FX Today: UK inflation data steal the show

Pablo Piovano FXStreet

The US Dollar (USD) managed to regain traction and clocked a marked bounce on turnaround Tuesday. The Greenback’s recovery came on the back of easing trade tensions and alleviated fears surrounding the US credit risk.

Here’s what to watch on Wednesday, October 22:

The US Dollar Index (DXY) clinched its third consecutive daily advance, rising to four-day highs despite US Treasury yields trading on the back foot across the curve. An apathetic US calendar will feature the weekly MBA Mortgage Applications and the EIA’s report on US crude oil inventories.

EUR/USD extended its correction, hitting multi-day lows and challenging the 1.1600 neighbourhood. The ECB’s de Guindos, Buch and Lagarde are due to speak.

GBP/USD remained on the back foot, breaking below the 1.3400 support to reach multi-day troughs. The UK Inflation Rate will take centre stage, seconded by the speech by the BoE’s Woods.

USD/JPY advanced to six-day peaks north of the 152.00 barrier as Japanese politics weighed down on the Yen. The Balance Trade results will be the sole release in Japan.

AUD/USD kept its choppiness well in place, this time reversing Monday’s strong advance and returning to the sub-0.6500 zone. The advanced SP& Global Manufacturing and Services PMIs alongside the speech by the RBA’s Bullock are next on tap in Oz on October 24.

WTI prices extended their downtrend for the fourth day in a row, approaching the $56.00 mark per barrel once again, as oversupply worries continued to hurt the sentiment.

Gold has embarked on a deep correction soon after hitting all-time highs, coming close to the $4,100 region per troy ounce amid a firm US Dollar and easing trade concerns. Silver prices collapse more than 8%, slipping back below the $48.00 region per ounce, or two-week lows.

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 holds range below mid-1.3600s amid Fed risks and Iran tensions

The GBP/USD pair extends its sideways consolidative price move for the second straight day, and trades around the 1.3630 area during the Asian session. The US Dollar is looking to build on its modest recovery from the lowest level since May 14, and is acting as a headwind for the currency pair. The lack of follow-through selling warrants some caution for bearish traders.

EUR/USD gains support amid hawkish ECB expectations, subdued US Dollar

EUR/USD inches higher after posting minor losses in the previous day, trading around 1.1670 during the Asian hours. The pair finds support as rising oil prices, elevated bond yields, and escalating Middle East tensions drive Eurozone inflation concerns. These factors have boosted expectations for a more hawkish stance from the European Central Bank, which is widely anticipated to deliver a 25-basis-point rate hike in September.

$4700 tested as Gold pulls back but bullish potential remains intact

Gold has pulled back sharply from fresh 15-week highs of $4,697, snapping a two-day uptrend in Asia on Tuesday. The US Dollar (USD) holds onto recovery gains, capping further upside in the bullion.

Bitcoin tops $80,000 as US Treasury fights high yields – AERO, VIRTUAL rally

Bitcoin extends gains above $80,000 as broader market risk-on sentiment persists. The scarce asset could extend its rally as the US Treasury combats high yields in the long-dated bond market, with further interventions on the horizon. Aerodrome Finance (AERO) and Virtuals Protocol (VIRTUAL) emerged as top performers over the last 24 hours.

The forex market is switching to a ‘debasement trade’

The US dollar has stabilised near three-month lows thanks to a rapid recovery in Treasury bond yields. Yields on 30-year bonds are returning to the levels seen following the Treasury’s announcement that it was increasing the minimum purchase volume to $4 billion. The greenback got support from falling stock indices, the continued rally in Brent crude, and positive signals from the US economy.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.