Forex News

Rabobank's Senior Macro Strategist Bas van Geffen reports that the Bank of Canada raised rates in response to persistent energy-driven inflation. Governor Macklem framed the move as containing the risk of broader price pressures, with inflation projections lifted notably for this year and 2027. The policy statement signals that additional rate increases may be needed, and strategists expect another hike in December.

Energy shock drives BoC rate hike

"Elsewhere, concerns about the energy shock elicited a rate hike from the Bank of Canada, which had held off from responding to energy price shock until yesterday. Governor Macklem explained that this move is to contain the risk that persistently high energy costs spread more broadly into consumer prices: “the combination of higher-for-longer energy prices and increased pass-through adds to the persistence of inflation in the projection.”"

"Indeed, the Bank of Canada raised its inflation projections substantially. It now forecasts 2.9% inflation this year instead of 2.5%. Moreover, the central bank’s economists added a whopping 1.1 percentage points to their 2027 forecast, lifting the inflation estimate from 2.0% to 3.1%."

"Unsurprisingly, then, the policy statement closes with the comment that “there could be a need to increase the policy rate further,” which suggests that this may not have been a one-and-done hike. Our Canada strategists have therefore pencilled in another rate hike in December."

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

Christine Lagarde, President of the European Central Bank (ECB), explains the ECB's decision to leave key rates unchanged at the October policy meeting and responds to questions from the press.

This section below was published at 13:15 GMT to cover the European Central Bank's policy announcements and the immediate market reaction.

The European Central Bank (ECB) announced on Thursday that it left key rates unchanged following the October policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.65%, 2.9% and 2.5%, respectively.

In its policy statement, the ECB noted that energy prices in the Eurozone have continued to rise, posing upside risks to inflation outlook and downside risks to growth outlook.

ECB policy statement key takeaways

"While full effects of energy shock are still unfolding, underlying inflation has remained broadly stable so far and wages do not show a material response at this stage."

"ECB remains well positioned to navigate current elevated uncertainty."

"Will follow a data-dependent and meeting-by-meeting approach to determining appropriate monetary policy stance."

"In particular, ECB’s interest rate decisions will be based on its assessment of inflation outlook and risks surrounding it, in light of incoming economic and financial data, as well as dynamics of underlying inflation and strength of monetary policy transmission."

"ECB is not pre-committing to a particular rate path."

"Pandemic Emergency Purchase Programme (PEPP) APP and PEPP portfolios are declining at a measured and predictable pace, as Eurosystem no longer reinvests principal payments from maturing securities."

"ECB stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2% target in medium term and to preserve smooth functioning of monetary policy transmission."

Market reaction to ECB rate decision

EUR/USD came under modest bearish pressure with the immediate reaction to the ECB policy announcements and was last seen losing 0.4% on the day at 1.1110.

This section below was published as a preview of the European Central Bank's policy decisions at 08:00 GMT.

• The European Central Bank is expected to leave its benchmark interest rate steady at 2.50% after two rate hikes so far in 2026. 
• ECB President Lagarde is likely to hint at further monetary tightening, amid high price pressures.
• The Euro risk remains skewed to the downside amid high Oil prices and France jitters.

The European Central Bank (ECB) concludes its two-day monetary policy meeting on Thursday and will announce its decision at 13:15 GMT. The bank is widely expected to leave the interest rate on the Main Refinancing Operations (MRO) and the Deposit Facility unchanged at 2.65% and 2.50%, respectively, after having raised both of them by 25 basis points (bps) in September.

Update (11:20 GMT): The European Central Bank (ECB) announced on Thursday that President Christine Lagarde has informed the Governing Council that she will resign from her position on February 7, 2027.

Alongside the decision, the bank will release its Monetary Policy Statement, although the main focus of the event will be the press conference of ECB President Christine Lagarde, due at 13:45 GMT. Her comments to journalists will be carefully analysed to confirm market expectations of a third rate hike in December.

The Euro (EUR) is likely to draw some support from an unequivocally hawkish ECB message on Thursday, but the risk is strongly skewed to the downside. High Oil prices and investors’ concerns about France’s fiscal health are a heavy burden for the common currency, which might suffer a significant blow if Lagarde cools market hopes of a December hike.

What to expect from the ECB interest rate decision?

Markets are practically fully pricing in a monetary policy pause by the European Central Bank on Thursday. The ECB hiked rates by a quarter-point in September, following a previous hike in June, and they will want to assess the impact of the latest move before raising borrowing costs again – although the hot inflation pressures rule out any accommodative gesture.

Eurozone consumer inflation accelerated to a 3.8% year-on-year rate in September, the highest level in three years, up from 3.2% in August, fuelled by a nearly 19% yearly increase in energy prices. Oil, the main inflation driver, is about 50% above July lows and is likely to remain at high levels for some time, considering the uncertain and volatile situation in the Middle East. 

Core inflation, on the other hand, has remained steady, providing some leeway for the ECB. The bank has also denied evidence of strong second-round inflationary effects, which adds to the case for a pause, but the steep increase in headline inflation must have set policymakers on alert.

Yet inflation will not be the only topic at the ECB’s committee on Thursday. France’s surging borrowing costs have raised all the alarms in bond markets, pushing the spread with the German Bund to levels not seen since the 2009-2011 financial crisis. Against this backdrop, speculation about a bond-buying toolkit from the ECB, namely the Transmission Protection Instrument (TPI), has arisen, although the chances of it being activated this week are remote

All things considered, ECB President Christine Lagarde will have to fine-tune its language to make everybody happy. Keeping inflation anchored is the bank’s main target, and, in that sense, she will be forced to hint at further interest rate hikes in the coming months. That said, recent Eurozone data suggests that economic growth remains frail, while surging bond yields are already tightening financial conditions and easing pressure to raise interest rates immediately.

Analysts at Brown Brothers Harriman point out that October's ECB survey “showed a further net tightening of credit standards and weaker loan demand in Q3,” a combination that “is a headwind to Eurozone economic activity and challenges the nearly 75bps of ECB hikes priced by markets over the next twelve months.”

With futures markets pricing in more than 80% odds of a quarter-point rate hike in December, the risk is on a too-dovish Lagarde, which might further undermine speculative support for an already weak Euro.

How could the ECB meeting impact EUR/USD?

The Euro has been falling against its main peers over the last few weeks. Concerns about the potential consequences of Oil prices above $100 for a protracted period of time, coupled with France’s debt problems and social unrest spreading through the country, have spooked investors away from the common currency in October.

The EUR/USD pair has dropped nearly 5% over the last two months, hitting 17-month lows just above 1.1100; the EUR/GBP depreciated about 2.8% in the same period, while the EUR/JPY lost about 6% of its value.

These figures highlight the importance of a hawkish ECB stance at Thursday’s meeting. Monetary policy expectations are unlikely to lift the Euro on their own, but they might help to ease bearish pressure, especially if they are accompanied by a clear commitment to support France.

From a technical perspective, Guillermo Alcalá, FX Analyst at FXStreet, sees the Euro’s bearish cycle as overstretched, but observes that “the EUR/USD pair’s inability to return to the upper range of the 1.1200s keeps the negative trend fully in play.”

The daily chart shows early signs that bearish momentum is losing strength, but the Relative Strength Index (RSI) remains below 40, suggesting that bulls are absent, although the Moving Average Convergence Divergence (MACD) histogram has popped up above zero.

“Bulls should break the resistance area at 1.1255, which has been holding upside attempts in October, and shift the focus to the late-June lows, near 1.1325 to confirm a trend reversal,” says Alcalá.

Failure to do so, according to the FXStreet expert, would increase pressure towards the year-to-date low at 1.1113, and the 61.8% Fibonacci retracement of the June-August rally, at 1.1095, ahead of the late May 2025 lows at 1.1050.

ING’s Warren Patterson notes European natural gas prices have rallied, with TTF breaking above EUR100/MWh for the first time since 2022 as supply concerns intensify ahead of the 2026/27 winter. He highlights disrupted Persian Gulf LNG flows, Norwegian outages, colder weather forecasts and emerging demand destruction in power and industrial sectors, including reduced gas use by European chemical producers.

TTF rally driven by tightening supply

"European natural gas prices rallied further yesterday, with TTF settling 4.85% higher. Prices broke above EUR100/MWh for the first time since 2022. The market has moved higher, with little sign of imminent relief in Persian Gulf LNG flows."

"If anything, the outlook appears more dire amid the risk of renewed US strikes on Iran following the US midterm elections next week. Reportedly, QatarEnergy has extended its force majeure for several buyers until the end of the year. It means significant LNG supply disruptions are creeping deeper into the heating season."

"Furthermore, forecasts show colder-than-usual weather in Northwest Europe from next week, pushing heating demand higher. This will likely start leading to more sustained drawdowns in storage. EU gas storage is just shy of 75% full."

"The key question is whether these higher prices will destroy demand. In power markets, we’re already deep into the gas-to-coal switching range. Industrial demand also shows signs of softening."

"Unsurprisingly, given the move in natural gas prices, investment funds increased their net long in TTF by 14.3TWh over the last reporting week to 207.4TWh. Fresh buying drove the increase, with gross long rising by a little more than 20TWh, while gross short also edged higher."

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

• USD/JPY eases below 158.00 following US data releases but remains on track for a 0.7% weekly rally.
• US GDP Growth beat forecasts in Q3, but Personal Income and Spending declined.
• Markets are bracing for a hawkish hold at Friday's BoJ meeting.

The Japanese Yen (JPY) has trimmed some losses against the US Dollar (USD) on Thursday as softer-than-expected Personal Income and Spending data offset the enthusiasm about the bright Gross Domestic Product (GDP) reading. The USD/JPY pair has retreated to the 157.90 area from session highs just above 158.00, although it remains on track for a 0.7% weekly appreciation.

Data from the US Bureau of Economic Analysis revealed that US economic growth accelerated to a 3.4% annualised rate in the third quarter, up from the 2.2% growth in the previous quarter and beating expectations of a 3.2% increase.

Personal Income and Spending decline beyond expectations

Preliminary US Personal Consumption Expenditures (PCE) accelerated to a 3.6% year-on-year pace in September, from 3.4% in August. Personal Income, on the other hand, eased to 0.2% growth against expectations of a steady 0.3% increase, and Personal Spending growth fell to 0.5% from 0.9% in the previous month. These figures hint at softer inflationary pressures from consumer demand and endorse Fed Chairman Kevin Warsh's faith in the bank's monetary policy.

On Wednesday, Federal Reserve (Fed) left rates unchanged, as widely expected, with Warsh’s comments to the press considered tilted to the dovish side. Warsh showed confidence that the “monetary medicine is starting to work, and affirmed that the bank might achieve the 2% inflation target without having to “throw people out of work”

Warsh's comments were seen as a sign that the bank might not have to hike rates as much as the market expects in 2027 and triggered a moderate US Dollar pullback.

The focus now will shift to the Bank of Japan (BoJ), which will release its monetary policy decision during Friday’s Asian session. The BoJ is expected to keep interest rates on hold and hint at a further rate hike in December. Anything different than that would be disruptive. A rate hike is out of the question, and casting any doubt about the unwritten law of quarterly rate-hiking is likely to send the Yen tumbling.

• Gold loses ground as the Fed's hawkish stance weighs on the non-yielding metal.
• US PCE inflation matches forecasts, while GDP growth beats expectations.
• RSI and MACD signal weak momentum on the daily chart, while XAU/USD hovers above the lower Bollinger Band.

Gold (XAU/USD) extends its intraday decline on Thursday as the latest US Personal Consumption Expenditures (PCE) inflation data reinforce expectations of a Federal Reserve (Fed) rate hike in December after the US central bank held interest rates steady at its October meeting. At the time of writing, XAU/USD trades around $4,022, down 1.11% on the day.

The headline PCE Price Index rose 0.5% MoM in September, matching expectations and accelerating from August’s 0.3% increase. Annual inflation climbed to 3.6% from 3.4%, also in line with forecasts.

The core PCE Price Index, which excludes food and energy, increased 0.3% MoM, matching expectations and August’s reading, which was revised up from 0.2%. On an annual basis, core inflation rose to 3.1% from 3.0%, as expected.

The Federal Open Market Committee (FOMC) voted 10-2 on Wednesday to hold rates at 3.75%-4.00%. Governor Lisa Cook and Cleveland Fed President Beth Hammack favoured a 25-basis-point (bps) increase. While the pause was widely expected, the Fed’s patient approach in its fight against inflation despite mounting price pressures drew a mildly dovish initial reaction, lifting Gold while pushing the US Dollar and shorter-dated Treasury yields lower.

Still, the overall message remained hawkish. Chair Kevin Warsh reiterated his commitment to delivering price stability. Warsh noted that “while overall financial conditions are tighter, I’m unwilling and unable to call them tight.”

Analysts at Rabobank highlight that, despite leaving policy unchanged, the Committee “indicated a need for more information to help determine the appropriate policy stance.” Chair Warsh underscored that the “FOMC will receive a lot more data in the weeks through the next meeting,” reinforcing the data-dependent nature of the Fed’s reaction function.

Rabobank’s US strategist concludes that, “without providing forward guidance, Warsh essentially made the case for a rate hike in December,” suggesting that the door to further tightening remains firmly open.

The latest PCE data show inflation remains above the Fed’s 2% target, partly reflecting higher energy costs linked to Middle East tensions. Meanwhile, the preliminary estimate of third-quarter Gross Domestic Product (GDP) showed the US economy grew at an annualised rate of 3.4%, above expectations of 3.2% and up from 2.2% in the previous quarter.

Sticky inflation and stronger growth reinforce expectations of a December rate hike, with the CME FedWatch Tool showing an 83% chance of an increase. Those bets support the US Dollar and weigh on Gold, as higher interest rates increase the opportunity cost of holding the non-yielding metal.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, reverses the previous day’s decline and trades around 102.30. A firmer Dollar adds pressure on Gold by making bullion more expensive for buyers using other currencies.

Technical Analysis: XAU/USD holds above the lower Bollinger Band

On the daily chart, XAU/USD remains below the 20-day Simple Moving Average (SMA) at $4,112, which forms the middle Bollinger Band, keeping the near-term bias bearish. The Relative Strength Index (RSI) hovers around 38, pointing to weak buying momentum without reaching oversold territory. Meanwhile, the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting that sellers retain control.

On the upside, initial resistance stands at the 20-day SMA near $4,113, followed by the upper Bollinger Band at $4,230. A sustained move above these levels could open the door toward $4,400.

On the downside, the lower Bollinger Band near $3,995 and the previous support zone around $4,000-$3,950 are likely to keep further declines in check. However, a decisive break below this area could trigger a deeper decline.

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

Philip Wee at DBS Group Research expects the European Central Bank to keep its deposit rate unchanged while signalling a possible December hike. He suggests the ECB will use the breathing space from France’s rating affirmation to focus on its 2% inflation target. A balanced message from Christine Lagarde is seen stabilizing EUR/USD within the recent 1.11–1.13 range.

ECB stance anchors Euro trading band

"Today, the European Central Bank is likely to leave its deposit facility rate unchanged at 2.50%, while keeping the door open for a December hike."

"The ECB is likely to seize the breathing space afforded by Moody’s affirmation of France’s Aa3 sovereign debt rating to prioritise the return of inflation to its 2% target."

"ECB President Christine Lagarde will need to reinforce the ECB’s inflation-fighting credentials without appearing complacent about France’s fiscal vulnerabilities."

"A balanced message should help stabilize EUR/USD within this month’s 1.11-1.13 trading range."

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

• XAG/USD accelerates its downtrend and hits fresh 2026 lows below $52.50.
• Precious metals struggle on Thursday as markets bet on a Fed rate hike in December.
• The Fed left its monetary policy unchanged on Wednesday and reaffirmed its commitment to bring inflation to target.
  

Silver (XAG/USD) accelerated its downtrend on Thursday, with bears pushing against the floor of the yearly trading range at the $52.60 area. The XAG/USD pair has reached fresh year-to-date (YTD) lows at $52.34 so far, with precious metals struggling after Wednesday’s Federal Reserve (Fed) meeting reaffirmed hopes of further monetary tightening in December.

The Fed left its monetary policy unchanged as widely expected, awaiting further insight into the economic impact of September’s rate hike. Chairman Kevin Warsh refused to give any clue about December's meeting but reiterated the bank's commitment to get inflation down, which has been seen as a sign that more interest rate hikes are in the pipeline.  

Futures markets are pricing in an 83% probability of a quarter-point rate hike in December, practically unchanged after the Fed meeting and up from the 77% chance observed last week. This sentiment is keeping the US Dollar moderately bid, and precious metals on their back foot for now.

Technical Analysis: Next support is at the channel's bottom around $51.85

XAG/USD trades at $52.36 at the time of writing, keeping a bearish near-term tone as price holds just above the base of the downtrend channel from late August lows. Momentum indicators on the 4-hour chart support the bearish view, as the Relative Strength Index (14) hovers just above oversold territory, and the Moving Average Convergence Divergence (MACD) has slipped slightly below zero.

A clear break of the mentioned channel bottom, in the area of $51.85, would expose the $50.00 psychological level and the late November 2025 low, at the $48.65 area. Further decline is unlikely, considering the current tame US Dollar Index (DXY) upside traction.

On the topside, initial resistance remains at the previous YTD lows around $54.85, ahead of the confluence between the channel top and last week's trading top, in the $58.50 area.

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

UOB strategists Quek Ser Leang and Lee Sue Ann report that GBP/USD rebounded to 1.3339 after a deeper-than-expected drop, easing immediate downside pressure and pointing to intraday range-trading between 1.3295 and 1.3350. Over 1–3 weeks, they retain a negative bias, looking for a move toward 1.3265 as long as the pair stays below strong resistance at 1.3365, despite a longer-term view of potential rebound toward 1.3480.

Pound consolidates but medium-term risk lower

"24-HOUR VIEW: GBP fell more than we expected two days ago, reaching a low of 1.3307. When it was at 1.3310 yesterday, we highlighted the following: “Despite declining, GBP has not gained much momentum. That said, there is scope for GBP to break below 1.3290. The next support at 1.3265 is unlikely to come under threat for now. To keep the momentum going, GBP must hold below 1.3335.” GBP subsequently fell to a low of 1.3274 and then rebounded strongly, reaching a high of 1.3339 in the NY session. The immediate downward pressure has eased, and today, GBP is likely to range-trade between 1.3295 and 1.3350"

"1-3 WEEKS VIEW: We turned negative on GBP yesterday (28 Oct, spot at 1.3310). We indicated that “the rapid increase in downward momentum has shifted the bias for GBP to the downside, likely toward 1.3265.” We added, “the downside bias will remain intact as long as GBP holds below the ‘strong resistance’ level, now at 1.3365.” We continue to hold the same view."

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

Norman Liebke at Commerzbank reports that the Bank of Canada raised rates to 2.5% and signalled a data-dependent approach. Inflation is projected above target until mid-2028, with growth risks centred on US tariffs but supported by energy investment. Elevated Oil prices and potential spillovers into broader inflation could justify another BoC hike, underpinning the Canadian Dollar.

BoC hike keeps CAD underpinned

"The Bank of Canada raised interest rates to 2.5% yesterday. The move had been priced in by the market with an 80% probability, which is why the CAD barely moved following the decision. Although the Bloomberg consensus was not entirely unanimous, the latest estimates had also increasingly pointed towards a rate hike. Broadly speaking, Governor Macklem reiterated his more recent hawkish comments on the inflation outlook, while the inflation forecasts were, unsurprisingly, revised significantly higher."

"According to the new projections, the BoC now expects inflation to average (somewhat) over 3% in the fourth quarter of 2026 as well as in 2027 overall. Although the BoC does not publish quarterly forecasts for 2027 apart from the fourth quarter, it appears that inflation will only fall back below 3% in the second half of the year. The 2% inflation target is not expected to be reached again until mid-2028."

"Given currently high oil prices, however, there is a reasonable case that another rate increase could become necessary if the feared price pressures increasingly spill over into non-energy components. As things stand, oil prices look set to remain elevated for the time being as, according to the WSJ, there is a risk of another escalation by the US in the Middle East conflict following the midterms. Should this materialise, there is currently a strong case for another rate hike in December."

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

• Initial Jobless Claims went down to 194K vs. the previous week.
• Continuing Jobless Claims dropped to 1.701M.

According to a report from the US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance decreased to 194K for the week ending October 24. The latest print came in below initial estimates (199K) and was lower than the previous week’s 195K (revised from 194K).

Additionally, the 4-week moving average went down by 1.25K to 196.75K vs. the previous week’s revised prints (198K).

The report also indicated that Continuing Jobless Claims fell by 21K to 1.701M for the week ending October 17.

Market reaction

The Greenback regains fresh upside traction, reversing part of the previous day’s decline and trading with humble gains above 102.00 when tracked by the US Dollar Index (DXY) on Thursday.