Forex News
- Gold gains as falling Treasury yields offset stronger US Dollar.
- Markets swing toward October hold after softer inflation data.
- Middle East escalation risks keep safe-haven demand firmly alive.
Gold price drifted higher, posting modest gains of over 0.40% on Thursday as US Treasury yields dove after Wednesday's inflation data, triggering a trimming of hawkish Fed bets for the October meeting. The XAU/USD trades at $4,175, up 0.4%.
XAU/USD advances as softer inflation trims October Fed hike expectations
On Wednesday, the Federal Reserve's (Fed) preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index, came in at 3.4% YoY, unchanged and below forecasts of a 3.3% jump.
Since this report, money markets have made a U-turn, with traders now expecting a near 70% chance of an interest rate hold, while the odds for a December rate hike stand at 83%, according to Prime Terminal.
Despite this, the US Dollar Index (DXY), which measures the American currency value against six others, is up 0.61% at 102.08.
Fed officials, led by Vice Chairman Philip Jefferson, crossed the wires, saying the economy is near maximum employment while stressing that patience is needed regarding rate adjustments. Meanwhile, Minneapolis Fed President Neel Kashkari remained hawkish, calling for additional hikes.
On the data front, the US ISM Manufacturing PMI in September ticked lower from 54.6 to 54.5, missing forecasts of 55. However, the Prices Paid sub-component soared from 71.1 to 77.1, an indication that inflationary pressure is building. The employment index sub-component also advanced from 51.2 to 52.7.
US jobless claims for the week ending October 26 were 197K, below forecasts of 200K and down from the previous week's 198K.
Given the backdrop, traders should expect further downside in Gold, but the rise of US Treasuries keeps yields lower, a tailwind for the non-yielding metal. The US 10-year Treasury yield is down more than 4 basis points at 5.243%.
Oil prices are rallying amid growing speculation that the US-Iran conflict might escalate after the US midterm elections in November. The Wall Street Journal reported that the US will send 10K more troops to the Middle East and that Trump expects to resume bombing Iran in November.
It's worth noting that China’s Oil product exports are being curtailed in favor of shoring up domestic demand. That could potentially tighten fuel markets that are already dealing with supply shortages worldwide.
The US economic calendar ahead includes the September Nonfarm Payrolls report and additional Fed remarks.
XAU/USD technical analysis: Gold struggles at $4,200, consolidates near $4,170
Price action shows Gold facing strong resistance at $4,200 after a breakout to the downside of a potential Bullish Wedge, which, once negated, opened the door for further losses.
Momentum is moving in favor of buyers, but overall, it remains bearish as the Relative Strength Index (RSI) is below the 50 neutral level.
For a bullish continuation, XAU/USD must reclaim the $4,200 mark. Once done, this opens the path to challenge the 100-day Simple Moving Average (SMA) at $4,283, ahead of $4,300. Once cleared, the next key resistance is the 50-day SMA at $4,324.
On the other hand, the path of least resistance, Gold’s first support is the low of the day (LOD) at $4,139, which, once breached, could test $4,100. Below there, the next support is the July 29 swing low of $3,996, followed by the July 17 low at $3,959. Once those levels are hurdled, the next area of interest is the year-to-date (YTD) low at $3,941.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Federal Reserve (Fed) Vice Chairman Philip Jefferson said Thursday that “inflation has resulted from a cascade of shocks” at the Darden School of Business at the University of Virginia in Charlottesville, Virginia.
He commented that inflation expectations show the Fed is credible in tackling inflation, that the “Fed is firmly committed to returning inflation to 2% in a timely manner,” and that the economy is close to “maximum employment.”
Key highlights:
Inflation has resulted from a cascade of shocks
Longer-term inflation expectations show the Fed is credible on getting inflation down
The Fed has to be prepared to do the needed work to validate inflation expectations
Fed is firmly committed to returning inflation to 2% in a timely manner
The economy is quite close to maximum employment
Fed has more space to focus on inflation mandate right now
There is great wisdom in the Fed's dual mandate
It's possible AI will power big productivity gains down the road
I encourage the responsible development of AI
It is hard to say what AI has done to natural rate estimates so far
The Fed does not have great insight into private credit developments
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- DXY breaks above 102.00 to its highest since April 2025 as the Euro sinks.
- The Euro below 1.1300 against the Dollar for the first time since May 2025.
- Odds of an October Fed hike under 40%, down from about 70% on Monday.
The odds of an October Fed rate hike have roughly halved since Monday, and the Dollar Index has risen on every one of those days. It trades near 102.10, its highest since April 2025. The index is moving with Crude Oil and the Euro rather than with the odds for the Fed's next meeting.
Close to four hikes still priced, and only October in doubt
The Fed raised its rate to 3.75-4.00% on September 16, and Fed Chair Warsh said inflation had been too high for too long. New York Fed President Williams said on Tuesday there was no need for urgency in raising it again, though he expects another increase this year.
Job openings and consumer confidence both came in soft the same day, and core Personal Consumption Expenditures (PCE) prices rose 0.2% in August, less than forecast. Minneapolis Fed President Kashkari said on Thursday he has no strong view on October and still expects more hikes. His own projection has one more quarter-point this year and another in 2027.
Futures put the chance of an October hike at about 70% on Monday and under 40% after the PCE release. They still price another hike this year and close to four by the end of 2027, so the market has moved the next hike rather than cancelled it. President Williams asked for no urgency, and traders applied that to October and to nothing after it.
The 10-year Treasury yield set a 24-year high above 5.30% on Wednesday, with the 30-year at 5.65%. Every step higher pays foreign buyers more to hold Dollar assets. Factories reported paying more in September too. The Institute for Supply Management (ISM) prices index jumped to 77.9, close to the 78.3 it recorded in March at the start of the war, and readings like that keep the later hikes in the price.
Europe buys more of its Crude Oil and fuel from the US than from anyone else
The Euro fell below 1.1300 against the Dollar on Thursday for the first time since May 2025, its fourth straight loss, and it makes up 57.6% of the Dollar Index. Worries over French government debt have added to the selling. It's possible that hotter September inflation in Germany, France, Italy and Spain will push the European Central Bank (ECB) to act, though the Euro fell on the day all four were published.
The European Union imports 96.6% of the Crude Oil and fuel it uses, and the US supplied 16% of those imports in 2024, more than any other country. Japan, 13.6% of the index, has almost no Crude Oil of its own, so the economies behind 71.2% of the basket face the same bill.
The US now exports more Crude Oil and fuel than it imports, a record 5.8 million barrels a day net in April. Each rise in Crude Oil is a cost for Europe and Japan and income for US exporters, which moves the Dollar Index whatever the Fed decides.
Crude Oil rose on Thursday on China's fuel export halt and on the Pentagon report of a third carrier group, and the Dollar Index set its session high on the second. Both stories add to the import bill in Europe and Japan, and neither depends on what the Fed does at its next meeting.
Pay has trailed prices for five months, and Friday is expected to add another
Nonfarm Payrolls (NFP) for September are due on Friday at 12:30 GMT, forecast at 94K after 162K in August, with the unemployment rate forecast at 4.1% for a third month. Average hourly earnings are forecast to rise 0.3% on the month. Payroll firm Automatic Data Processing (ADP) counted 90K private jobs on Wednesday against a 70K forecast, and announced layoffs fell to about 43K in September, down 18% from August.
The euro area's first estimate of September inflation comes out earlier the same day. A strong payroll number puts October back in play before the Fed decides on October 28, and a weak one pushes the next hike to a later meeting. For an index pricing the destination rather than the date, that is a choice between a hike and a hike.
Levels and bias
Resistance: Thursday's high just above 102.20 is where the push on the carrier report stopped. Above it, 102.50 and 103.00 are round levels the index hasn't traded since April 2025.
Support: 102.00 has held since Thursday's break above it. Below it, the June peak near 101.80 capped the index from June 24 until Thursday, then Wednesday's high near 101.50, where Thursday's run started.
Bias: The lean is long above 101.80, with 102.50 the first objective and 103.00 after it. Momentum on the daily Stochastic Relative Strength Index (Stoch RSI) is near 96 as the index heads for a fourth straight gain, so a dip toward 102.00 could come without breaking the run. A daily close back under 101.50 takes the index back into its late-September range and ends the trade.
DXY daily chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- WTI extends its rally to just above $92.50 as the Pentagon adds a carrier group.
- Chinese refiners suspend fuel exports through a holiday that ends October 7.
- US distillate inventories 14% below the five-year average, Crude Oil 2% above.
A report that the Pentagon is sending a third aircraft carrier strike group to the Middle East has added a second leg to Thursday's rally in Crude Oil. Crude Oil trades near $92.00, its highest since Tuesday, after the first leg came on reports that China's refiners have stopped selling fuel abroad. Neither leg takes a barrel of Crude Oil off the market in October.
A third carrier means one of the first two doesn't go home
The Pentagon is sending a third carrier strike group and more Marine Corps ships to the Middle East, US officials said in a report on Thursday. The deployment adds up to 10K troops, all due in the region by the end of November. President Trump has told a magazine it's possible he will order strikes on Iran after the November 3 midterms, days after rejecting Iran's seven-day ceasefire plan on September 26.
The strike group led by the carrier Theodore Roosevelt, which makes three, left San Diego on September 27, so Crude Oil rallied on a ship that had been at sea for four days. It sailed as the reported relief for the George Washington, and a US official said on Thursday that the Washington will now stay alongside the George H.W. Bush.
The US last had three carriers in the region in April, the most since the 2003 invasion of Iraq. Iran said on Wednesday it had received a US response to its latest ceasefire proposal, and Qatar is still passing messages between the two sides. The extra forces arrive after the vote and a deal could come before it, so the premium the report added is the easiest part of Thursday's rally to give back.
Beijing steadies fuel supplies, starting with China's
Chinese refiners have suspended fuel exports to everywhere except Hong Kong and Macau until Beijing says otherwise, people familiar with the matter said on Thursday. A state-owned refiner cancelled a handful of October gasoline and jet fuel cargoes on Wednesday, most of them deals it had agreed within the previous two weeks.
The halt came less than a week after President Trump asked President Xi in Washington to help steady global fuel supplies. Beijing first restricted fuel exports in March, after the war began, and eased the curbs in July. China's week-long holiday runs to October 7 with no export approvals in place, and whether they resume could depend on domestic fuel stocks and refinery output.
China has the largest refining capacity in the world but usually exports less fuel than India or South Korea. The reason trade sources give for the halt matters more than the cargoes, and that reason is a drop in China's own fuel stocks. Rebuilding them takes Crude Oil, and in Asia diesel now sells for about $75 a barrel more than the Crude Oil it's made from.
The US has more Crude Oil than usual and 14% less diesel
Middle East Crude Oil exports rose in September to their highest since the war began on February 28. US Crude Oil stocks sit 2% above their five-year average, according to the Energy Information Administration (EIA). Distillate stocks, which cover diesel and heating fuel, are 14% below theirs after falling 2.3 million barrels in the week to September 25. US refiners are short of fuel to sell rather than barrels to run.
One consultancy estimates a ban on US diesel exports could cut US refinery runs by as much as 12% as storage fills within a month. A barrel a US refiner doesn't run has to find another buyer abroad, where high freight costs and scarce tankers have already held US exports back. On September 24, talk of a ban pushed US Crude Oil to its widest discount to the international benchmark since early May.
The US average diesel price passed $6.50 a gallon for the first time in September, and the administration wants it lower before the November 3 midterms. President Trump said on Wednesday he is still discussing a US diesel export ban, and the White House has asked the European Union to release its emergency diesel stocks to lower world prices.
Levels and bias
Resistance: The session high just above $92.50 is where the jump on the report stopped. Friday and Tuesday both sold off from the $93.00-$93.50 area, and Monday's spike to $95.00 fell short of the September 24 high near $96.00.
Support: The jump on the report started just above $90.50, the top of a $90.00-$90.50 area that held on September 25 and September 28 before Tuesday's break. Beneath it, Thursday was the third straight session to bottom just under $88.00.
Bias: Lean long while $90.50 holds, with $93.50 the first objective and Monday's $95.00 spike high the second. The daily Stochastic Relative Strength Index (Stoch RSI) is near 18, at the bottom of its range and yet to turn up. The long is wrong on a daily close below $90.00.
WTI daily chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- The US Dollar climbs to a fresh year-to-date high as strong economic growth and sticky inflation support a hawkish Fed outlook.
- DXY holds above its key daily moving averages after forming a double bottom near 98.50.
- Bullish momentum remains strong, although overbought conditions raise the risk of near-term consolidation.
The US Dollar Index (DXY) rally gathers pace on Thursday, climbing to a fresh year-to-date high as resilient US economic growth, a firm labour market and stubborn inflation support expectations of further monetary policy tightening by the Federal Reserve (Fed). Meanwhile, elevated US Treasury yields provide additional support to the Greenback by increasing the appeal of Dollar-denominated assets.
US Dollar Price This Year
The table below shows the percentage change of US Dollar (USD) against listed major currencies this year. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 4.69% | 2.24% | 1.11% | 3.97% | -3.50% | 3.49% | 5.11% | |
| EUR | -4.69% | -2.39% | -3.34% | -0.63% | -7.48% | -1.09% | 0.47% | |
| GBP | -2.24% | 2.39% | -0.98% | 1.81% | -5.22% | 1.33% | 2.93% | |
| JPY | -1.11% | 3.34% | 0.98% | 2.71% | -4.47% | 1.84% | 4.06% | |
| CAD | -3.97% | 0.63% | -1.81% | -2.71% | -6.99% | -0.85% | 1.11% | |
| AUD | 3.50% | 7.48% | 5.22% | 4.47% | 6.99% | 6.90% | 8.58% | |
| NZD | -3.49% | 1.09% | -1.33% | -1.84% | 0.85% | -6.90% | 1.58% | |
| CHF | -5.11% | -0.47% | -2.93% | -4.06% | -1.11% | -8.58% | -1.58% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
At the time of writing, the index trades around 102.18, up 0.70% on the day, after gaining 2.07% in September. Traders now look ahead to Friday’s US Nonfarm Payrolls (NFP) report. Strong data could further boost the Greenback, while a weaker reading could trigger some profit-taking.
Strategists at Brown Brothers Harriman observe that recent USD gains are closely aligned with “widening US-G6 interest rate differentials,” even as “tightening by other major central banks limits policy divergence with the Fed.” In their view, the Dollar’s appeal is reinforced by “US economic growth outperformance and strong foreign appetite for US securities,” factors that together “can keep USD risks skewed to the upside” despite the narrowing scope for further relative policy moves.
Technical Analysis
From a technical perspective, the US Dollar Index maintains a strong bullish bias after forming a double bottom near 98.50 in early September and reclaiming its key daily Simple Moving Averages (SMAs). The index now holds above the 50-day, 100-day and 200-day SMAs, which are clustered between 99.29 and 100.12.
Momentum indicators also favour buyers. The Relative Strength Index (RSI) stands near 78, while the Moving Average Convergence Divergence (MACD) remains in positive territory, pointing to firm upside momentum. The Average Directional Index (ADX) near 35 confirms that the underlying trend is gaining strength. However, overbought RSI conditions suggest that the rally could pause or consolidate before extending higher.
On the topside, a sustained move above 102.00 would keep the focus on immediate resistance at 102.50, followed by the 103.50 area. On the downside, a return below 102.00 would bring initial support at 101.50 into focus, with a deeper pullback exposing 100.50.
The outlook remains constructive as long as the index holds above the moving-average cluster, comprising the 100-day SMA at 100.12, the 50-day SMA at 99.94 and the 200-day SMA at 99.29. A decisive break below these averages would weaken the bullish structure and expose the double-bottom area near 98.50, which provides stronger support.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Minneapolis Federal Reserve (Fed) President Neel Kashkari said on Thursday he is unsure about an October rate hike but added that he is “open-minded about how fast the Fed should raise interest rates.”
Kashkari reiterated that “his September rate projections were for one more hike this year, another in 2027,” indicating that he sees the Fed funds rate near 4.25%-4.50%, and reiterating his hawkish posture.
Key highlights:
'I don't have a strong view' about October rate hike
Says he is open-minded about how fast fed should raise interest rates
Says his September rate projections were for one more hike this year, another in 2027
No sense monetary policy providing much restraint at current moment
Says he doesn't see meaningful tightening in financial conditions given data
Economy has outperformed expectations since fed's September policy meeting
Says he has some confidence inflation will fade, but shocks keep happening
Fed's September rate hike showed central bank will act to lower inflation
Markets now see that fed chairman warsh will act to cool inflation
Depending on economy's performance, fed may have to hike more than expected
Supply shocks should fade, rate hikes are aimed at tempering price expectations
Market inflation expectations still centered on 2%
Says he does not see signs of systemic risk in financial system
Even with yield rise, treasury market has been functioning
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.94% | 0.61% | 0.44% | 0.08% | 0.46% | 0.68% | -0.38% | |
| EUR | -0.94% | -0.33% | -0.51% | -0.89% | -0.47% | -0.26% | -1.31% | |
| GBP | -0.61% | 0.33% | -0.19% | -0.50% | -0.16% | 0.07% | -0.98% | |
| JPY | -0.44% | 0.51% | 0.19% | -0.36% | 0.03% | 0.24% | -0.81% | |
| CAD | -0.08% | 0.89% | 0.50% | 0.36% | 0.39% | 0.60% | -0.45% | |
| AUD | -0.46% | 0.47% | 0.16% | -0.03% | -0.39% | 0.24% | -0.80% | |
| NZD | -0.68% | 0.26% | -0.07% | -0.24% | -0.60% | -0.24% | -1.03% | |
| CHF | 0.38% | 1.31% | 0.98% | 0.81% | 0.45% | 0.80% | 1.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Vice Chairman of the Federal Reserve (Fed) Philip Jefferson said on Thursday that the Fed "is fully committed to returning inflation to 2% target” and that future interest rate decisions “should be driven by data.”
Jefferson added that the Fed “may take more time to decide the next rate move,” echoing comments from New York Fed President John Williams on Wednesday, who said that the Fed is in no rush to tighten monetary policy.
Key highlights:
Fed is fully committed to returning inflation to 2% target
Future fed rate changes should be driven by the data
Says us central bank 'may take more time' to decide next rate move
Weighing more data will allow fed to make better call on rates
Economic output and job market are broadly SOLID
Bond yields show market participants rethinking outlook
September rate hike will help anchor inflation expectations
Inflation remains above target with upside risks
Says he still expects inflation pressure to ease over longer term
Sees jobless rate holding steady into end of this year
Says he is worried high inflation could spill into expectations
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.89% | 0.56% | 0.28% | 0.08% | 0.34% | 0.57% | -0.45% | |
| EUR | -0.89% | -0.34% | -0.64% | -0.85% | -0.56% | -0.35% | -1.34% | |
| GBP | -0.56% | 0.34% | -0.29% | -0.48% | -0.22% | -0.00% | -1.00% | |
| JPY | -0.28% | 0.64% | 0.29% | -0.21% | 0.06% | 0.27% | -0.74% | |
| CAD | -0.08% | 0.85% | 0.48% | 0.21% | 0.27% | 0.48% | -0.52% | |
| AUD | -0.34% | 0.56% | 0.22% | -0.06% | -0.27% | 0.24% | -0.77% | |
| NZD | -0.57% | 0.35% | 0.00% | -0.27% | -0.48% | -0.24% | -0.98% | |
| CHF | 0.45% | 1.34% | 1.00% | 0.74% | 0.52% | 0.77% | 0.98% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
A Bank of Mexico (Banxico) survey of private economists revised down headline and core inflation forecasts, updated projections for the USD/MXN exchange rate, and revised projections for future interest rates set by the Mexican institution.
Economists expect headline inflation to end at 3.87% in 2026, down from 3.90% in August, while core figures are expected to end at 3.90%, beneath August’s 3.99% projection.
For the next year, they see inflation at 3.82%, with the underlying print expected to drop to 3.78%.
Regarding economic growth, the Gross Domestic Product (GDP) for this year is forecast to rise 1.40%, up from 1.30% in August. Meanwhile, USD/MXN is projected to end this year at 17.50 and at 18.04 by the end of 2027.
The survey showed that analysts expect Banxico to hold rates unchanged at 6.50% through the end of next year.
Banxico FAQs
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
The main tool of the Banxico to guide monetary policy is by setting interest rates. When inflation is above target, the bank will attempt to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The rate differential with the USD, or how the Banxico is expected to set interest rates compared with the US Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year, and its monetary policy is greatly influenced by decisions of the US Federal Reserve (Fed). Therefore, the central bank’s decision-making committee usually gathers a week after the Fed. In doing so, Banxico reacts and sometimes anticipates monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised rates, Banxico did it first in an attempt to diminish the chances of a substantial depreciation of the Mexican Peso (MXN) and to prevent capital outflows that could destabilize the country.
- USD/MXN surges above 18.30 as Peso selling accelerates.
- DXY clears 102 while elevated yields reinforce Dollar demand.
- Mexico manufacturing returns to growth, but underlying recovery remains fragile.
The Mexican Peso (MXN) collapses on Monday, extending its depreciation by over 1.50% as the Greenback strengthens sharply amid growing fears that the Middle East conflict will be prolonged, keeping energy prices under pressure. The USD/MXN pair trades at 18.35, after bouncing off daily lows of 18.06.
Geopolitical risk, high yields and Dollar strength overwhelm improving Mexican factory data
Sentiment remains negative amid growing concerns of a potential escalation in the US-Iran conflict. This pushed energy prices and US Treasury yields higher, boosting the safe-haven appeal of the Greenback at the expense of the Mexican currency.
Aside from this, Mexico’s economic docket showed that manufacturing activity improved in September, according to S&P Global. The Manufacturing PMI expanded from 49.8 to 50.3.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, was cautious, saying that “September's PMI data suggested that Mexico's manufacturing economy moved fractionally back into growth territory, but the underlying picture was still quite fragile.”
Meanwhile, the Bank of Mexico (Banxico) private economists’ poll revealed that most see the main reference rate at 6.50% through the end of 2027, and the USD/MXN exchange rate to end around 17.50 this year.
In the US, data showed that business activity in the manufacturing sector remains solid, despite cooling, with the ISM Manufacturing PMI hitting 54.5, below estimates of 55, a tenth below August’s 54.6. Earlier, Initial Jobless Claims for the week ending September 26 came in at 197K, below forecasts of 200K and down from the previous week's 198K.
Given the backdrop, money markets trimmed their Fed-hawkish bets for October, but for December, the chances of another rate increase are 83%, according to Prime Terminal.
Also, high US Treasury yields keep the Greenback underpinned, as indicated by the US Dollar Index (DXY). The DXY, which measures the performance of the American Dollar against six peers, is at 102.16, up 0.69%, a headwind for the Mexican currency.
The US economic calendar ahead includes the September Nonfarm Payrolls report and additional Federal Reserve remarks.
USD/MXN Price Forecast: Technical Outlook
In the daily chart, USD/MXN trades at 18.3726. The pair holds well above the latest reading of the triple simple moving average (50, 100, 200) at 17.2219, keeping the near-term bias firmly bullish and suggesting an extension of the recent uptrend away from the mid-16.00s base. Momentum looks stretched, however, as the 14-period Relative Strength Index prints an overbought reading near 86.9, hinting that upside may be vulnerable to consolidation or a corrective pullback even as buyers remain in control.
On the downside, initial support is seen at the triple simple moving average cluster around 17.22, which reinforces the broader ascending structure. A deeper retreat would expose the horizontal support level at 16.8866, where previous demand emerged and a more significant downside correction could pause. With no clearly defined nearby resistance levels in the dataset, price action around current highs will guide whether USD/MXN extends the bullish phase or allows overbought conditions to unwind toward the 17.00–17.20 region.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
The US Dollar (USD) has advanced further on Thursday, trading in levels last seen in early April 2025 on the back of the marked improvement in the sentiment surrounding the US Dollar, geopolitical uncertainty and renewed concerns over the French economy.
Here is what you need to know on Friday, October 2:
The US Dollar Index (DXY) has extended its move higher, leaving behind the key 102.00 hurdle to hit 18-month tops as investors continued to gear up for critical data releases at the end of the week. The NFP will be in the limelight, along with the Unemployment Rate and Factory Orders. In addition, the Fed’s Logan is due to speak.
EUR/USD has added to the ongoing weakness, selling off to the low 1.1200s while reaching new 17-month troughs. The release of the flash Inflation Rate in the euro bloc will wrap up the domestic calendar. The ECB’s Cipollone and Vujčić are also due to speak.
GBP/USD has faded the previous day’s bullish attempt, reaching new four-month lows in the sub-1.3200 region. The BoE’s Decision Maker Panel (DMP) will be the sole release on the UK docket.
USD/JPY failed to maintain its earlier move past the 158.00 barrier, slipping back toward the low 157.00 afterwards, keeping its decent gains for the day. The Unemployment Rate will be in focus along with the Tokyo CPI and Monetary Base data.
There was no respite for the deep correction in AUD/USD, which has clinched fresh three-month lows near the 0.6900 threshold. Next on tap in Oz will be the publication of the final S&P Global Services PMI on October 5.
Front-month WTI futures have added to Wednesday’s uptick and challenged the $93.00 mark per barrel as supply concerns resurfaced following China’s decision to suspend exports of oil products.
Gold has traded in a volatile fashion, hovering below the $4,200 mark per troy ounce amid traders’ assessment of the Fed’s potential rate path in light of recent softer-than-expected inflation data.
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