Forex News

On Friday, Richmond Federal Reserve President, Thomas Barkin, crossed the wires on SiriusXM Business Briefing. He said that the Fed’s direction of travel is “straightforward,” while noting that the question is the pace.

In the speech, Barkin said that a gradual approach – on rates – is “a good way to go.” He commented that businesses argued that cost pressure had broadened and that they need to raise prices after years of high inflation.

Key highlights:

Direction of travel is "straightforward" for the Fed, the question is pace

A gradual approach is a good way to go right now

A lot of cost pressure is hitting American businesses

In the context of years of elevated inflation, it is easier for businesses to argue they need to raise prices

Resilience of consumer spending has been a surprise given relatively flat incomes

The AI investment surge has pressured supply chains, and that is inflationary

AI investment is leading to demand side inflation, which is the kind of thing the Fed can lean against

Business owners say demand remains solid, with only weakness among non-profits and the housing sector

Businesses say that cost pressure is broad based

Businesses are laying plans to pass those costs on to their customers

• Silver heads for its steepest monthly decline since June amid broad precious metals selling.
• XAG/USD trades well below daily moving averages, keeping sellers firmly in control.
• RSI signals oversold conditions, while negative MACD and elevated ADX indicate a strong downtrend.

Silver (XAG/USD) extends its decline on Friday, falling more than 5% and breaking below $50 to its lowest level since November 2025. The white metal is on track to lose around 18% in October, its steepest monthly decline since June, when it fell 22%.

The slide comes amid broader weakness in precious metals, with Gold (XAU/USD) also falling below $4,000 to levels last seen in October 2025. Precious metals have faced heavy selling pressure since the Middle East war erupted in late February, pushing Oil prices sharply higher and pressuring major central banks, particularly the Federal Reserve (Fed), to raise interest rates to contain inflation.

Higher borrowing costs reduce the appeal of assets such as Silver, which offers no interest income. Traders anticipate another Fed rate hike in December after the central bank left rates unchanged at 3.75%-4.00% on Wednesday.

Silver now trades nearly 60% below its all-time high near $121 reached in January. The latest leg lower may also reflect forced liquidation as a technology stock sell-off over heavy AI spending unsettles financial markets. Investors facing losses elsewhere may be selling precious metals to raise cash, while a broadly firmer US Dollar (USD) adds to the pressure.

Technical analysis

On the daily chart, XAG/USD extends its slide well below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), reinforcing a clear bearish bias. The prevailing downward trend line, now broken at $60, remains an overhead reference, while momentum gauges underline selling pressure: the Relative Strength Index (14) at 23 sits in oversold territory and the Moving Average Convergence Divergence (MACD) indicator stays below zero with a negative reading, hinting that the downside trend is both strong and still intact, as supported by an elevated Average Directional Index (ADX) near 39.

On the upside, immediate resistance emerges at the horizontal barrier of $50, followed by $55 before the broken trendline region around $60 comes into play. This region closely aligns with the 100-day SMA and the 50-day SMA at $61, together forming a dense resistance cluster, while the 200-day SMA at $70.39 marks a more distant structural ceiling.

On the downside, next support lies at the horizontal level near $45, with further losses possible if selling pressure intensifies. While the market appears oversold, only a sustained recovery above the $50-$55 band would begin to ease the immediate bearish pressure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• GBP/USD edges higher toward 1.3400 as Sterling buyers remain resilient.
• November BoE hike fully priced, potentially eliminating US-UK rate differential.
• December Fed hike odds fall to 70% despite strong GDP and inflation.

The Pound Sterling drifts higher against the US Dollar by 0.04% as traders seem confident that the Bank of England (BoE) will raise rates next week, while traders trim hawkish bets on the Fed despite solid US data released on Thursday. The GBP/USD trades near 1.3400.

GBP/USD remains supported as November BoE tightening expectations contrast with fading December Fed hike bets

US data revealed that the economy grew at a healthy 3.4% YoY in Q3, crushing forecasts. Consequently, inflation remains high at 3.1% YoY, as measured by the Core PCE, up from September’s print but in line with estimates. Even though this would increase the odds for a rate hike by the Fed, investors are trimming the odds from around 84% on Wednesday, post-Fed’s decision, to 70%, reveals Prime Terminal.

Of note, US equities – particularly tech stocks – are getting smashed, with the Nasdaq falling over 3% after tech stocks reported “disappointing tech earnings”, as read by a Bloomberg article.

In the UK, the budget was well received by investors. John Healey, the Finance Minister, presented the first budget of PM Andy Burnham administration, which was aligned with former Chancellor Reeves' fiscal rules.

Aside from this, the Bank of England is expected to raise the Bank Rate to 4%. The swaps market priced in a 100% chance, and if the BoE confirms the speculation, GBP/USD is poised to recover more ground, as the interest rate differential between the US and the UK would shrink to 0.

What’s in the calendar for the next week

Next week, the US economic docket will be packed. The ISM Manufacturing and Services PMI for October are eyed, along with a tranche of jobs data. Stats about the labour market include JOLTS, the ADP Employment Change, Initial Jobless Claims, and the highlight of the week, Nonfarm Payrolls.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3392. The pair holds a mildly bullish near‑term tone as it stands above the triple simple moving average cluster around 1.3380, suggesting underlying demand after reclaiming the 1.3251 former resistance trend line, now acting as structural support. Price is testing a downward trendline of resistance that breaks near 1.3391, while the Relative Strength Index (14) at 56.7 keeps momentum in constructive territory without yet signalling overbought conditions.

On the topside, a decisive move through the nearby trend‑line pivot at 1.3391 would expose higher resistance layers at the upward support‑turned‑resistance lines around 1.3656 and 1.3833. On the downside, initial support is seen at the 1.3392 area, followed by the triple simple moving average at 1.3380 and the reclaimed downward trend line around 1.3251, where a break lower would weaken the current bullish bias and open the door to a deeper corrective slide.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• Gold breaks below $3,900, reaching its lowest level in the last twelve months.
• Strong US growth and elevated Core PCE inflation pressure bullion.
• December Fed hike odds fall to 70% from 84% after Wednesday's decision.

Gold (XAU/USD) prices plunged below $3,900 on Friday, reaching a new year-to-date low even though expectations that the Federal Reserve (Fed) will tighten policy are trimmed by investors. At the time of writing, XAU/USD is down more than 3% and hit a daily low of $3,891, its lowest since October 28, 2025.

This week, US data has been solid, which is positive for the Greenback. The economy grew solidly, and jobs data showed a strong labor market. This, along with a red-hot Core PCE print, is a headwind for bullion, although US Treasury yields ease.

The rise of the US Dollar weighs on the yellow metal, which is denominated in Dollars. Also, higher Oil prices sparked by the escalation of the Middle East conflict increase the buck’s appeal.

Still, the Federal Reserve’s decision on Wednesday and the lack of forward guidance from Chair Kevin Warsh have made investors skeptical about an interest rate increase in December.

Prime Terminal is pricing in a 70% chance of a rate hike in December, down from 84% after the Fed’s meeting on Wednesday.

Gold 5-minute chart

(This story was corrected on October 30 at 15: 52 to say in the first bullet that Gold reached its lowest level in the last twelve months, not four months.)

• USD/CAD falls as rising Oil prices support the Canadian Dollar.
• Canada’s economy stalls in August for a second consecutive month.
• Persistent inflation concerns keep both the BoC and Fed open to further interest rate hikes.

USD/CAD trades on the back foot on Friday, even as the US Dollar (USD) recovers from earlier weakness. Rising Oil prices support the commodity-linked Canadian Dollar (CAD), outweighing softer-than-expected domestic growth data. At the time of writing, the pair trades around 1.3963, its lowest level since mid-September.

West Texas Intermediate (WTI) trades above $103 a barrel, climbing to its highest level since May amid concerns that the US could resume military strikes against Iran after next week’s US midterm elections. Higher Oil prices support the Canadian Dollar, as Canada is a major crude exporter.

Statistics Canada reported that the economy stalled in August for a second consecutive month. Monthly Gross Domestic Product (GDP) was unchanged, missing expectations for 0.2% growth.

Preliminary estimates point to a 0.1% contraction in September, as declines in manufacturing and in mining, quarrying, and Oil and gas extraction outweigh gains in utilities and wholesale trade. That would leave third-quarter growth at 0.3% QoQ, or roughly 1.2% annualised.

That suggests a softer pace than the Bank of Canada's (BoC) forecast of about 2% annualised growth, outlined in Wednesday’s monetary policy announcement. The BoC raised its policy rate by 25 basis points (bps) to 2.50% on Wednesday, its first hike since 2023, as higher energy costs linked to Middle East tensions add to inflation pressures.

Brown Brothers Harriman notes that the BoC struck a distinctly hawkish tone, stressing that “there could be a need to increase the policy rate further.” The bank points out that policymakers “lifted real GDP growth and headline inflation projections across the forecast horizon,” underscoring a more robust macro backdrop than previously assumed. What Haddad highlights as particularly significant is that the BoC now “sees headline CPI above its 2% target through Q4 2028.”

Across the border, the US Dollar weakened earlier on Friday as a technology stock sell-off fuelled demand for government bonds, pushing Treasury yields lower. Investors remain concerned about returns on heavy AI spending following disappointing earnings reports. However, the Greenback has since regained ground, with the US Dollar Index (DXY) recovering above 102.00 after falling to 101.59.

Persistent inflation and solid US growth continue to support expectations of additional Federal Reserve (Fed) interest rate hikes. The Fed held rates at 3.75%-4.00% on Wednesday, while September PCE data showed inflation remains above its 2% target. Traders price in around a 75% chance of a December rate hike, according to the CME FedWatch Tool.

DBS Group Research, led by Chief Economist Taimur Baig, expects Bank Negara Malaysia to keep its Overnight Policy Rate at 2.75% at the final 2026 meeting. The report highlights contained inflation within the official 1.5-2.5% range, strong GDP and export performance, and fuel subsidies limiting cost pass-through, suggesting monetary policy normalisation can be delayed until 1H27.

BNM cautious on inflation risks

"As written in our Macro Strategy note, BNM’s final meeting of 2026 on 5 November will be live and a close call, after the central bank opened the door to monetary policy normalisation during its September review."

"BNM Governor Abdul Rasheed Ghaffour reiterated in a Bloomberg interview on 15 October that the central bank has space to adjust policy if needed, as policymakers are vigilant about upside inflationary pressures amid strong economic growth. He also said that policy decisions will be data dependent."

"We think the latest available September data for the upcoming meeting suggest that policymakers can afford to be patient until 1H27, maintaining the Overnight Policy Rate at 2.75% for now."

"Inflation remained contained within the lower half of the official 2026 inflation forecast range of 1.5-2.5%, notwithstanding external price pressures and robust economic activity. Advance estimates showed GDP growth of 5.3% yoy in 3Q26, while exports jumped to a five-year high of 54.5% yoy in September, supercharged by the artificial intelligence boom."

"However, headline inflation eased slightly to 1.8% yoy in September 2026 from 1.9% yoy in August, while core inflation remained stable at 1.7% yoy. Fuel subsidies have limited the pass-through of upstream cost pressures to consumer prices, alongside stable domestic demand conditions."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The BoJ said underlying inflation had reached levels broadly consistent with its 2% price-stability target, while financial conditions remained accommodative and short-term real rates stayed low. It also raised its fiscal 2027 core CPI forecast to 2.6% from 2.4%, although the projection for fiscal 2028 remained at 2.0%. GDP growth forecasts were revised to 0.7% for fiscal 2026 and 0.7% for fiscal 2027.

The central bank said the balance of risks had shifted. Unlike in the past, when policymakers were primarily concerned about inflation undershooting the target, they must now guard against an overshoot. Risks from the Middle East conflict, stronger AI-related demand and FX volatility require close monitoring, while corporate funding demand is rising and lenders remain willing to extend credit.

Ueda said the BoJ would not wait passively for inflation to move higher but would adjust policy proactively if needed. At the same time, he stressed that the Bank could not yet declare victory because inflation must remain stable and sustainable around 2%. The timing and pace of future hikes will depend on the data, wage developments, financial conditions and the likelihood of the Bank’s economic outlook being realised. He gave no indication that increases would follow a fixed timetable.

Overall assessment

The BoJ delivered a hawkish hold. That said, it paused because it wanted more evidence that inflation and wages can remain sustainably around 2%, not because it has abandoned its tightening cycle. With one dissent for an immediate hike, an explicit warning about overshooting and a commitment to respond proactively, further rate increases remain firmly on the table.

Societe Generale economists Reo Sakida and Jin Kenzaki note that food inflation continued to ease in October's Tokyo CPI data, while oil-related goods inflation edged higher. They highlight that rising upstream food prices and energy costs have yet to fully feed through to consumer prices, leaving risks to goods inflation tilted to the upside in the coming months.

Goods prices and energy-driven pressures

"The contribution from goods prices was broadly unchanged at +1.61pp (vs +1.62pp). Food prices continued to slow, with their contribution falling to +0.74pp (vs +0.86pp). This partly reflects a high base in October 2025, while food prices have yet to reflect higher upstream costs."

"In recent months, leading PPI indicators and food CPI have diverged, with consumer prices yet to follow the rise in producer prices. We expect food CPI to catch up in the coming months."

"Inflation in oil-related goods accelerated slightly to +0.20pp (vs +0.18pp), remaining on an upward trend. The contribution from these items has risen sharply over the past four months, from +0.06pp in June. Consumer prices have yet to fully reflect the latest increase in energy costs due to the ongoing unrest in the Middle East."

"With the latest increase in energy costs not yet fully reflected in consumer prices, risks to goods inflation remain tilted to the upside."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• Gold falls to its lowest level since October 2025 as Fed rate hike bets weigh.
• The US Dollar and Treasury yields bounce off intraday lows, adding pressure on bullion.
• XAU/USD remains below its main daily moving averages, with weak momentum leaving room for further losses.

Gold (XAU/USD) plunges more than 2.5% on Friday, hitting fresh year-to-date lows. The metal struggles despite a risk-off mood driven by a technology stock sell-off over AI spending concerns. A hawkish Federal Reserve (Fed) outlook continues to act as a headwind, while investors may also be liquidating Gold positions to cover losses elsewhere. The decline leaves Gold on track to end the month in negative territory.

At the time of writing, XAU/USD trades around $3,911, its lowest level since October 2025.

Traders turn risk-averse as disappointing technology earnings renew concerns about heavy AI spending and whether those investments will generate sufficient returns. Investors move into government bonds, pushing US Treasury yields lower and dragging the US Dollar down. However, both have since recovered some ground, adding to the pressure on Gold.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.90, bouncing off an intraday low of 101.59 and pausing a two-day losing streak.

Adding to the cautious mood, reports of a major security breach at cryptocurrency exchange Binance weigh on digital assets and further unsettle investors. Gold has so far failed to benefit from the risk-averse mood, as traders focus on rising Oil prices amid Middle East tensions and their impact on inflation and interest rates.

West Texas Intermediate (WTI) trades above $103 a barrel, climbing to its highest level since May amid concerns that the US could resume military strikes against Iran after next week’s US midterm elections.

Higher energy costs risk keeping inflation above the Fed’s 2% target for longer. Data released on Thursday showed that September headline Personal Consumption Expenditures (PCE) inflation rose 0.5% MoM and 3.6% YoY, while the core measure increased 0.3% MoM and 3.1% YoY.

Traders price in around a 75% chance of a December rate hike, according to the CME FedWatch Tool, after the Fed left rates unchanged in October. Higher borrowing costs tend to weigh on Gold, as it offers no interest income.

Fed speakers return as Dollar faces AI jitters and midterm risks

Analysts at ING highlight that today’s end of the FOMC’s blackout period will bring comments from Thomas Barkin, Mary Daly and Alberto Musalem, but they “don’t feel there is much members can add at this stage, as markets are already pricing in a December hike and dovish comments look unwarranted given the latest energy price developments.” Against that backdrop, ING argues that “resurgent AI-related jitters and the upcoming US midterms are increasing downside risks for the Dollar,” even as a “still-hawkish Fed argues against major corrections.”

Technical analysis: XAU/USD eyes deeper losses below $4000

On the daily chart, XAU/USD has been making lower highs and lower lows since peaking near $4,700 in late August. The metal trades below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), keeping sellers in control. The Relative Strength Index (RSI) near 31 signals subdued buying interest, while the Moving Average Convergence Divergence (MACD) remains in negative territory, suggesting that downside pressure persists.

Initial resistance stands at $4,000, followed by $4,100, the 100-day SMA near $4,214 and the nearby 50-day SMA at $4,255. A stronger recovery could bring horizontal resistance at $4,400 into focus, followed by the 200-day SMA around $4,491.

On the downside, $3,900 offers immediate support. A break below this level could open the door to deeper losses toward $3,800.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• EUR/USD retreats from intraday highs as the Greenback regains ground.
• AI spending concerns unsettle investors, while persistent inflation keeps the Fed hawkish.
• Upbeat Eurozone GDP and hawkish ECB comments fail to provide lasting support to the Euro.

EUR/USD turns lower on Friday, giving up earlier gains as the US Dollar (USD) rebounds amid heightened volatility across financial markets. At the time of writing, the pair trades around 1.1140 after reaching an intraday high of 1.1214.

The US Dollar came under pressure earlier on Friday as technology shares fell for a second day, with investors still digesting disappointing earnings reports and questioning the returns on heavy AI investment. The sell-off drove demand for government bonds, pushing US Treasury yields lower and weighing on the Greenback.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, fell to 101.53 before recovering above 102.00. The US Dollar’s downside remains cushioned as higher energy prices linked to developments in the Middle East keep inflation risks elevated and the Federal Reserve (Fed) on a hawkish path.

The latest US PCE data showed that inflation remains stubbornly above the Fed’s 2% target, while stronger-than-expected third-quarter GDP growth gives policymakers more room to raise interest rates without immediately threatening the expansion.

However, traders fear that a slowdown in AI spending could weaken growth, even as the current investment boom adds to inflation pressures. Richmond Fed President Thomas Barkin said on Friday that “the AI investment surge has pressured supply chains, and that is inflationary.” He added that AI investment is creating demand-driven inflation, which the Fed can lean against.

Against this backdrop, traders continue to favour a December rate hike, with the CME FedWatch Tool putting the probability at around 75%. The US central bank held rates at 3.75%-4.00% on Wednesday, reaffirming its commitment to deliver price stability. Barkin also said that “the Fed has signaled a gradual approach.”

On the Euro side, upbeat growth data and hawkish European Central Bank (ECB) comments fail to provide lasting support. Preliminary figures released on Friday showed that the Eurozone economy expanded 0.4% QoQ in the third quarter, beating expectations of 0.2%, although slowing from 0.6% in the previous quarter. Annual growth rose to 1.3% from 1.2%.

After the ECB left interest rates unchanged on Thursday, policymaker Fabio Panetta said on Friday that “further increases in policy rates could prove necessary.” He added that the “outlook for prices is worsening,” with inflation seen above 2% for several quarters, and warned that the “increase in core inflation could become more pronounced early next year.”