Forex Today: Investors turn cautious as critical central bank week gets underway

Eren Sengezer FXStreet

Here is what you need to know on Monday, October 31:

Market mood sours on the last trading day of October as investors prepare for the key central bank meetings and high-tier data releases later in the week. The US Dollar Index builds on Friday's gains and holds in positive territory near 1110.00, US stock index futures post modest losses and the 10-year US Treasury bond yield stays calm above 4%. Eurostat will release the advanced estimate of the third-quarter Gross Domestic Product (GDP) growth and October inflation data on Monday. Later in the day, ISM Chicago's PMI and the Federal Reserve Bank of Dallas' Texas Manufacturing Survey will be watched closely by market participants.

Earlier in the day, the data from China showed that the NBS Manufacturing PMI and Non-Manufacturing PMI both fell into contraction territory in October, arriving at 49.2 and 48.7 respectively. In addition to the disappointing PMI data, ongoing coronavirus-related lockdowns and restrictions across numerous cities in China forced investors to seek refuge with the Shanghai Composite losing nearly 1% on the day. In the early trading hours of the Asian session on Tuesday, the Reserve Bank of Australia will announce its interest rate decision. Despite the negative shift witnessed in risk mood, AUD/USD trades in a narrow channel slightly above 0.6400.

EUR/USD failed to reclaim parity on Friday and started the new week in a relatively calm manner. As of writing, the pair was moving sideways at around 0.9950.

GBP/USD registered gains for the third straight week and went into a consolidation phase near 1.1600 early Monday. The Bank of England will announce its policy decisions later in the week and British Prime Minister Rishi Sunak will unveil the fiscal plan on November 17.

Following the Bank of Japan's decision to keep the policy setting unchanged on Friday, USD/JPY gained more than 100 pips on Friday. The pair fluctuates in a relatively tight range near 148.00 heading into the European session on Monday.

Gold suffered heavy losses on Friday as the benchmark 10-year US Treasury bond yield snapped a three-day losing streak and reclaimed 4%. XAU/USD consolidates its losses at around $1,640 on Monday.

Bitcoin struggled to make a decisive move in either direction over the weekend but managed to end the week above the key $20,000 level. Ethereum gained more than 15% last week and turned quiet above $1,500 early Monday while awaiting the next significant catalyst.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD retreats toward 1.1700 following two-day rally

EUR/USD consolidates its weekly gains and edges lower toward 1.1700 in the European session on Wednesday. US President Donald Trump will deliver a speech at the World Economic Forum later in the day and the US economic calendar will feature mid-tier data releases.

GBP/USD stays below 1.3450 after mixed UK inflation data

GBP/USD struggles to build on its weekly gains and trades marginally lower on the day below 1.3450. The data from the UK showed on Wednesday that the annual CPI inflation rose to 3.4% in December from 3.2% in November. In this period, the core CPI increased by 3.2% as expected.

Gold pulls away from record-high, holds above $4,800

Gold extended its impressive upsurge to a fresh all-time high near $4,900 earlier in the day before correcting lower. Investors eagerly await US President Donald Trump's speech in Davos as the EU-US tensions remain high over the Greenland issue.

Bitcoin, Ethereum and Ripple extend correction as bearish pressure persists

Bitcoin, Ethereum and Ripple steadied on Wednesday, after correcting by nearly 5%, 10% and 5%, respectively, so far this week. BTC slips below $90,000, while ETH and XRP close below their key daily supports. The momentum indicators of these top three cryptocurrencies by market capitalization suggest a strengthening bearish trend, hinting at a deeper correction.

Greenland tariffs: What happened, and how to position for the new Europe risk premium

Over the weekend, President Trump threatened a new round of tariffs on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the UK, with reporting flagging 10% from February 1 and a possible step-up later.

BNB Price Forecast: BNB loses strength as crypto market drops

BNB (formerly Binance Coin) loses ground as the broader cryptocurrency market falls, recording a 1% drop at the time of writing on Wednesday. Retail interest in the exchange token is declining, as evidenced by the massive wipeout of long positions and a decline in futures Open Interest.