US FX WRAP: Dollar sees two-way trade on geopols as US midterms await

The Dollar Index was more or less flat on Tuesday as geopolitics dominated ahead of the US midterms overnight. At the time of writing, Polymarket sees a 74% chance of a Democratic sweep, with a 95% chance of the party winning the House and a 75% chance of winning the Senate. Several key Senate races will be watched, particularly whether Texas turns blue. On data, US JOLTS job openings for September jumped to 7.523mln from 7.190mln, well above the expected 7.10mln. Within the release, the quits rate rose to 2.1% from 1.9%, while the job openings rate rose to 4.5% from 4.3%.

G10 FX performance was mixed, with GBP, EUR and NZD eking out mild gains, while CAD, CHF, AUD and JPY lost ground to varying degrees against the Buck. The Aussie came under notable selling pressure after the RBA hiked rates by 25bps to 4.85%, but gave no further guidance, with Governor Bullock saying in her press conference that it is probably better to wait for incoming data. The Swissy initially benefited from a hotter-than-expected CPI report, but gradually pared gains as the session progressed. Following the data, SNB's Schlegel said inflationary pressure in September was slightly higher than in June.

Elsewhere in Europe, ECB's Radev said the economic environment is becoming more challenging and that the October pause does not mean the tightening cycle is over, while Nagel said a rate hike in December will very likely be necessary. EUR/SEK saw brief upside during the European session on reports that the Swedish parliament rejected the Centre Party leader's candidacy for PM.

CAD fell to lows as oil hit its troughs. BoC Governor Macklem reiterated that there could be a need to raise the policy rate further and that the inflation outlook has deteriorated, although there was no market reaction.

In EMFX, the PBoC will raise the FX reserve requirement ratio by 2ppts to 6% from 4%, effective November 15th.