The home unit’s winning streak against the U.S. dollar was halted in Tuesday’s trading session amid matching flows.
Market activity was surprisingly dreary, with both demand and supply counters sizing each other out. Foreign currency flows were evenly matched for the majority of the session and kept the USDUGX currency pair in the 3680-3700 band.
Looking ahead, flows are likely to drive the direction of the domestic unit, although its fortunes may be fleeting as dollar buyers may come to the fore and nip the greenback at these lucrative levels.
The dollar stabilized against a broad basket of other currencies on Tuesday after three consecutive days of losses as investors waited for the release of the minutes of the Fed meeting held in October when policymakers cut interest rates by 25 basis points.
Expectations had grown that Washington and Beijing would sign a so-called “phase one” deal this month to scale back their 16-month-long trade war but those hopes received a setback on Monday after CNBC reported China is pessimistic about agreeing to a deal, which suggests a resolution to perhaps the biggest risk to the global economy remains elusive.
The euro was steady against the dollar, but gains remained capped as proposals to reform the euro zone’s bailout fund are creating a political storm in Italy, where parties and institutions are battling over whether Rome should try to block the reform at the EU level.
The pound was weaker against the dollar, as traders remained broadly of the view that the ruling Conservative Party will get a majority in Britain’s parliament following the election next month.