Forex Today: ECB rate decision, US growth data to ramp up volatility


Here is what you need to know on Thursday, October 26:

Markets remain on edge on Thursday and safe-haven flows dominate the action as geopolitical tensions re-escalate. The European Central Bank (ECB) will announce monetary policy decisions later in the day and President Christine Lagarde will speak on the policy outlook and respond to questions afterward. The US economic docket will feature the first estimate of the third-quarter Gross Domestic Product (GDP) data alongside September Durable Goods Orders and weekly Initial Jobless Claims.

Israel ramped up airstrikes in Gaza and Prime Minister Benjamin Netanyahu said late Wednesday that the air assault was "just the beginning" as they were preparing for a ground incursion into the region. Reflecting the risk-averse market atmosphere, US stock index futures were last seen losing between 0.3% and 1.25% on the day.

Meanwhile, the US Dollar Index stays in positive territory above 106.50 after posting gains for the second consecutive day on Wednesday, while the benchmark 10-year US Treasury bond yield holds comfortably above 4.9%. The US economy is forecast to expand at an annual rate of 4.2% in Q3.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Canadian Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.38% 0.60% 0.67% 0.15% 0.34% 0.44% 0.53%
EUR -0.38%   0.23% 0.29% -0.23% -0.04% 0.07% 0.19%
GBP -0.59% -0.23%   0.08% -0.46% -0.25% -0.16% -0.05%
CAD -0.67% -0.29% -0.09%   -0.53% -0.34% -0.25% -0.10%
AUD -0.15% 0.25% 0.47% 0.53%   0.19% 0.27% 0.42%
JPY -0.31% 0.05% 0.26% 0.35% -0.21%   0.11% 0.22%
NZD -0.44% -0.06% 0.18% 0.25% -0.27% -0.09%   0.14%
CHF -0.56% -0.18% 0.04% 0.11% -0.42% -0.21% -0.11%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

 

US GDP Q3 Preview: When is the preliminary US GDP report, and how could it affect EUR/USD?

The ECB is widely expected to leave key rates unchanged following the October policy meeting. Market participants will pay close attention to the statement language and Lagarde's comments, given the loss of momentum in the European economic activity and growing concerns over the uncertainty surrounding the growth and inflation outlook. Ahead of the ECB event, EUR/USD stays relatively quiet at around 1.0550.

European Central Bank Preview: ECB expected to hold interest rates for first time in current tightening cycle.

USD/JPY broke above its horizontal trading range and climbed to its highest level in a year above 150.50 on Thursday. The pair, however, lost nearly 100 pips in a matter of minutes after touching 150.80, pointing to a possible currency intervention by the Bank of Japan. Earlier in the day, Japanese Prime Minister Fumio Kishida said that the FX intervention was not a contradiction of the policy of shifting money away from savings towards investment.

GBP/USD closed in negative territory on Wednesday and continued to push lower in the Asian session on Thursday. At the time of press, the pair was trading in the red slightly below 1.2100.

Gold benefited from the strong safe-haven demand and climbed to the $1,990 area early Thursday.

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