The US dollar (USD) remains in consolidation mode despite strong economic data, as the Republican party faces setbacks in local elections. The US ISM services index rose 2.4 points to 52.4 in October, with the new orders index jumping 5.8 points to a one-year high of 56.2. Private sector employment also increased by 42,000 in October, surpassing estimates of 25,000. However, the USD index (DXY) showed little change, remaining near the 200-day moving average of 100.3. The Republican party's losses in high-profile local elections, including the New York City mayoral race and governorships in Virginia and New Jersey, have raised the likelihood of negotiations to end the ongoing government shutdown, now in its sixth week.
European currencies, including the euro (EUR) and Swiss franc (CHF), saw little movement. US President Trump met with Swiss executives to discuss reducing the 39% US tariff on Switzerland, which could impact industries like chocolatiers and watchmakers. Analysts expect USD/CHF to test resistance at 0.82 and have closed a bullish EUR/CHF trade to lock in profits.
The USD/JPY pair rose 0.3%, approaching resistance at 155. Japan's Vice Finance Minister for International Affairs, Atsushi Mimura, noted a steady decline in long-JPY positions since summer due to trade, geopolitics, and speculation over Japan's fiscal spending plans. Japan's labour cash earnings accelerated to 1.9% year-over-year in September, up from 1.5%. The focus now shifts to PMI readings.