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AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.
USD/JPY attracts heavy follow-through selling on Friday, dropping to the 156.00 neighborhood, a one-month low, as Japan's National CPI report reaffirms bets for an imminent BoJ rate hike and boosts the Japanese Yen. Moreover, the recent steep fall in US bond yields counters hawkish Fed expectations and geopolitical risks, undermining the US Dollar and exerting additional pressure on the currency pair.
Gold touches a fresh low since early August during the Asian session on Friday, eyeing the key $4,000 psychological mark. Oil-driven inflation fears reinforce December Fed hike bets and continue to undermine the non-yielding bullion, which fails to benefit from the recent steep fall in US bond yields and the prevailing US Dollar selling bias. Moreover, the overnight breakdown below a trading-range support backs the case for further depreciation.
UK inflation as measured by the CPI accelerated to 3.5% YoY in September, up from 3.1% in August, according to the Office for National Statistics. This is the highest level since October 2025, exceeding economists' expectations of 3.4% and pushing inflation further from the BoE's 2% target.
The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.
