FX Today: Focus shifts to Canadian inflation, trade jitters and US shutdown

Pablo Piovano FXStreet

In an inconclusive start to the week, the US Dollar (USD) alternated gains with losses as investors continued to gauge developments around the US government shutdown, prospects for further rate cuts by the Federal Reserve and renewed US credit risks.

Here’s what to watch on Tuesday, October 21:

The US Dollar Index (DXY) traded in a vacillating mood around the 98.50 zone and amid mixed US Treasury yields. The API’s weekly report on US crude oil inventories will be the only data release on the docket. In addition, the Fed’s Waller is due to speak.

EUR/USD clocked marginal losses around 1.1640 against the backdrop of a generalised flattish mood in the FX galaxy. Absent data releases on the domestic calendar, the focus of attention is expected to be on the speeches by the ECB’s Nagel and Lagarde.

GBP/USD treaded water near 1.3400 amid a slight uptick in the US Dollar. The release of the UK Public Sector Net Borrowing figures will take centre stage, seconded by the speech by the BoE’s Cleland.

USD/JPY added to Friday’s advance, although it failed to extend the earlier breakout above the 151.00 mark. The speech by the BoJ’s Himino will be the sole event on the Japanese docket.

Decent results from the Chinese calendar lent support to AUD/USD, which added to Friday’s gains past the 0.6500 hurdle. Next on tap in Oz will be the speech by the RBA’s Jones.

There was no respite for the decline in WTI prices, with the commodity retreating for the third consecutive day and briefly piercing the $56.00 mark per barrel amid supply glut concerns.

Gold resumed its uptrend on Monday, setting asi Friday’s marked correction and regaining the area beyond the $4,300 mark per troy ounce. The move higher in the precious metal came on the back of shutdown concerns and rising bets of rate cuts by the Fed. Silver prices managed to regain some composure, partially leaving behind Friday’s deep correction and rising to the vicinity of the $53.00 mark per ounce.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD stays offered near 1.3370

GBP/USD remains on the back foot, slipping back toward the 1.3370 zone on Tuesday. Cable has come under pressure soon after testing the 1.3400 neighbourhood as investors turned more cautious in response to renewed effervescence on the geopolitical front.

EUR/USD stays offered below 1.1450

EUR/USD remains on the back foot ahead of the opening bell in Asia, returning to the low-1.1400s on the back of the resurgence of the demand for the US Dollar. Indeed, renewed jitters in the Middle East support the safe haven universe and weigh on the sentiment surrounding the risk complex. Moving forward, investors’ attention should shift to Wednesday’s FOMC Minutes.

Gold weakens toward $4,100

Gold adds to Monday’s decent pullback and trades close to the $4,100 mark per troy ounce on Tuesday. In the meantime, fresh geopolitical effervescence appear to have reignited inflation concerns, which in turn, limit any recovery attempt from the precious metal.

RBNZ set to increase interest rate after three pauses amid deeply divided committee

The Reserve Bank of New Zealand is widely expected to raise the Official Cash Rate by 25 basis points from 2.25% to 2.50% on Wednesday, snapping a three-consecutive-meeting pause.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance, arguing that the current world demands more flexibility.