The US dollar steadied near a three-week low on October 21, 2026, after falling in the previous session as Treasury yields and crude oil prices eased. The Australian dollar held close to a three-week high after Reserve Bank of Australia Deputy Governor Andrew Hauser warned that the inflation outlook had deteriorated, leaving another rate increase under consideration.
Key Takeaways
- The dollar index held at 101.78 after falling 0.2% on October 20.
- The Australian dollar rose 0.1% to $0.7013 as Hauser highlighted worsening inflation risks.
- Traders expected several major central banks to hold rates the following week, but anticipated increases in Canada and New Zealand.
Table of Contents
- US dollar holds near its recent low
- Hauser leaves another Australian rate rise open
- Central-bank decisions set the next currency test
- Conclusion
US dollar holds near its recent low
The dollar index, which measures the greenback against six peer currencies, was steady after the previous session’s decline took it to a three-week low. Lower Treasury yields and an overnight retreat in oil prices formed the backdrop to the currency’s softer performance.
Crude eased after touching a five-month high as traders weighed diplomatic efforts involving Iran against continued attacks on Saudi infrastructure and reports of attacks on vessels in the Gulf. The competing developments left the energy outlook uncertain rather than signaling a confirmed easing of the conflict.
Commonwealth Bank of Australia economist and currency strategist Carol Kong said demand for the dollar as a haven was likely to fade once the Middle East conflict ended and energy prices retreated. Nevertheless, she expected the currency to trend modestly higher over coming months as foreign capital inflows increased. That was her forecast, not an observed market outcome.
| Item | Details |
|---|---|
| Japanese yen | 158.33 yen per US dollar; little changed. |
| Euro | $1.1229 per euro; steady. |
| British pound | $1.33735 per pound; steady. |
| New Zealand dollar | $0.5677; down 0.1%. |
| Canadian dollar | C$1.4064 per US dollar; steady. |
Hauser leaves another Australian rate rise open
The Australian dollar traded just below its October 20 high of $0.7017. Hauser’s October 21 conference remarks highlighted an inflation outlook that looked materially worse than the RBA had projected in August, while making clear that forecasts were still being finalized.
In his assessment, higher energy costs, AI-related demand and domestic capacity pressures were adding to inflation risks. At the same time, weaker household confidence, tepid consumption and an easing labor market complicated the case for further tightening.
The remarks were not a new policy decision. Hauser said the board faced a choice between doing more to restrain inflation and holding rates to protect activity and employment, with the next meeting due in early November.
Central-bank decisions set the next currency test
Attention was turning to policy decisions from the Federal Reserve, European Central Bank and Bank of Japan on consecutive days from October 28 to October 30. Traders did not expect any of the three to change interest rates.
The Reserve Bank of New Zealand and Bank of Canada were also due to announce decisions on October 28. Market pricing pointed to quarter-percentage-point increases from both, distinguishing those expectations from the anticipated pauses elsewhere.
Conclusion
The next scheduled focus is the October 28–30 run of central-bank decisions, followed by the RBA’s early-November meeting. Those decisions will test the differing rate expectations reflected in currency trading on October 21.
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