Global Markets: US Dollar Retreats as China Services Growth Hits Three-Month Low

By / / Breaking News

This update was written automatically with AI from market data and news wire reports, and published without review by a person.

Key Takeaways

  • The US Dollar (DXY) faced broad-based selling pressure, with the USD/CHF dropping 0.76% to 0.8146 and USD/JPY declining 0.56% to 157.77 as investors focused on US midterm election results.
  • China's services sector activity slowed to its weakest pace since July, with the RatingDog/Caixin Services PMI falling to 50.8 in October, missing market estimates of 51.7.
  • The Bank of Korea (BOK) successfully auctioned 1-year Monetary Stabilisation Bonds (MSBs) at a yield of 3.510%, part of its ongoing efforts to manage liquidity and stabilize domestic debt markets.
  • Safe-haven demand for the Swiss Franc surged following higher-than-expected Swiss inflation data, which rose to 1.5% y/y in October, driving the USD/CHF to a seven-week low.

The US Dollar (DXY) retreated against major currency peers on Wednesday as the first results of the US midterm elections began to influence market sentiment. Investors are increasingly pricing in a potential Democratic sweep of Congress, which analysts suggest could limit future government spending and exert further downward pressure on the Greenback. The US 10-year Treasury yield fell 4 basis points to 4.919%, reducing the yield advantage that has supported the dollar in recent months.

In the currency markets, the Swiss Franc emerged as a top performer. The USD/CHF pair plummeted 0.76% to 0.8146, fueled by a combination of dollar weakness and domestic inflationary pressures. Swiss consumer price inflation accelerated to 1.5% in October, up from 1.0% in September, prompting traders to reassess the Swiss National Bank's path for interest rate cuts.

The Japanese Yen also saw significant gains, with the USD/JPY declining 0.56% to 157.77. This move comes as hedge funds continue to slash bearish bets against the Yen, which have fallen to their lowest levels since June. Market participants remain wary of potential joint intervention by Japanese authorities and the US, especially as volatility in the pair hit a four-year low earlier this week.

Economic data from Asia provided a more cautious outlook. China's Services PMI fell to 50.8 in October from 51.6 in September, according to data from S&P Global (SPGI). While the figure remains above the 50.0 threshold separating expansion from contraction, it represents the slowest growth in three months. Service providers cited fierce competition and rising input costs—driven by higher fuel and wages—as primary headwinds to business confidence.

Meanwhile, the Bank of Korea continued its proactive liquidity management by reporting the sale of 1-year Monetary Stabilisation Bonds at 3.510%. This issuance is part of a broader strategy to anchor the South Korean bond market through 2026, as authorities navigate shifting monetary conditions and elevated foreign-exchange volatility. The South Korean Won remained sensitive to these developments, even as the central bank maintains its steady policy stance.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.
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