Daily Financial Breakfast 3 November 2026: RBA Rate Increases to 4.85%; WSJ Reports US Strike on Qeshm

Market News Today: Policy Decisions and Global Developments Shape Trading

• Contacts aimed at bringing the conflict to an end were continuing, Iran said, as The Wall Street Journal reported a United States attack on Iran’s Qeshm Island on Monday.
• A 25 basis point increase took the Reserve Bank of Australia’s cash rate to 4.85% following a 6-3 vote; Governor Michele Bullock said the bank’s policy options were still open.
• The planned early departure of Christine Lagarde has hastened changes to the ECB’s leadership affecting half of the Executive Board, Standard Chartered said.
• First-quarter funding of $800 billion compares with $618 billion in the fourth quarter in the U.S. Treasury’s borrowing estimates, Danske Research said.
• October’s U.S. ISM manufacturing reading of 55.5 surpassed the consensus forecast of 54.5, having risen from 54.5 in September.
• Following Monday’s selling, WTI moved back towards $95.30; TD Securities noted that onshore inventories were falling despite the restoration of Middle East oil flows.
• Binance said all assets affected by the $6.3 billion exploit had been replenished, as North Korea dismissed U.S. allegations that its hackers were involved.
• The $388 million loss incurred in Bitget’s September hack was absorbed by the exchange, CEO Gracy Chen said, with security controls subsequently overhauled.
• HSBC reported declines in Brazilian shares and the real after President Lula secured re-election, also noting gains by the opposition in Congress.

Policy and Events Drive Market Moves

Australian Dollar Falls After RBA Decision

The RBA decision was followed by a 0.25% fall in AUD/USD, leaving the pair near 0.6975. Against the yen, the Australian dollar retreated towards 110.20 in AUD/JPY; AUD/NZD was down for a second successive day at around 1.2430. A 0.11% decline took EUR/GBP to around 0.8336 from an earlier level near 0.8345. In European dealings, GBP/USD showed little change around 1.3410, having weakened towards 1.3405 during the Asian session. Modest losses on the previous day left the U.S. Dollar Index trading near 101.80 in Asian hours.

Military Action Continues Alongside Diplomacy

U.S. Strikes Iran’s Qeshm Island, WSJ Says

Monday saw a United States attack on Iran’s Qeshm Island, close to the Strait of Hormuz, according to U.S. officials cited by The Wall Street Journal. The newspaper said Washington had covertly undertaken several limited strikes against Iran in recent weeks, with this attack the latest in that series.

The military activity did not halt diplomatic contacts. According to Reuters on Monday, Iran said talks with the United States to end the eight-month conflict were continuing. Revised proposals emerged from several days of discussions involving Iranian officials and Qatari mediators, though the negotiations delivered no major breakthrough.

Central Banks Adjust Policy and Prepare Leadership Changes

RBA Lifts Rate to 4.85% but Keeps Policy Options Open

A 25 basis point rise brought the Reserve Bank of Australia’s cash rate from 4.6% to 4.85% on 3 November. Approved by a 6-3 vote, the decision was the fifth increase this year and met market consensus as inflation remained above target.

For the first time since June, the statement made no reference to possible further rate increases. Falling house prices were putting pressure on consumers and unemployment risks were skewed upwards, said ING’s Francesco Pesole, who noted a sharp downward revision to the economic outlook. At the subsequent press conference, Governor Michele Bullock emphasised that the economy had yet to feel the full impact of previous monetary tightening.

The altered wording did not mean rate increases were over, Bullock insisted. Standard Chartered’s Nicholas Chia reported that she described the RBA as “preserving our options”. Alongside continued warnings about upside inflation risks, the statement recognised that capacity pressures were tighter than previously judged. Bullock said both the neutral interest rate and the non-accelerating inflation rate of unemployment had risen, but gave no estimates.

Lagarde’s Planned Departure Brings Forward ECB Leadership Changes

A wider leadership transition at the European Central Bank is proceeding sooner following Christine Lagarde’s announcement that she would leave the presidency nine months early, according to Standard Chartered’s Christopher Graham. Replacements are required for half of the Executive Board, including Isabel Schnabel and Philip Lane.

In considering possible successors as president, Graham examined Pablo Hernandez de Cos and former Dutch central bank governor Klaas Knot. The policy implications could not be reduced to a simple distinction between hawks and doves, he argued, as the other board appointments would also matter. These remain potential succession choices, rather than confirmed appointments.

U.S. Funding Needs & Manufacturing Data Come Into Focus

U.S. Treasury Puts First-Quarter Borrowing at $800 Billion

First-quarter borrowing is estimated at $800 billion, against $618 billion in the fourth quarter, Danske Research said in its account of the U.S. Treasury’s quarterly refunding estimates. A cash balance of $1,000 billion was targeted for the end of the first quarter.

With the opening cash balance slightly above expectations, the fourth-quarter borrowing estimate was lowered by $10 billion. The target for the year-end cash balance stayed at $850 billion.

U.S. Manufacturing ISM Reaches 55.5 as Production Strengthens

At 55.5 in October, the U.S. ISM manufacturing index was above September’s 54.5 and the consensus expectation of an unchanged 54.5. Danske Research noted a slight rise in new orders alongside a substantial increase in production.

A less robust picture emerged from a separate activity measure. The S&P Global manufacturing PMI’s initial reading of 55.9 was lowered to 54.9. This still signalled growth, but the pace fell short of both the previous month and the preliminary estimate.

Energy & Commodity Supply Remains Uneven

WTI Regains Ground Towards $95.30 Following Diplomacy-Driven Fall

Around $95.30 was the price of West Texas Intermediate crude in Tuesday’s early Asian session, following a low of $94.30 in the preceding session, its weakest since 16 October. Reduced fears of further supply disruption after news of U.S.-Iran diplomacy sent prices down more than 5% on Monday; a later account recorded a 6.50% fall.

The physical supply picture was still uneven. Flows from the Middle East through bypass pipelines, the Gulf of Oman and the Strait of Hormuz had recovered to pre-war levels, said TD Securities’ Ryan McKay. Yet moving tankers in the shuttle trade around Oman remained costly and reliant on constant U.S. Navy support. Ship-to-ship transfers added to loading and travel times.

A crude surplus nearing 2–3 million barrels a day was apparent in TD Securities’ high-frequency estimates, with most of the accumulation held as oil on water while commercial inventories onshore kept declining. Its estimate for petroleum products, however, showed a deficit above 2 million barrels a day. Improved demand and tight product markets helped explain elevated pricing, McKay said, together with supply risks arising from IRGC attacks on tankers and Houthi attacks on Saudi infrastructure.

Crypto Exchanges Respond to Security Breaches

North Korea Denies U.S. Claims Linking Its Hackers to Binance’s $6.3 Billion Exploit

U.S. allegations that state-backed hackers were behind the $6.3 billion Binance exploit were dismissed by North Korea. The FBI said North Korean hackers operating under the TraderTraitor cyber activity designation were responsible.

The accusations amounted to a political provocation aimed at presenting North Korea as a cybercriminal state, said Kim Yo-jong, sister of the country’s leader Kim Jong-un. Her statement appeared through the Korean Central News Agency and was reported late Monday by Yonhap. For its part, Binance said replenishment of all affected assets was complete, along with a new zero-knowledge proof-of-reserves snapshot.

Bitget Overhauls Security After Absorbing $388 Million Hack Loss

Within hours of the $388 million September hack, Bitget chose to bear the loss itself rather than transfer it to users, CEO Gracy Chen said. Speaking to FXStreet, she explained that small unauthorised transfers had marked the start of the attack, which then grew into larger withdrawals spanning multiple chains.

According to the exchange, withdrawals were halted within minutes after its security systems flagged unusual activity. An internal investigation traced the incident to a transaction-authorisation vulnerability in a third-party security product, with no compromise of private keys or cold wallets. Bitget later changed the structure of access to sensitive systems, added multiple approval layers for critical operations and strengthened monitoring.

The breach contributed to broader losses across the industry. CertiK estimated that cryptocurrency security breaches in 2026 had caused losses of approximately $8.65 billion to $8.98 billion.

Political Outcomes Weigh on Regional Assets

Brazilian Assets Decline After Lula’s Re-Election, HSBC Says

President Lula’s unexpected victory in the second round of the election prompted sharp falls in Brazilian stock indices and a decline in the real against the U.S. dollar, according to HSBC strategists. A substantial repricing had taken place across Brazilian assets, the bank said.

Gains by the opposition in Congress were another focus for HSBC. The bank argued that the resulting political split made restoring fiscal credibility more difficult, leaving the country’s fiscal risk premium elevated.

Elections and BoE Decision Remain Ahead

• U.S. Prepares for Midterm Elections (3 November 2026): United States: Tuesday is the scheduled day for midterm voting. Preliminary results were expected on Wednesday morning, Danske Research said, though final outcomes could take weeks or longer.
• Bank of England Prepares Next Rate Decision: United Kingdom: The next interest-rate announcement from the Bank of England is still ahead.