The US dollar traded steady on Tuesday amid the spotlight on the US midterm elections. and the easing of Covid-19 restrictions in China that have boosted investor sentiment and weighed on the U.S. currency. as a safe haven.
Final results for the midterms could take a few days, but most predict a Republican victory. Some analysts say that the outcome could be positive for the bond market and negative for the US dollar if it leads to less fiscal stimulus.
"If we get a gridlock result or a Republican filibuster, it won't be so easy to get fiscal stimulus over the next year," said Damien Boey, head of macro strategy at Barrenjoey in Sydney.
U.S. rate hikes aggressive has caused U.S. Treasury yields rose and pushed the US dollar to multi-year highs against most major currencies, even as speculation grew that the trend was coming to an end.
The euro hit a high of $1.0031 on Tuesday, before slipping slightly against the US dollar. Sterling currency also declined with a decrease of 0.39% to trade at 1.1463 against the US dollar.
The rate-setting committee of the U.S. Federal Reserve. raised rates by 75 basis points last week and Chairman Jerome Powell indicated that hikes would continue, causing the market to reprice expectations at the point where it would peak.
Another factor weighing on the US dollar in recent days is speculation that China may relax its zero-Covid policy.
Markets are focused on inflation data to be released on Thursday.
