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Boston Federal Reserve (Fed) President Susan Collins said that “inflation is too high and appears to be broadening,” echoing earlier comments by Chicago’s Fed President Austan Goolsbee.

In an interview with Bloomberg TV on Friday, Collins commented that recent inflation data is “less promising than I hope” and that the path of monetary policy is clear. She said that the base-case scenario is for “careful adjustments” to monetary policy and that she doesn’t know how high rates should go.

Key takeaways:

Inflation is too high and appears to be broadening

Recent inflation data less promising than I hope

The future direction of monetary policy is clear

Labor market appears on SOLID footing

I would think some additional policy tightening warranted soon

Direction of policy clear, but pace and destination unclear

Possible the Fed may have to raise more than expected

Best case scenario is ‘careful adjustment’ of monetary policy

I don't want to say how high or fast rates should move

Many firms expect to pass on higher costs to consumers

Some firms see strong demand and expect to hire more people in key sectors

I'm seeing evidence financial markets stable and functioning well

• GBP/USD heads for 0.90% weekly loss after retreating from 1.3460.
• US headline PPI rises to 6.5% YoY, highest since 2022.
• December Fed hike odds approach 90% despite rising BoE tightening expectations.

The British Pound holds steady against the US Dollar on Friday, yet it’s poised to end the week with weekly losses of nearly 0.90%, trading at around 1.3230, up nearly 0.05% after the recent US producer inflation report reached its highest level since 2022.

GBP/USD pressured by US inflation data, Fed rate hike expectations

The US Producer Price Index (PPI) in October rose by 6.5% YoY, below forecasts but above September’s 6.3% print, largely due to higher transportation and warehousing prices. Core PPI, which strips items like food and energy, was unchanged from the previous month and aligned with estimates at 5%.

Federal Reserve (Fed) officials are crossing the wires. Chicago’s Fed President Austan Goolsbee warned that inflation data suggest it’s worsening, which “would make the Fed more aggressive.”

Money markets had priced in a nearly 90% chance that the Fed will increase rates by 25 basis points in December. However, there is a slim 10% chance that policymakers could aim for a 50-basis-point increase, according to the CME FedWatch Tool.

Recent US inflation data, hawkish comments from Fed officials and expectations that the Fed may embark on a tightening cycle pushed GBP/USD lower after it hit a weekly high near 1.3460.

In the UK, Gross Domestic Product (GDP) data matched estimates on Thursday, following last week’s Bank of England (BoE) rate hike, as market participants already expect another move in December, with odds at 85%.

Next week, traders are eyeing the release of the UK’s inflation data. In the US, the Fed parade continues, with Retail Sales and the minutes of the latest Federal Open Market Committee meeting grabbing the spotlight.

GBP/USD Price Forecast: Technical outlook.

In the daily chart, GBP/USD trades at 1.3236, retaining a bearish near-term bias as spot holds beneath the latest triple simple moving average (SMA) reading around 1.3341 and a series of former rising trend-line supports that now act as overhead resistance near 1.3360 and 1.3606. The Relative Strength Index (RSI) at 40.6 stays below the midline, hinting at persistent downside pressure rather than oversold conditions, while the broader pattern of descending resistance lines off 1.3869 and 1.3653 reinforces the impression that rallies remain capped within a corrective environment.

On the topside, initial resistance is located at the clustered 1.3341–1.3360 area, where the triple SMA aligns with the nearest reclaimed trend support, followed by the descending resistance levels around 1.3508 and 1.3544, ahead of the higher former support zone close to 1.3606. With no clear structural support levels defined in the immediate vicinity below 1.3236 by the current dataset, any sustained break under recent lows would leave the pair vulnerable to extending the decline into fresh territory, keeping sellers in control unless price can recover and hold above the 1.3340–1.3360 band.

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

• USD/CAD pulls back from recent highs as the Canadian Dollar benefits from firmer Oil prices.
• Fed rate hike bets keep the US Dollar near a 19-month high, cushioning the pair's decline.
• Traders await Canadian CPI data for clues on the BoC's December rate decision.

USD/CAD pauses a three-day winning streak on Friday as a rebound in Oil prices helps the Canadian Dollar (CAD) outperform its major peers. The pair’s downside remains cushioned by a broadly stronger US Dollar (USD), supported by an increasingly hawkish Federal Reserve (Fed) outlook.

At the time of writing, USD/CAD trades around 1.4248, near a one-month high, and remains on track for a second straight weekly gain. The US Dollar Index (DXY), which tracks the Greenback against six major currencies, trades near 103.33, its highest level in 19 months.

Canada is a major crude exporter, making the Canadian Dollar sensitive to Oil price swings. Crude prices have recovered from recent lows after US President Donald Trump said on Thursday that Washington did not need a deal with Iran to end the war.

Higher energy prices threaten to keep inflation elevated across major economies. The Bank of Canada (BoC) raised its policy rate by 25 basis points (bps) to 2.50% at its October meeting. The Governing Council said the increase was needed “to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services.” Traders now await Canadian Consumer Price Index (CPI) data on Monday for fresh clues on whether the BoC will raise rates again in December.

Economists at RBC Economics expect the BoC to continue tightening policy, noting that the central bank "is expected to hike three more times." RBC forecasts "another 25-basis-point increase in December and two additional hikes by mid-2027, bringing the overnight rate to 3.25%, provided the economy continues to improve."

On the US side, Producer Price Index (PPI) data released earlier in the day drew little market reaction. Headline PPI rose 0.3% MoM in October, below the 0.4% forecast and down from 1.4% in September. Annual producer inflation picked up to 6.5% from 6.3%, just below the 6.6% forecast. Core PPI rose 0.3% MoM and 5.0% YoY, both in line with expectations.

According to the CME FedWatch Tool, traders fully price in a 25 bps hike in December, with a 10% chance of a larger 50 bps move. Traders also expect another hike in January.

Chicago Fed President Austan Goolsbee said on Friday that inflation would determine the path of rates and that the Fed still “has work to do.” Earlier this week, Dallas Fed President Lorie Logan called for “at least two more 25-basis-point rate increases.”

• EUR/USD remains under pressure near its lowest level since May 2025.
• Fed officials signal additional interest rate hikes may be needed to bring inflation under control.
• ECB rate hike expectations offer limited support as markets favour further Fed tightening.

EUR/USD remains on the back foot on Friday as the latest US producer inflation data draws little market reaction. The pair hovers near its lowest level since May 2025 as bets on further Federal Reserve (Fed) tightening continue to support the US Dollar (USD).

At the time of writing, EUR/USD trades around 1.1050 and is on track for a third straight weekly loss. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades near 103.20, just below the 19-month high of 103.30 it touched earlier.

The Producer Price Index (PPI) rose 0.3% MoM in October, below the 0.4% forecast and down from 1.4% in September. Annual producer inflation picked up to 6.5% from 6.3%, just below the 6.6% forecast. Core PPI rose 0.3% MoM and 5.0% YoY, both in line with expectations.

The report did little to temper the rate hike bets that built this week after hotter-than-expected US consumer inflation and calls from Fed officials for further tightening. According to the CME FedWatch Tool, traders are fully pricing in a 25-bps rate hike in December and a small chance of a 50 bps increase. Markets also expect another hike in January.

Chicago Fed President Austan Goolsbee said on Friday that inflation would determine the path of interest rates and that the Fed still “has work to do” to bring it down. Earlier this week, Dallas Fed President Lorie Logan called for “at least two more 25-basis-point rate increases.” Before Tuesday’s CPI release, Fed Governor Christopher Waller said a 50-basis-point (bps) hike in December could be warranted if October core CPI rose around 0.3% or more. The reading came in at 0.3%.

Higher energy costs add to the risk that inflation remains elevated for longer. Oil prices have rebounded from recent lows after US President Donald Trump said on Thursday that Washington did not need a deal with Iran to end the war.

On the Eurozone side, preliminary data showed that Gross Domestic Product (GDP) grew 0.4% QoQ and 1.3% YoY in the third quarter, both in line with forecasts. Employment was flat on the quarter, missing expectations for a 0.2% increase, while annual employment growth slowed to 0.4% from 0.5%.

The European Central Bank (ECB) reiterated this week that it would set rates meeting by meeting as it assesses how higher energy costs feed through to wages and other prices. All 71 economists in Thursday’s Reuters poll expect the ECB to raise its deposit rate by 25 basis points to 2.75% in December. Most see it as the final hike of the cycle, while 25 expect another increase, most likely in early 2027.

Chicago Federal Reserve (Fed) President Austan Goolsbee said inflation has broadened into categories “where prices are not being driven by energy,” adding that the Fed “definitely has work to do” to retain its credibility.

In an interview with CNBC on Friday, Goolsbee added: “Inflation is rising and proving far more persistent than expected when it was just a matter of supply shocks.” He stated that “to the extent data” inflation is getting worse, pushing the Fed to be more aggressive on rates.

Key takeaways:

Says on CNBC inflation has spread into categories where prices are not being driven by energy

Need to be careful about assessing labor market impact on inflation, because wages are a lagging indicator of price pressures

Cannot look through inflation if demand is overheating; data center buildout is pushing up prices

Inflation is rising and proving far more persistent than expected when it was just a matter of supply shocks

The Fed “Definitely has work to do” to maintain its credibility

Services inflation and rising health care costs don’t feel like they will change quickly

Fed is trying to figure out the same thing as Bessent, which is persistence of inflation

Even if the price of oil drops rapidly, refining capacity remains “Problematic” and will keep diesel and jet fuel prices elevated

To the extent data suggest inflation is getting worse it would make the Fed more aggressive

Right now the Fed is not on track to hit 2% and the central bank needs to deal with that; need to ensure demand does not overheat

• Gold heads for a sharp weekly decline as aggressive Fed rate hike bets weigh on sentiment.
• US PPI rises less than expected in October, although annual producer inflation edges higher.
• Technical indicators remain bearish, with RSI below 50 and MACD in negative territory.

Gold (XAU/USD) trims its gains on Friday after briefly climbing above $3,900. The metal fell to $3,852 on Thursday, its lowest level since October 2025. Hawkish remarks from Federal Reserve (Fed) officials continue to fuel bets on an extended period of monetary policy tightening, overshadowing a mixed US Producer Price Index (PPI) report.

At the time of writing, XAU/USD trades around $3,880, down more than 4% so far this week.

The US PPI rose 0.3% MoM in October, below the 0.4% forecast and down from 1.4% in September. Annual producer inflation picked up to 6.5% from 6.3%, coming in below the 6.6% forecast. Core PPI rose 0.3% MoM, slowing from 0.8%, while the annual rate held at 5.0%. Both core readings matched expectations.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades little changed on the day near 103.19, just below the 19-month high of 103.30 it touched earlier. The index remains on track for a third straight weekly gain.

Dollar surges as Fed hike expectations drive short-end yields higher

Analysts at ING describe “a powerful, macro-driven rally in the dollar” this week, as markets rapidly reprice the Fed’s near-term path. They note that “short-dated US yields are close to 40bp higher since Tuesday morning, when the Fed's Christopher Waller mused over the need for a 50bp hike in December.” In the wake of those comments, ING highlights that “the market has since adopted the view that back-to-back December and January hikes look likely, while extending the full Fed adjustment from here to a full 85bp of tightening.”

A stronger US Dollar makes Gold more expensive for buyers using other currencies, while higher US Treasury yields raise the opportunity cost of holding the non-yielding metal.

Fed officials warn that inflation remains too high

Earlier this week, US Consumer Price Index (CPI) data showed headline inflation rose 0.4% MoM in October, above the 0.3% forecast. Core CPI, which excludes food and energy, rose 0.3% MoM, exceeding the 0.2% forecast.

Chicago Fed President Austan Goolsbee said on Friday inflation will determine the path of interest rates and agreed that the Fed still “has work to do” to bring inflation down. On Thursday, Cleveland Fed President Beth Hammack said inflation pressures were “moving in the wrong direction” and that the Fed needed to “move to a restrictive stance of policy” to bring inflation back to 2%.

San Francisco Fed President Mary Daly also said her “bias is that further tightening will be needed.” Dallas Fed President Lorie Logan said on Tuesday that the central bank needs “at least two more 25-basis-point rate increases” to bring inflation down.

Higher energy costs could keep inflation elevated as prospects for a deal to end the US-Iran war remain slim. West Texas Intermediate (WTI) crude jumped more than 3% on Thursday after US President Donald Trump said Washington did not need a deal with Iran to end the war.

Technical Analysis: Bearish bias persists below key daily SMAs

On the daily chart, XAU/USD is extending a bearish near-term bias as price holds below the 21-day, 50-day, and 100-day Simple Moving Averages (SMAs). The Relative Strength Index (RSI) at 37 stays below the midline, while the Moving Average Convergence Divergence (MACD) indicator is negative, both reinforcing a soft downside tone even as oversold conditions are not yet extreme.

On the topside, initial resistance emerges at the nearby horizontal barrier of $3,900, followed by the psychological $4,000 level, ahead of the 21-day SMA at $4,030, which caps any stronger recovery. Above there, the 50-day SMA at $4,154 and the 100-day SMA at $4,197 form a broader supply zone.

On the downside, Thursday’s low of $3,852 offers immediate support, followed by the $3,800 psychological level. A break below $3,800 could open the door to a deeper decline.

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

Producer inflation in the United States (US), as measured by the change in the Producer Price Index (PPI), climbed to 6.5% in October from 6.3% in September, the US Bureau of Labor Statistics (BLS) reported on Friday. This print came in slightly below the market expectation of 6.6%.

On a monthly basis, the PPI increased by 0.3% following the 1.4% (revised from 1.3%) increase recorded in September.

The PPI ex Food & Energy rose by 0.3% and 5% on a monthly and yearly basis, respectively, with both of these figures matching analysts' estimates.

Market reaction to US producer inflation data

The US Dollar (USD) Index edged lower with the immediate reaction to the PPI data and was last seen down 0.05% on the day at 103.10.

• EUR/GBP trims earlier gains as mixed Eurozone data limit the Euro's upside.
• Eurozone employment stagnates in the third quarter despite steady economic growth.
• Stronger UK growth and hawkish BoE expectations lend support to the Pound.

EUR/GBP pares back some of its earlier gains on Friday as mixed Eurozone data temper the Euro’s (EUR) advance against the British Pound (GBP). The pair is still slightly higher on the day and remains stuck in a tight range near its April 2025 lows. At the time of writing, EUR/GBP trades around 0.8355 after easing from an intraday high of 0.8363.

Preliminary Eurozone data showed that Gross Domestic Product (GDP) grew 0.4% QoQ and 1.3% YoY in the third quarter, both in line with expectations. Employment was flat on the quarter, missing forecasts for a 0.2% rise after a 0.1% increase in the previous quarter. Annual employment growth slowed to 0.4% from 0.5%.

The European Central Bank (ECB) reiterated this week that it would set rates meeting by meeting as it assesses how higher energy costs feed through to prices and wages. Its latest Economic Bulletin warned that the energy shock could push inflation higher and weigh on growth, while underlying price pressures have so far remained broadly stable.

All 71 economists in Thursday’s Reuters poll expect the ECB to raise its deposit rate by 25 basis points to 2.75% in December. Most see that as the final hike of the cycle, while 25 expect another increase, most likely in early 2027.

On the UK side, the Bank of England (BoE) raised its benchmark rate by 25 basis points to 4.00% earlier this month in an 8-1 vote, with external Monetary Policy Committee (MPC) member Catherine Mann backing a larger half-point increase.

BoE Deputy Governor Clare Lombardelli said earlier this week that the “balance of risks to inflation remains to the upside.” She said the “energy shock has become more persistent,” raising the “prospect of second-round effects.”

UK rate expectations support Pound, with BoE seen moving above neutral

Strategists at Brown Brothers Harriman note that UK rate markets remain firmly priced for further BoE tightening, with the swaps curve still implying “about 70% odds of a back-to-back 25bps hike to 4.25% on December 17, and a total of 85bps of tightening over the next twelve months.” They point out that such a path “would push the policy rate well above the BoE’s estimated 2-4% neutral range, raising the risk of a sharper growth slowdown ahead.”

Nonetheless, BBH argues that “for now, resilient UK economic activity reinforces the case for additional BoE hikes, which is GBP positive, especially against EUR.”

Preliminary data released on Thursday showed that UK GDP grew 0.7% QoQ in the third quarter, up from 0.5% in the previous quarter. Annual growth accelerated to 1.9% from 1.4%. Both readings matched expectations.

The Japanese Yen (JPY) remains under sustained pressure near multi-month lows as USD/JPY pushes above the 160.00 level for a second consecutive session, prompting official warnings from Japanese Finance Minister Katayama regarding one-sided and rapid foreign exchange moves. While resilient domestic economic activity — highlighted by projected Q3 real GDP growth of 0.8% QoQ saar — and above-target inflation bolster expectations for a 25 bps Bank of Japan (BoJ) rate hike in December, upward revisions to Federal Reserve (Fed) tightening expectations are counteracting domestic policy support. Institutional strategists at DBS Group Research, Societe Generale, and Commerzbank are assessing whether technical breakouts above 160.00 will extend near-term Yen weakness toward 162.20 or if Japan’s shifting interest rate landscape will anchor a longer-term JPY recovery.

DBS expects solid growth and above-target inflation to justify December BoJ rate hike

Economists at DBS Group Research forecast Japan’s third-quarter real GDP to expand by 0.8% QoQ saar, underpinned by AI-driven export demand and wage-led domestic consumption. Although October trade figures are projected to show the trade deficit widening to JPY1.2 trillion despite 17% YoY export growth, persistent above-target inflation driven by higher energy costs and a weak Yen should reinforce the case for a 25 bps Bank of Japan rate hike in December.

"Real GDP is expected to expand by 0.8% qoq saar in 3Q, broadly in line with trend... October trade data are likely to show export growth remaining solid at 17% yoy, but the trade deficit widening to JPY1.2tn... Overall, these data should reinforce the case for a 25bp BOJ rate hike at the December policy meeting, with growth around trend, inflation above target, and continued pressure on external balance/exchange rate."

Societe Generale warns USD/JPY breakout above 160 risks further Yen losses toward 162.20

Kenneth Broux and colleagues at Societe Generale note that USD/JPY has broken above the upper boundary of its narrow consolidation range and reclaimed its 200-day moving average, trading above 160.00 for a second straight day before verbal warnings from Finance Minister Katayama tempered gains. With initial support established at the 200-day SMA near 158.70, a sustained push higher exposes the Japanese Yen to key resistance levels at 160.40/160.70 and 162.20.

"USD/JPY witnessed a sharp rebound in September and evolved within a narrow consolidation. It has now broken out above the upper limit of this rang denoting possibility of extension in bounce. The next potential hurdles could be located at April high of 160.40/160.70 and projections near 162.20... The pair has reclaimed the 200-DMA. If a short-term pullback develops, the moving average at 158.70 could be an important support... USD/JPY: 159.66 - 160.19 overnight range. Spot trades through 160 for second day before traders pare back on warning by FinMin Katayama one-sided action and rapid forex moves. Support 158.70, resistance 160.70."

Commerzbank sees Fed-BoJ policy convergence capping near-term Yen gains before structural recovery

Volkmar Baur at Commerzbank argues that revised expectations for an additional Federal Reserve rate hike in March neutralize the currency impact of projected Bank of Japan rate increases in December and next spring. Because parallel tightening signals central bank convergence rather than divergence, Commerzbank sees limited near-term upside for the Japanese Yen — projecting only a modest move toward 155.00 by mid-2027 — before structurally more attractive domestic bond yields support a sustained longer-term JPY recovery.

"This reassessment of our US central bank expectations naturally impacts our forecast for the Japanese yen as well. Our economists no longer expect the US central bank to halt its interest rate hikes in December. Instead, they have factored in a further rate rise by the Fed in March... While we also expect the Bank of Japan to implement two further rate rises - in December and in spring next year - this no longer favours the Japanese yen. Rather, it signals a convergence between the central banks, which will likely have little impact on the currency... Consequently, we see little potential for the Japanese yen in the near future. In recent days, the yen has already weakened slightly due to rising market expectations regarding the Fed, and is currently trading just below USD-JPY 160. By the middle of next year, we now expect only a slight appreciation towards 155... In the longer term, however, we continue to expect the JPY to strengthen. The structural shift in Japan’s interest rate landscape means that domestic bonds are once again significantly more attractive, particularly for Japanese investors."

Key Takeaway

The Japanese Yen faces a tug-of-war between strengthening domestic macro fundamentals and persistent external rate pressures near the 160.00 level. While DBS Group Research emphasizes that trend GDP growth (0.8% QoQ saar) and sticky inflation firmly justify a 25 bps BoJ rate hike in December, Societe Generale warns that USD/JPY’s technical breakout above its 200-day SMA (158.70) leaves the Yen vulnerable to testing 160.40/160.70 and 162.20 unless official intervention halts the move. Ultimately, Commerzbank underscores that parallel Federal Reserve tightening into March will cap near-term JPY appreciation near 155.00, delaying a more durable Yen turnaround until higher Japanese bond yields attract sustained domestic capital inflows over the longer term.

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

• EUR/USD languishes a few pips above 19-month lows at 1.1045, on track for a 1.5% decline in the last three weeks.
• The US Dollar surges across the board as investors ramp up bets for a 50-basis-points Fed rate hike in December.
• US PPI data is expected to add to evidence of the elevated inflation pressures in the US economy

The Euro (EUR) extends losses on Friday as mixed Eurozone macroeconomic data failed to offset the broad US Dollar's (USD) strength, with US Treasury yields surging amid speculation of a large Federal Reserve (Fed) rate hike next month. The EUR/USD pair languishes a few pips above 19-month lows at 1.1045 as investors await US Producer Price Index (PPI) figures, due in a few minutes.

Producer inflation is expected to have accelerated to 6.6% year-on-year (Y-o-Y) in October, its highest level since 2022, in the aftermath of the COVID-19 crisis, up from 6.3% in September. Core inflation is expected to have remained growing at a steady 5% Y-o-Y rate, all in all showing levels that support calls for a tighter monetary policy.

Mixed Eurozone data fails to support the Euro

Preliminary data from the Eurozone released earlier in the day revealed that the region's economy grew at a steady 0.4% pace in the third quarter as measured by Gross Domestic Product (GDP), while the yearly growth maintained a steady 1.3% growth pace, unchanged from the previous quarter and in line with market expectations.

On the negative side, Preliminary Q3 Employment Change data showed a 0.1% rise against expectations of an improvement to 0.2% after another 0.1% uptick in Q2. Beyond that, September’s Trade Balance showed a EUR 10.3 billion deficit, an improvement from the EUR 16.6 billion trade gap posted in August but more than twice the EUR 4.5 billion shortfall expected by the market.

Dollar surges as Fed hike expectations drive short-end yields higher

Meanwhile, the US Dollar maintains a bid tone, buoyed by a sharp recovery in US Dollar yields, as Federal Reserve (Fed) policymakers open the door for an XL rate hike at its December meeting.

Analysts at ING observe that “This week has seen a powerful, macro-driven rally in the Dollar,” with the move closely tied to a sharp repricing of the Fed’s near-term policy path.

“Short-dated US yields are close to 40bp higher since Tuesday morning, when the Fed's Christopher Waller mused over the need for a 50bp hike in December,” according to ING experts, who also affirm that “the market has since adopted the view that back-to-back December and January hikes look likely,” to explain how swiftly rate expectations have shifted in favour of the Dollar.