of flattening in the long end of the Treasury curve.”
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann turned constructive on GBP/USD, noting recent gains and rising momentum as the Bank of England (BoE) prepares to hike rates for the first time in over three years. They see short-term consolidation between 1.3380 and 1.3435, but on a 1–3 week and 1–3 month basis they highlight scope for the Pound to test 1.3480, provided key support at 1.3360 holds.
Pound bias tilts to upside
"24-HOUR VIEW: Following last Friday’s price action, we highlighted yesterday that GBP “appears to have entered a range-trading phase between 1.3360 and 1.3420.” The subsequent price movements did not unfold as expected, as GBP rebounded from 1.3380 to 1.3448 before pulling back to close at 1.3408 (+0.14%). Upward momentum has increased, but it is insufficient to indicate a continued rise. Today, we expect GBP to consolidate between 1.3380 and 1.3435."
"1-3 WEEKS VIEW: We turned positive on GBP last Friday (30 Oct, spot at 1.3380). We indicated that GBP “could rise toward 1.3420.” We pointed out that GBP “must break clearly above this level before a move to 1.3450 can be expected.” After GBP subsequently rose to 1.3433 and then retreated, we highlighted yesterday (02 Nov, spot at 1.3390) that “the price action suggests that 1.3435 is a key resistance now, and GBP must break clearly above this level before a sustained advance is likely.” GBP subsequently broke above 1.3435, rising to a high of 1.3448 before pulling back. Although upward momentum has not increased significantly, the price action suggests there is scope for GBP to test 1.3480. On the downside, a breach of 1.3360 (‘strong support’ level was at 1.3330 yesterday) would indicate that 1.3480 is not coming into view"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- NZD/USD jumps to near 0.5627 against the US Dollar with U Midterm elections in focus.
- The RBNZ is expected to remain on the monetary tightening path.
- Investors also await NZ Q3 labor market data.
The New Zealand Dollar (NZD) trades sharply higher against its peers, except the Canadian Dollar (CAD), on Tuesday. Against the US Dollar (USD), the antipodean is up 0.22% to near 0.5627.
The Kiwi dollar has remained well-supported near 0.5600 since the Reserve Bank of New Zealand’s (RBNZ) monetary policy announcement last week where it surprisingly left interest rates unchanged.
Kiwi downside seen limited as Commerzbank frames RBNZ move as a pause
Strategists at Commerzbank argue that the Reserve Bank of New Zealand’s latest decision should not be read as a shift to a softer stance, describing it instead as “more of a pause than a dovish pivot.” In their view, the policy path remains biased toward further tightening, and they “continue to expect two further hikes, in December and 1Q27, which should limit further NZD downside.”
Going forward, investors will focus on New Zealand (NZ) Q3 employment data, which is scheduled for Wednesday.
The Labor Cost Index is expected to come in lower at 0.5% from 0.7% seen in the second quarter this year. The Unemployment Rate is seen dropping to 5.5% from the previous reading of 5.6%.
On the US Dollar front, investors brace of United States (US) Midterm elections. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies,
US midterms seen favoring Democrats as markets eye sweep odds
Strategists at Brown Brothers Harriman note that “the US midterm elections will be held on Tuesday,” with “Democrats widely expected to win the House of Representatives.” They add that “Senate control is much closer, but the tide favors the Democratic party,” as “Democrats need a net gain of four seats to secure a majority in the Senate” — a target that is “within reach as Republicans are defending six of the seven toss-up seats.”
BBH highlights that betting markets “favor a Democratic sweep,” with Polymarket and Kalshi “putting the odds around 70%.” In their view, that “points to a relatively muted initial market reaction if Democrats win both chambers,” whereas “a Republican Senate hold would be the bigger surprise and could spark more market volatility.”
NZD/USD Technical Analysis
In the daily chart, NZD/USD trades at 0.5619, keeping a bearish near-term tone as it holds beneath the 20-period Exponential Moving Average (EMA) at 0.5651. The pair’s inability to reclaim this short-term EMA suggests rallies remain capped for now, while the Relative Strength Index (RSI) at around 40 shows recovering but still subdued momentum, hinting at a consolidation phase rather than an outright reversal.
On the topside, immediate resistance is located at the 20-period EMA at 0.5651, and a sustained break above this level would be needed to ease the current downside pressure. With no nearby technical supports derived from the provided dataset, traders may instead look to prior swing lows on the broader chart for potential demand zones, while the current positioning below the EMA keeps the bias tilted to the downside.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
RBNZ Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after each of its seven scheduled annual policy meetings. If the RBNZ is hawkish and sees inflationary pressures rising, it raises the Official Cash Rate (OCR) to bring inflation down. This is positive for the New Zealand Dollar (NZD) since higher interest rates attract more capital inflows. Likewise, if it reaches the view that inflation is too low it lowers the OCR, which tends to weaken NZD.
Read more.Last release: Wed Oct 28, 2026 01:00
Frequency: Irregular
Actual: 2.75%
Consensus: 3%
Previous: 2.75%
Source: Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by interim Governor Christian Hawkesby's press conference.
- USD/CHF dips to session highs just below 0.8150 and is more than 1% down in two days.
- Swiss CPI accelerated to a 1.5% year-on-year pace in October, its hottest reading in more than two years.
- The Greenback remains on the defensive with US voting in the midterm elections.
The Swiss Franc (CHF) extends gains for the second consecutive day on Tuesday, favoured by higher-than-expected Swiss Consumer Price Index (CPI) data while the US Dollar (USD) remains on the defensive, as US voters head to the polls in the midterm elections. Against this background, the USD/CHF pair has hit a fresh seven-week low at 0.8149 and is more than 1% down so far this week.
Data released by the Swiss Federal Statistics Office on Tuesday revealed that consumer inflation accelerated to a 0.2% pace in October, against market expectations of a flat reading and to 1.5% year-over-year, its fastest reading in more than two years, up from 1% in September, and also beyond the 1.3% market consensus.
Consumer Inflation might prompt the SNB to consider rate hikes sooner rather than later
These are still moderate inflation rates to pressure the Swiss National Bank (SNB) to tighten its monetary policy immediately, but they confirm that energy costs are boosting price growth. If this trend continues, as it looks to be the case, considering the entangled conflict in the Middle East, the SNB might be forced to, at least, bring monetary tightening back to the table.
The US Dollar, on the other hand, remains on the defensive amid the uncertainty surrounding midterm elections. Strategists at ING affirm that they “don’t expect today’s US midterm results to cause structural shifts in FX.”
ING says that a moderate Republican loss has already been priced in, but cautions that if Democrats secure both the House and the Senate, the Dollar may come under additional pressure. “Fears of tougher regulation could weigh on AI stocks (we’ve recently seen how that can hit the greenback), while markets could price in greater risks of decision-making gridlock around issues such as government funding and the debt ceiling,” says ING in a note.
Economic Indicator
Consumer Price Index (MoM)
The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.
Read more.Last release: Tue Nov 03, 2026 07:30
Frequency: Monthly
Actual: 0.2%
Consensus: 0%
Previous: 0%
Source: Federal Statistical Office of Switzerland
Economic Indicator
Consumer Price Index (YoY)
The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.
Read more.Last release: Tue Nov 03, 2026 07:30
Frequency: Monthly
Actual: 1.5%
Consensus: 1.3%
Previous: 1%
Source: Federal Statistical Office of Switzerland
ING strategist Frantisek Taborsky highlights resilient CEE economies, with Czech and Hungarian PMIs showing strength, while Poland improves and Romania weakens. However, he sees the Polish Zloty as the region’s weakest currency, as EUR/PLN tests new highs amid political uncertainty and unfavourable global conditions. A dovish NBP outlook and fiscal concerns reinforce expectations of further Zloty weakness, with EUR/PLN seen above 4.420.
Bearish Zloty outlook and EUR/PLN target
"Yesterday’s PMI readings in the region confirmed the economy's strong position across the board. The outlook remains positive. With the exception of Turkey, all countries show PMI levels higher than those seen before the onset of the US-Iran conflict."
"The Czech Republic and Hungary appear particularly strong, hovering near or reaching new highs; Poland is edging higher, while Romania has declined once again. Overall, however, the economy continues to show resilience, pointing to a stable outlook for the coming months."
"EUR/PLN tested new highs yesterday following political headlines over the weekend. In our view, these developments provide further bearish momentum, suggesting additional downside for the zloty."
"Additionally, we anticipate a dovish tone from the National Bank of Poland at this week’s meeting. Taken together, we continue to view the zloty as the weakest link in the CEE region and expect the EUR/PLN pair to settle above 4.420."
"Naturally, global conditions remain unfavourable, characterised by a strong US dollar and high energy prices, despite some improvement yesterday. Furthermore, Poland’s public finance deficit, the highest in the EU, leaves the country exposed to potential turmoil in the euro-denominated bond market."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Indonesian Rupiah weakens as market caution, rising oil prices, unpredictable export revenue, and shifting external demand pressure fiscal stability.
- Bank Indonesia has reaffirmed its commitment to government coordination and a balanced policy mix to support the IDR.
- High energy prices from ongoing conflicts with Iran have intensified political pressure on President Trump and the Republican Party.
USD/IDR gains ground for the second successive day, trading around 18,190 during early European hours on Tuesday. The pair appreciates as the Indonesian Rupiah (IDR) struggles under widespread cautious sentiment, driven by fiscal pressures from rising oil prices, volatile export earnings, and shifting external demand. In response, Bank Indonesia (BI) has reaffirmed its commitment to strengthening policy coordination with the government while maintaining a balanced policy mix to support the domestic currency.
The upside of the USD/IDR pair could be restrained as the US Dollar (USD) struggles ahead of the US midterm elections. Political pressure on US President Donald Trump and the Republican Party has mounted due to elevated energy prices linked to ongoing conflicts with Iran. Meanwhile, prediction markets currently reflect a 74% probability of the Democratic Party gaining control of the US Senate, highlighting the elevated political stakes surrounding the vote.
Meanwhile, market participants are keeping a close watch on the upcoming US jobs report scheduled for release later this week. The employment data is expected to offer fresh insights into labor market health and help shape expectations for future monetary policy decisions. The Federal Reserve has maintained a hawkish stance, with the CME FedWatch Tool currently pricing in roughly a 75% chance of a rate hike in December following a policy pause in October.
US Dollar seen resilient as RBA hit weighs on Aussie
Strategists at ING argue that the outcome of today’s US midterm elections is unlikely to be a major driver for foreign exchange markets, noting that they “don’t expect today’s US midterm results to cause structural shifts in FX.” They do, however, flag some near-term political risk for the Dollar, with the currency potentially facing “some short-term pressure should the Democrats secure both the House (widely expected) and the Senate (close call).”
Turning to Australia, ING highlights that “a dovish hike by the RBA has hit AUD,” but the bank’s analysts “remain optimistic on the outlook for the currency beyond the near term,” suggesting that recent weakness in the Aussie may prove temporary once the immediate policy surprise is absorbed.
Indonesian Rupiah FAQs
The Indonesian Rupiah (IDR) is sensitive to a dynamic mix of global market conditions, domestic economic fundamentals, commodity price shifts, and proactive central bank interventions. As an emerging market currency, the Rupiah’s trajectory depends heavily on both domestic resilience and international economic momentum.
Bank Indonesia (BI) plays a central role in stabilizing the Rupiah through strategic monetary policy and direct market operations. By adjusting benchmark interest rates, the central bank manages yield differentials against major global central banks like the US Federal Reserve to attract and retain foreign portfolio investments. BI also utilizes a "triple-intervention" framework—operating across spot, derivative (DNDF), and government bond markets- to smooth out currency volatility, complemented by monetary instruments like Sekuritas Rupiah Bank Indonesia (SRBI) to bolster capital inflows.
From a broader macroeconomic perspective, domestic inflation rates, trade performance, and overall fiscal health dictate the IDR's underlying strength. Indonesia's trade and current account balances are closely tied to these fundamentals, while broader global factors, such as risk-on or risk-off sentiment among international investors and global liquidity trends, directly affect exchange rate movements.
As a major exporter of commodities such as palm oil, coal, nickel, and natural gas, Indonesia benefits from higher global commodity prices, which generate trade surpluses, increase foreign currency inflows, and strengthen the Rupiah. However, because Indonesia is also a net importer of crude oil, elevated global oil prices increase the foreign exchange burden, widening the current account deficit and weighing on the currency's value.
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