The highlight of the Asian session will be RBA Bullock's appearance before the Senate Economics Legislation Committee. Later in the day, the European Central Bank will announce its monetary policy decision, and the US will release critical economic data, including Q3 GDP and Jobless Claims.
Here is what you need to know on Thursday, October 26:
The US Dollar Index (DXY) rose for the second consecutive day, rising above 106.50, the highest level since last Friday. The Greenback received a boost from higher Treasury yields and deteriorating market sentiment following the latest round of earnings results. The Dow Jones dropped 0.32%, and the Nasdaq lost 2.43%. The 10-year Treasury yield rose to 4.94%.
Israel agreed to delay the invasion of Gaza. Prime Minister Benjamin Netanyahu stated that they are preparing for a ground invasion. Following these comments, crude oil prices rebounded, and WTI rose above $85.00.
Data from the US showed a surprising increase in New Home Sales in September, reaching 759,000 (annual rate), surpassing the market consensus of 680,000.
Key data is due from the US on Thursday. The first Q3 Gross Domestic Product estimate is expected to show a 4.2% expansion. Additionally, reports such as the Core Personal Consumption Expenditure Price Index, Initial Jobless Claims, and Durable Goods Orders will be released. These numbers are likely to have an impact on the market, the US Dollar, and expectations regarding Federal Reserve (Fed) monetary policy. Moves in the bond market could also influence XAU/USD. If US data continues to indicate a robust economy, the US Dollar could benefit.
EUR/USD rose above 1.0600 but subsequently declined towards 1.0560. The pair continues to face downward pressure, although it remains above a short-term uptrend line. The European Central Bank (ECB) is expected to keep interest rates unchanged on Thursday. The focus will be on ECB President Christine Lagarde's forward guidance. With the Eurozone heading towards a recession and inflation indicators slowing down, it is unlikely that there will be any rate hikes in the near future.
ECB Preview: Forecasts from 11 major banks, good moment to pause
GBP/USD recorded its lowest daily close since October 3, just above 1.2100. The British Pound also weakened against the Euro on expectations that the Bank of England (BoE) will maintain unchanged interest rates.
USD/JPY broke above 150.00 and is surging, potentially attracting the attention of Japanese officials. This development may lead to increased volatility in Yen's crosses over the following hours.
USD/CAD jumped to its highest level since March, moving towards 1.3800, following the Bank of Canada (BoC) meeting. The BoC kept its key rate unchanged at 5% but maintained a tightening bias. The Bank's inflation forecast indicates that it expects inflation to reach the 2% target by the end of 2025, slightly later than its previous projection of mid-2025.
Analysts at Wells Fargo on BoC and CAD:
We believe the BoC's interest rate pause will be an interest rate peak. Given we forecast slower growth and inflation than the central bank, we expect policy rate to hold steady for an extended period, before rate cuts begin in Q2-2024. As Canadian growth remains subdued and in the absence of further BoC tightening, we also see potential for further Canadian dollar weakness over the next several months.
The Australian Dollar rose during the Asian session following higher-than-expected Australian inflation data but later retraced its gains. AUD/NZD reached a five-week high at 1.0915 before turning lower and falling to 1.0860. AUD/USD reached weekly highs at 0.6400 and then reversed sharply, falling toward 0.6300. On Thursday, Reserve Bank of Australia (RBA) Governor Michele Bullock will appear before the Senate Economics Legislation Committee. Later in the day, the Export and Import Price Index is scheduled to be released.
Analysts at TD Securities:
Q3 CPI data handily beat the RBA's and analyst forecasts. Along with the Q2 trimmed mean measure being revised up and strong signs of domestic inflation, there is now a clear signal for monetary policy to respond. We now expect the RBA to hike 25bps at next month's meeting to 4.35% on the target cash rate. We believe failing to act could harm the RBA's credibility. The possibility of the RBA delivering a subsequent hike in 2024 cannot be ruled out.
The Central Bank of the Republic of Turkey (CBRT) is scheduled to meet on Thursday, and the consensus points to another 500 basis points rate hike, bringing the interest rate to 35%. USD/TRY has reached a new record high, closing above 28.00.
Gold regained momentum despite higher yields and tested levels above $1,980. Meanwhile, Silver failed to reclaim the $23.00 level.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.