Dollar Weakens as Oil Prices Fall, Markets Await Australia’s Rate Decision

US, Nov 03 : Global currency markets remained cautious on Tuesday as the US dollar edged lower amid a sharp decline in crude oil prices, while investors awaited the Reserve Bank of Australia’s latest monetary policy decision.

Brent crude futures dropped more than 7 per cent on Monday, marking their steepest daily decline in several months. The fall followed signals from Tehran that discussions with Washington aimed at ending their eight-month conflict were continuing, raising hopes of a possible diplomatic breakthrough.

The decline in energy prices eased concerns over inflationary pressures and pushed longer-term US Treasury yields lower. However, bond yields remained largely unchanged during Tuesday’s trading session.

The benchmark 10-year US Treasury yield stood at 4.9145 per cent, while the 30-year yield remained at 5.2868 per cent. Both had touched their lowest levels in almost two months during the previous session.

The dollar index, which tracks the greenback against a basket of major international currencies, slipped marginally to 101.76 after reaching a one-month low on Monday.

Despite the recent weakness, the US currency continued to receive support from concerns over an artificial intelligence-driven stock market downturn and uncertainty surrounding the upcoming US midterm elections. These factors have encouraged investors to maintain exposure to the dollar as a relatively safe-haven asset.

“Oil relief is growing, but conviction elsewhere remains thin,” said Sim Moh Siong, an FX strategist at OCBC, in a note.

He observed that lower energy costs were influencing currency market movements, while concerns over artificial intelligence and political uncertainty in the United States continued to provide support to the greenback.

Among other major currencies, the euro edged up to USD 1.1185, benefiting from the softer dollar. The Japanese yen remained broadly unchanged at 157.915 against the US currency as markets in Japan were closed for a local holiday.
Central Bank Decisions in Focus
Investors are also preparing for a busy week of monetary policy announcements, with central banks in Australia, Britain, Norway and Sweden scheduled to announce their decisions.

The Reserve Bank of Australia is widely expected to increase its official cash rate by 25 basis points to 4.85 per cent on Tuesday. If implemented, the move would take borrowing costs to their highest level since December 2008.

The anticipated increase would also mark the fifth rate hike this year, bringing cumulative monetary tightening to 125 basis points.

The Australian dollar traded largely unchanged at USD 0.7002, while the New Zealand dollar remained steady at USD 0.5617.

Meanwhile, the British pound gained 0.05 per cent to USD 1.3414 following encouraging purchasing managers’ index (PMI) data. The figures indicated that British manufacturing output expanded at its fastest pace in more than two years at the beginning of the final quarter of 2026.

Market participants are also closely monitoring the Bank of England’s upcoming policy announcement. Economists surveyed by Reuters expect the central bank to raise its benchmark interest rate to 4 per cent from the current 3.75 per cent.

Such a move would represent the first increase since August 2023, when inflation in Britain remained more than three times the central bank’s 2 per cent target.

With energy prices, geopolitical developments and monetary policy decisions shaping investor expectations, currency markets are likely to remain sensitive to fresh economic signals throughout the week.