Currencies hold their breath: euro near 17-month low as the world waits for the midterms
The dollar barely moved on Monday as investors waited for Tuesday's U.S. elections. France's outlook cut pushed the euro down, while Australia prepares a rate hike to its highest since 2008.
Key facts
- The dollar index eased 0.15% to 101.83; the euro traded near a 17-month low around $1.1159–$1.1186
- Fitch cut France's outlook to negative from stable, keeping the A+ rating
- Fitch forecasts France's debt at about 124% of GDP by 2028, up from about 115.7% last year
- Markets expect the Reserve Bank of Australia to lift its cash rate from 4.60% to 4.85% on Tuesday
- The Bank of England decides Thursday, November 5; the U.S. jobs report lands Friday, November 6
Currency markets spent Monday waiting. The dollar and its major peers traded in a holding pattern as investors turned to Tuesday's U.S. midterm elections, which decide control of Congress and, with it, the shape of tax, spending and tariff policy for the next two years. The dollar index eased 0.15% to 101.83, sterling was little changed at $1.3394, and the yen slipped 0.1% to 157.73 per dollar.
The euro was the exception, nursing losses near a 17-month low. It traded around $1.1159 to $1.1186 in Asian trading after Fitch revised France's sovereign credit outlook to "negative" from "stable" late on Friday, after markets closed. Fitch kept France's rating at A+ but cited weaker growth, higher borrowing costs and a widening deficit since its August review. It forecast France's debt reaching about 124% of GDP by 2028, up from about 115.7% last year, and put the 2027 deficit at 5.5% of GDP against the government's draft-budget target of 5.0%. Interest payments, Fitch said, will rise to 3.3% of GDP by 2028. The backdrop is a French economy that unexpectedly contracted 0.1% in the third quarter, even as the wider eurozone grew 0.4%, beating the 0.2% that had been expected, with Germany expanding 0.2%.
Australia is the week's other central-bank story. The Australian dollar eased 0.15% to $0.7022 ahead of Tuesday's Reserve Bank of Australia decision, where markets and all four major banks expect the cash rate to rise from 4.60% to 4.85% — the fifth increase of 2026 and the highest since 2008. The case for a hike hardened after September inflation came in at 4.3% over the year, with the trimmed mean — the Reserve Bank's preferred underlying measure — at 3.7% for the year and up 1.0% in the quarter, above the bank's own forecast. The ASX rate tracker put the chance of a rise at about 80%.
The Bank of England decides on Thursday, November 5, and Norway and Sweden also set rates this week. Stock and commodity markets offered a calmer backdrop than last week. Nasdaq-100 futures rose 0.8% after a 2% weekly drop, while Brent crude fell about 4% to around $109 after Secretary of State Marco Rubio said President Donald Trump wants to resolve the Iran war peacefully.
For ordinary readers, the week ahead connects directly to household costs: the election outcome shapes U.S. fiscal policy, central-bank decisions feed into mortgage and loan rates around the world, and Friday's U.S. jobs report will steer expectations for the Federal Reserve's December decision.
What to watch: the midterm results overnight Tuesday; the Reserve Bank of Australia decision on Tuesday; the Bank of England on Thursday, November 5; and the October U.S. jobs report on Friday, November 6.