Dollar holds near flat as Middle East talks and US midterms keep traders cautious

what happened

The dollar swung between small gains and losses on Tuesday, according to Reuters. Traders were assessing how uncertain US-Iran negotiations remain, along with the chance that midterm results could shift control of Congress and unsettle the AI-driven rally in stocks.

The dollar index rose 0.07% to 101.83, while the euro gained the same amount to $1.1193. Earlier losses reversed after the JOLTS survey showed job openings climbing by 333,000 to 7.523 million, far above the 7.100 million expected. September factory orders also beat forecasts, rising 1.8% against an expected 1.2%.

The yuan and the Aussie came under pressure. China's central bank raised the foreign-currency reserve requirement for financial institutions to curb the yuan's recent strength, and the dollar jumped 0.35% to 6.67 per offshore yuan. The Reserve Bank of Australia lifted its cash rate by 25 basis points to 4.85% in a 6-3 vote, its fifth hike this year, and the Aussie fell 0.4% to $0.6968.

why it matters

Markets are focused on whether a Democratic gain in Congress could bring more volatility to tech-led stocks, and on Friday's payrolls report, which will shape expectations for Fed policy. Goldman Sachs called the RBA decision incrementally dovish, citing the split vote and a softer inflation outlook. Monex USA's Juan Perez argues the dollar could lose ground if the Fed lacks consensus and political friction increases.

market impact

Dollar index: strong jobs data supports the greenback, while political risk and Fed divisions weigh on it.

• ↔Dollar index mixed — strong labor data supports it, while political uncertainty and Fed divisions weigh on it
• ▼Chinese yuan pressure down — a reserve requirement hike meant to slow its gains adds pressure on the currency

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