Forex News

Brown Brothers Harriman's Ellias Haddad expects Japan’s September Consumer Price Index (CPI) to edge higher but remain below the Bank of Japan’s (BoJ) 2026 projection, limiting pressure for rapid tightening. With markets pricing minimal odds of an October hike and higher probability for December, Haddad sees USD/JPY likely trading in a 155.00–160.00 range in the near term as BoJ normalization remains gradual.

Limited BOJ tightening caps Yen

"Japan September CPI (Friday). Headline CPI is expected at 2.1% y/y vs. 1.9% in August, core CPI ex. fresh food is expected at 2.1% y/y vs. 1.7% in August, and core CPI ex. fresh food & energy CPI is expected at 2.3% y/y vs.1.9% in August."

"The BOJ is unlikely to crank up the pace of tightening with headline and core CPI ex. fresh food & energy tracking below its 2026 projection of 2.5%. The swaps curve price in less than 5% odds of a 25bps BOJ rate hike to 1.50% on October 30, and 80% probability of a hike on December 18."

"That leaves USD/JPY likely to trade within a 155.00-160.00 range in the near term."

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

Standard Chartered’s Christopher Graham discusses how Prime Minister Burnham is reopening debate on the UK’s long-term relationship with the EU ahead of next month’s UK-EU summit. Options range from closer cooperation within Labour’s red lines to potentially rejoining the customs union, single market or EU. Public regret over Brexit and evolving EU industrial policy are strengthening arguments for reintegration.

Burnham reopens debate on EU relationship

"The UK’s long-term relationship with the EU has returned to mainstream discussion as Prime Minister Burnham seeks to lay out the options around next month’s UK-EU summit."

"These could range from closer cooperation within Labour’s manifesto red lines to rejoining the customs union, single market or ultimately the EU itself."

"The renewed focus reflects both economic and political considerations."

"Public regret over Brexit has grown, while the economic case for closer integration has strengthened as the EU’s industrial policy evolves."

"Burnham may also sense an opportunity to capitalise on other parties’ current divisions and bring back pro-European voters to Labour."

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

TD Securities economists Oscar Munoz and Eli Nir project that US headline Consumer Price Index (CPI) will rise 0.30% month-on-month in October 2026, slowing from September’s 0.65% gain, with gasoline and food still contributing. They expect core CPI to increase 0.21% and translate into a 0.24% rise in core Personal Consumption Expenditures (PCE) Price Index, as core goods and services inflation moderate and shelter cools.

TD sees softer but still solid CPI

"Following the release of the September CPI report, we are providing an early look into our October projection based on multiple assumptions which may evolve as the month progresses and more data becomes available — particularly for volatile segments like gasoline prices, hotel rates, and airfares."

"Headline inflation is expected to cool down in October, rising a still solid 0.30% m/m after a stronger 0.65% m/m September increase (CPI NSA index: 337.316 vs the market's current fixing at 337.250)."

"Our preliminary forecast for the October core CPI stands at 0.21% m/m (down from a firmer 0.33% gain in September), which would be consistent with a core PCE increase at 0.24%."

"Core goods prices likely lost some momentum on the back of a decline in used vehicle prices and cooling from apparel, recreation and IT goods. A pickup in household goods prices likely acted as a partial offset to the broad decline."

"Services inflation is projected to mean-revert following last month's broad-based increase. We look for shelter to throttle down — led by a reversal in OER — after an unexpected surge in the last report. Slowing inflation in transportation and recreation services is also expected to help tame price gains in the segment."

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

• Gold struggles to extend early gains as the US Dollar and Treasury yields regain some ground.
• Persistent inflation risks keep another Fed interest rate hike on the table before year-end.
• The technical outlook is mixed, with XAU/USD trading below its 20-day SMA while the MACD turns positive.

Gold (XAU/USD) struggles after opening the week higher. The US Dollar (USD) and US Treasury yields find some footing following last week’s pullback as traders assess the Federal Reserve’s (Fed) interest rate path and geopolitical developments. At the time of writing, XAU/USD trades around $4,161 after reaching an intraday high of $4,190.

The US Dollar and yields corrected sharply lower last week, driven by an AI-led equity sell-off that prompted traders to rotate into government bonds and safe-haven Gold. However, the metal’s gains were modest as expectations of additional interest rate hikes by the Federal Reserve (Fed) continued to weigh on the non-yielding metal while cushioning the downside in the US Dollar and Treasury yields.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.95 after falling to 101.58 last week. Weakness in the Euro (EUR) amid mounting fiscal concerns and political unrest in France provides additional support to the USD. Meanwhile, the benchmark 10-year US Treasury yield stands near 5.10%, recovering from Thursday’s low of 5.03%.

Elevated energy prices linked to the war in the Middle East continue to feed into inflation, with both September’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports coming in hotter than expected. This reinforces expectations of another rate hike by year-end as the Fed seeks to bring inflation back to its 2% target.

Analysts at Nordea say they are leaving their Federal Reserve outlook unchanged, stressing that “we keep our Fed forecast unchanged” and “still expect one more hike this year and another next year, with the risks tilted to the upside.” In their view, “monetary policy still does not look restrictive enough for an economy in this shape,” particularly as “inflation is still clearly above target, and the September CPI shows it moving up, not down.”

Against that backdrop, Nordea argues that “long-term yields above 5% are not particularly restrictive,” and concludes that “all in all, our view is unchanged. A strong economy and above-target inflation still call for tighter policy. Higher long-term yields do not change that call. They mostly reflect the same strong economy that keeps the Fed hiking.”

Recent remarks from Fed officials also suggest they remain open to further tightening, although they have not strongly signaled a hike at the October 27-28 meeting. Speaking in Bangkok on Friday, Fed Chair Kevin Warsh stuck to his stance of avoiding forward guidance, saying, “I don't prejudge meetings.” The CME FedWatch Tool shows traders pricing in a 15% chance of a rate hike this month and an 89% chance of a hike in December.

On the geopolitical front, Iran has renewed its offer to reopen the Strait of Hormuz within seven days if Washington accepts its conditions, although negotiations remain stalled over Tehran’s nuclear programme. Meanwhile, continued attacks on vessels in the Strait of Hormuz and fighting between Saudi Arabia and the Houthis keep supply risks elevated. However, US President Donald Trump’s decision to temporarily waive sanctions on Russia has raised expectations of increased energy supplies.

Technical analysis: Mixed technical signals keep bulls cautious below $4,200

On the daily chart, XAU/USD holds a mildly bearish near-term bias as price sits just under the 20-day simple moving average (SMA) embedded in the Bollinger Bands at $4,183. The failed recovery through this middle band hints that recent gains are losing traction, even as the Moving Average Convergence Divergence (MACD) indicator turns positive and extends higher, suggesting only tentative upside momentum, while the Relative Strength Index (RSI) near 45 keeps the broader tone slightly soft and the Average Directional Index (ADX) below 20 signals a weak underlying trend.

On the topside, the Bollinger middle band and 20-day SMA at $4,183 act as immediate resistance. A daily close above this pivot would be needed to ease the current downside pressure. On the downside, initial support is seen at the lower Bollinger Band near $4,053, where buyers may look to defend the recent range floor if the pullback accelerates.

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

• USD/CAD pauses its decline as softer Canadian inflation data limit gains in the Loonie.
• Softer core inflation reinforces expectations that the BoC will keep interest rates unchanged.
• Traders expect another Fed interest rate hike by December, keeping the US-Canada rate gap in focus.

USD/CAD pauses its decline on Monday after the Canadian Dollar (CAD) briefly strengthened to its highest level in a month at the weekly open. Softer-than-expected Canadian inflation data limit further gains in the Loonie, while the US Dollar (USD) stabilizes following last week’s correction from 18-month highs. At the time of writing, USD/CAD trades around 1.4091 after touching an intraday low of 1.4070, down nearly 0.35% on the day.

Statistics Canada reported that the Consumer Price Index (CPI) rose 0.1% MoM in September, following a 0.1% decline in August and falling short of the 0.2% increase expected. Annual inflation edged up to 3.1% from 3.0%, although it remained below the 3.2% forecast. The Bank of Canada’s (BoC) core CPI was unchanged on the month, while the annual rate eased to 2.2% from 2.4%.

The headline increase was largely driven by energy prices, which rose 19% YoY, including a 27.8% surge in gasoline prices. However, the details point to softer underlying price pressures, with the BoC’s preferred core measures hovering near the 2% target and suggesting limited spillover from higher energy costs into broader inflation.

The inflation report, combined with deteriorating labour market conditions after the Canadian economy shed 68,300 jobs in September, limits the scope for the Bank of Canada to raise interest rates. The central bank has kept its policy rate unchanged at 2.25% throughout this year.

In contrast, stronger-than-expected US inflation data released last week keep the Federal Reserve (Fed) on a tightening path as it seeks to return inflation to its 2% target. However, policymakers appear cautious about delivering back-to-back increases after raising the federal funds rate by 25 basis points in September to the 3.75%-4.00% range. The CME FedWatch Tool shows traders pricing in a 15% probability of a rate hike this month and an 89% chance of an increase by December.

The widening interest-rate gap between the United States and Canada could keep the US Dollar favoured over the Canadian Dollar. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.85 after falling to 101.58 last week.

Rabobank’s Global Daily notes Oil prices surged as reports of attacks on shipping in the Strait of Hormuz hit sentiment, before easing after President Trump waived Graham Act sanctions and tariffs on Russian energy. The analysts highlight that potential future sanctions on major buyers of Russian crude and gas could significantly disrupt trade and keep Oil volatility elevated.

Hormuz attacks and sanctions waiver

"Oil prices surged following further reports of attacks on shipping in the Strait of Hormuz, with Iran claiming that two tankers carrying up to 4 million barrels of crude were struck by marine mines."

"Following market close on Friday news emerged that President Trump is enacting a waiver of steep Graham Act sanctions and tariffs that were due to come into effect."

"Active Brent crude futures are down by $1.80/bbl at time of writing."

"Depending on how the calculation is performed, the top five buyers of Russian energy products are likely to include China, India, Turkey and the European Union."

"Of course, the imposition of Graham Act sanctions would also directly contradict recent efforts of the administration to reduce fuel prices ahead of the midterm elections."

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

Societe Generale strategists note USD/INR remains below 95 in Asia after a 1.9% rally last week, supported by Reserve Bank of India (RBI) measures for Oil importers and speculation curbs. They highlight reported US Dollar (USD) selling by state-run banks and warns RBI’s direct supply to Oil companies could be constrained. FX reserves have dropped sharply and Indian Rupee (INR) shorts in the Reuters poll are at multi‑month highs.

RBI tools, reserves and positioning

"The INR stays below 95 in Asia, after rallying nearly 1.9% last week thanks to the RBI measures (window for oil importers and curbs on speculation)."

"State-run banks were reportedly selling small amounts of dollar to nudge the pair below 95.0."

"Traders believe the RBI may turn more conscious of intervention size going forward as direct supply to oil companies could exhaust about $400m per day."

"FX reserves have come down by around $60bn in the last five weeks from the peak of $785.7bn."

"In the latest Asia bi-weekly Reuters FX poll, INR short positions rose to the highest level since early June."

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

Brown Brothers Harriman’s Elias Haddad expects UK September Consumer Price Index (CPI) and August labour data to be pivotal for Bank of England (BoE) pricing, with markets already discounting a 25 bps hike to 4.00% in November and 100 bps over twelve months. Haddad argues the BoE may not need to tighten as much, citing spare capacity, near-neutral rates, and likely fiscal tightening, which weighs on the British Pound (GBP).

UK inflation and wages in focus

"UK September CPI (Wednesday). Headline CPI is expected at 3.4% y/y (BoE projection: 3.0%) vs. 3.1% in August, core CPI is seen at 2.8% y/y vs. 2.6% in August, and services CPI is projected at 3.6% (BoE projection: 3.6%) vs. 3.4% in August."

"Ahead of that, the UK August labor market data is due Tuesday. The policy-relevant private sector regular pay growth is seen at 3.0% y/y vs. 2.9% in July, matching the BoE’s Q3 forecast and supporting Governor Andrew Bailey’s comments last week that there is little evidence yet of inflation becoming embedded in wage-setting."

"The swaps curve price in 90% odds of a 25bps hike to 4.00% on November 5 and 100bps of tightening in the next twelve months. In our view, the BoE may not need to tighten as much as markets anticipate, which is a drag on GBP. The UK economy is operating below capacity, the policy rate is near the top of the BoE’s estimated 2% to 4% neutral range, and fiscal policy will likely turn more restrictive following the October 28 UK budget."

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

Canada’s inflation picked up pace in September, with the headline Consumer Price Index (CPI) rising 3.1% from a year earlier, missing market expectations and up from the 3.0% increase recorded in August. On a monthly basis, prices rose by 0.1%.

Meanwhile, the Bank of Canada’s (BoC) core measure, which excludes more volatile components such as food and energy, rose 2.2% over the past year and increased by 0.1% compared with the previous month.

Looking at the BoC’s underlying key inflation gauges, Common CPI came in at 2.4% (from 2.6%), Trimmed CPI at 1.8% (from 1.9%), and Median CPI at 1.9% (from 2.0%). Together, they show an apparent impasse in price pressures in the last month.

According to the press release, "The Consumer Price Index (CPI) rose 3.1% year over year in September, following a 3.0% increase in August. The acceleration was led by higher prices for gasoline in September (+27.8%) compared with August (+22.8%). Excluding gasoline, the CPI rose 2.2%, after increasing 2.4% in August… Moderating the acceleration in the all-items CPI in September were smaller year-over-year price increases for travel tours and groceries compared with the previous month.”

Market reaction

The Canadian Dollar (CAD) builds on recent gains and motivates USD/CAD to hit fresh four-week lows below the 1.4100 yardstick on Monday, further extending last week’s leg lower.

This section below was published as a preview of the Canadian inflation report at 12:00 GMT.

• Canadian inflation is expected to rise in September.
• The underlying inflation gauges are also expected to gather some steam.
• The Canadian Dollar has been trading in a choppy fashion vs. the US Dollar.

Canada’s September Consumer Price Index (CPI) figures will be the focus of attention on Monday. Indeed, Statistics Canada data will provide markets with an update on price pressures ahead of the Bank of Canada’s (BoC) October 28 gathering, when officials are expected to keep the interest rate steady at 2.25%, broadly in line with analyst consensus.

This time, economists expect the headline CPI to pick some upside traction at 3.2% YoY and to rise by 0.2% on a monthly basis, up from the 0.1% contraction recorded in August. The BoC’s core measure (which strips food and energy costs) is forecast to rise by 0.2% inter-month, while remaining steady at 2.4% from a year earlier.

In the current context of heightened geopolitical volatility, crude Oil dynamics are likely to keep inflationary pressures anything but abated, while the lack of progress on the tariffs front is expected to also add to the sentiment.

Still around data, the BoC’s preferred gauges of underlying inflation, CPI-Common, Trimmed Mean, and Median, cooled somewhat in August to 2.6%, 1.9%, and 2%, respectively.

What can we expect from Canada’s inflation rate?

Inflation remained steady in August, although market participants mostly pencil in a pick-up in inflationary pressure due to the persistent tensions in the Middle East and the accompanying uptrend in crude Oil prices.

The BoC delivered a cautiously hawkish hold on September 2, leaving rates unchanged as economic slack and lingering trade uncertainty continue to argue for patience. Still, policymakers appear increasingly uneasy about the inflation outlook. Governor Tiff Macklem’s warning that several rate hikes could be needed suggests renewed tightening is firmly back on the table, particularly if Oil prices remain elevated or inflationary pressures begin to spread beyond energy.

So far, market participants expect nearly 23 basis points of tightening by year-end, which is roughly a quarter percentage point.

When is the Canada CPI data due, and how could it affect USD/CAD?

Markets will fully focus on Monday at 12:30 GMT, when Statistics Canada publishes September’s inflation prints. If inflation falls in line with the latest results from its US peer, bets on further rate hikes should likely increase, providing fresh legs for the Canadian Dollar (CAD).

Pablo Piovano, Senior Analyst at FXStreet, notes that USD/CAD has been navigating a downward path since hitting yearly tops near the 1.4300 yardstick earlier in the month.

Piovano points out that the pair remains well above its critical 200-day SMA in the 1.3880 zone, suggesting that further gains are possible in the near term.

If bulls regain control, the next key level is expected at the 2026 top at 1.4299 (October 9 and 14), before the March 2025 peak at 1.4542 (March 4). Further up emerges the 2025 ceiling at 1.4792 (February 3), Piovano adds.

“On the opposite direction, the resurgence of the bearish trend could prompt the pair to revisit its provisional support levels at the 100-day and 55-day SMAs at 1.4035 and 1.4000, respectively. South from here awaits the critical 200-day SMA," he adds.

“Momentum keeps favouring further gains,” he notes, signalling that the Relative Strength Index (RSI) hovers around the 54 level, while the Average Directional Index (ADX) beyond 37 suggests a solid trend.

• Silver holds modest gains as the US Dollar and Treasury yields stabilise following last week's decline.
• The technical outlook remains bearish as XAG/USD trades within a descending channel below key daily SMAs.
• The $55 level provides key support, while $60 acts as immediate resistance.

Silver (XAG/USD) kicks off the week on a bullish note but struggles to extend its gains as the US Dollar (USD) and US Treasury yields pause their decline following last week’s correction from recent highs. Expectations that the Federal Reserve (Fed) could deliver another interest rate hike before year-end also contain the upside for the non-yielding metal. At the time of writing, XAG/USD trades around $57.65, up nearly 1.15% on the day.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.95 after falling to 101.58 last week. Meanwhile, the benchmark 10-year US Treasury yield stands near 5.09%, recovering from Thursday’s low of 5.03%.

Technical analysis

From a technical perspective, Silver maintains a bearish structure within a descending parallel channel, forming a series of lower highs and lower lows since peaking near $71 in late August. The metal also trades below its key daily Simple Moving Averages (SMAs).

Momentum indicators remain bearish. The Relative Strength Index (RSI) near 39 and a negative Moving Average Convergence Divergence (MACD) reading reinforce prevailing downside pressure within a strengthening trend backdrop indicated by the Average Directional Index (ADX) above 26.

On the downside, the $55 psychological mark provides strong initial support, as buyers previously stepped in around this level. This area also aligns with the lower boundary of the descending channel. A decisive break below $55 could expose the $50 psychological level.

On the topside, initial resistance appears at the $60 psychological mark, followed by the 100-day SMA at $62.88 and the 50-day SMA at $63.80. Further gains could open the door toward the $68-$70 resistance zone, while the 200-day SMA near $72.08 remains the main longer-term barrier.

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