Dollar retreats as oil falls and Treasury yields stabilise

what happened

According to Newsmetry API, the dollar slipped in Asian trading on Tuesday after a holiday in some US markets. The dollar index, which measures the currency against six major peers, fell 0.2% to 102.39. The 10-year US Treasury yield dropped 5 basis points to 5.192% as trading resumed. Brent crude futures declined 1.4% to $105.20, with traders considering the prospect of additional diesel supplies from Russia amid an uncertain energy truce between Moscow and Kyiv. Attacks on Ukraine’s energy infrastructure continued, while recent strikes on Saudi Arabia kept Middle East supply risks in focus.

The euro gained 0.2% to $1.1177 and sterling rose 0.1% to $1.3219. The yen strengthened 0.2% to 158.215 per dollar after Bank of Japan data showed wholesale prices had risen 6.8% in the year to September, below the 7.6% median forecast. The offshore yuan held near a four-year high at 6.6961 per dollar. The Australian dollar was unchanged at $0.6960 after minutes showed the Reserve Bank of Australia had unanimously raised rates for the fourth time this year. The New Zealand dollar added 0.1% to $0.5589. Bitcoin fell 0.4% to $82,705.08, while ether lost 1.4% to $2,481.40.

Attention now turns to Wednesday’s US CPI report. Fed funds futures indicated an 80.6% probability that the Federal Reserve would leave rates unchanged at its next two-day meeting later this month, down from 82.3% on Friday, according to CME Group’s FedWatch tool. DBS analysts said comments from several Fed officials opposing a back-to-back increase at the October 28 FOMC meeting could limit the dollar’s upside.

why it matters

Lower oil prices and stabilising Treasury yields weakened recent support for the dollar, while the upcoming CPI report may reshape expectations for Federal Reserve policy. Currency and energy markets remain exposed to inflation data and supply risks.

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