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TD Securities’ Prashant Newnaha argues the Bank of Japan (BoJ) will likely keep raising its target rate roughly every quarter, with the next move expected in December. The BoJ now judges inflation to be at its 2% target and is shifting focus toward preventing an overshoot, while still characterizing financial conditions as accommodative and highlighting upside risks from wages, FX and AI-related demand.

BoJ at target but not at terminal

"Today's Statement reaffirms our view the BoJ is likely to continue raising the target rate roughly every quarter with the next hike to land in December. The Bank's focus has shifted from achieving the inflation target to preventing an overshoot and the forecasts reinforce this stance. The labour market, FX developments, and AI will be key factors shaping views on the terminal rate."

"So even with underlying inflation already at target, the Bank repeats what it said in July and September: “the Bank will continue to raise the policy interest rate and adjust the degree of monetary accommodation”."

"Very simply the BoJ is saying that labour market conditions have tightened by more than can be explained by the output gap. This will have implications for discussions about the neutral/ terminal rate. It's part of the reason why we are more hawkish than the street's forecast for the BoJ."

"However, with the tech sector coming under pressure in recent weeks, the clear risk to our 2.25% terminal rate forecast is a slowdown in AI spend. Such a slowdown would shave growth expectations and price pressures, lowering expectations for the terminal rate."

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

• Euro corrects from 1.1215 to near 1.1188 as the US Dollar regains ground.
• US GDP growth remained stronger-than-projected in the July-September period.
• Investors keenly await the flash German HICP data for October.

The Euro (EUR) gives back a majority of its early gains against the US Dollar (USD) on Friday. The EUR/USD pair corrects after failing to extend gains above 1.1215, but is still 0.11% higher at around 1.1188 in the European trade.

The pair retreats as the US Dollar claws back a majority of its early losses, as the combination of strong United States (US) economic growth and high inflation fears has strengthened the case of Federal Reserve’s (Fed) interest rate hike in December.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% down to near 101.72, but has recovered from its day’s low of 101.59.

On Thursday, the US preliminary Q3 Gross Domestic Product (GDP) data came in stronger-than-expected. Economists at Commerzbank highlight that the US economy “expanded strongly by 3.4% in the third quarter of 2026,” with the Q3 GDP advance estimate coming in at “3.4% qoq annualised (Bloomberg consensus: 3.2%) vs 2.2% in Q2.” They note that “private consumption was the main driver and expanded 3.8%, at the same pace as Q2,” while “business investment, particularly in IT,” also contributed significantly to the robust outturn.

Meanwhile, the US core PCE Inflation, which strips of volatile food and energy items, and is a Fed’s preferred inflation gauge, grew by 3.1% Year-on-Year (YoY), in line with expectations, and faster than the August reading of 3%.

On the Euro front, investors await the preliminary German Harmonized Index of Consumer Prices (HICP) data for October, which will be published at 13:00 GMT. The headline HICP growth in Germany is expected to have cooled down to 3.1% Year-on-Year (YoY) from 3.3% in September.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1199, keeping a mildly bearish near-term tone as it holds beneath the 20-period exponential moving average (EMA) at 1.1223. The pair’s inability to reclaim this short-term EMA suggests upside remains capped for now, while the Relative Strength Index (RSI) at 42 stays below the neutral 50 mark, hinting at subdued bullish momentum despite the recent stabilization off oversold readings.

On the topside, immediate resistance is located at the 20-period EMA around 1.1223, where sustained rejection would likely maintain the downside bias and favor further consolidation or a retest of recent lows. A clear daily close above this moving average would be needed to ease bearish pressure and open the way for a stronger corrective recovery, with momentum indicators then likely to strengthen in tandem.

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

• EUR/JPY ticks up to the 176.40 area, approaching weekly highs at 176.60.
• The Bank of Japan left interest rates on hold and cast doubt on a December rate hike.
• In Europe, German import prices and France's CPI beat expectations in September.

The Euro (EUR) extends gains for the third consecutive day against the Japanese Yen (JPY) on Friday, as investors ponder the cautious tone of the Bank of Japan’s (BoJ) monetary policy statement. The EUR/JPY trades at 176.40 at the time of writing, with the weekly high of 176.60 on sight, although it remains practically flat on the weekly chart.

The BoJ met expectations and left its benchmark interest rate on hold at 1.25% after its monetary policy meeting on Friday. The bank’s statement affirmed that underlying inflation has reached the 2% target and projected a median core CPI of 2.5% in 2026 and 2.7% in 2027.

The statement also reinforced the bank’s commitment to keep inflation anchored but showed a cautious tone on further interest rate hikes, conditioning them on developments in FX markets, AI and the Middle East. This stance was echoed at Governor Kazuho Ueda’s press conference, and triggered a slight JPY pullback against its main peers.

Inflation grows beyond expectations in Germany and France

In the Eurozone, the German Import Price Index beat expectations in September with a 2.1% advance and a 10.4% year-on-year gain from 1% and 8.3% respective increases in August.

France’s Consumer Price Index (CPI), released shortly afterwards, has shown a similar outcome, with monthly inflation growing 0.4% after a 0.3% contraction in August and the yearly rate accelerating to 3.8% from 3.4%, above the 3.6% market consensus.

On Thursday, the European Central Bank left interest rates on hold, as expected, and President Christine Lagarde announced an early exit in February 2027. The bank stated that energy prices keep boosting inflation and hampering economic growth but also observed that financial conditions "have tightened since the Governing Council's last meeting, which is likely to weigh on inflation and growth." The Euro edged up against its main peers following the event.

• GBP/JPY turns positive for the third straight day amid the post-BoJ downtick in the JPY.
• Firming BoE rate hike expectations underpin the GBP, contributing to the intraday rise.
• The mixed technical setup warrants some caution before placing aggressive bullish bets.

The GBP/JPY cross attracts some dip-buyers near the 210.60-210.55 region on Friday, turning positive for the third straight day and advancing to an over one-week high during the early part of the European session. Spot prices currently trade around the 211.25-211.30 area, up nearly 0.15% for the day, and remain on track to register modest weekly gains.

The Japanese Yen (JPY) gained briefly after the Bank of Japan (BoJ) ​left its main rate at 1.25% in a widely anticipated move, but left the door open for future hikes. The initial market reaction, however, turns out to be short-lived as BoJ Governor Kazuo Ueda refrained from offering fresh and definitive clues on the exact timing of the next move. The British Pound (GBP), on the other hand, continues to be underpinned by hawkish Bank of England (BoE) expectations, offering additional support to the GBP/JPY cross.

From a technical perspective, an intraday move beyond the 38.2% Fibonacci retracement level backs the case for additional gains. Moreover, oscillators show constructive momentum, with the Moving Average Convergence Divergence (MACD) staying in positive territory and the Relative Strength Index (RSI) hovering near 56. This improving tone, however, only hints at upside attempts rather than a clear trend shift, while the GBP/JPY cross remains below the critical 200-day Simple Moving Average (SMA).

Meanwhile, any subsequent move up might confront initial resistance at the 50% retracement at 212.20. This is followed by the 200-day SMA at 212.91 and the 61.8% retracement at 213.47, with higher barriers seen at 215.26 and 217.55, representing the 78.6% retracement of the recent swing. On the downside, immediate support emerges at the 38.2% retracement at 210.94, ahead of the 23.6% level at 209.38, with a deeper structural floor near the cycle low around 206.85.

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

GBP/JPY daily chart

ING’s Francesco Pesole notes that recent pressure on US tech stocks has supported Treasuries and modestly weighed on the Dollar, though underlying demand remains intact with hawkish US data and a still-alert Federal Reserve. He highlights US midterm election positioning as a key near-term risk, warning that a potential Democratic sweep could be mildly negative for the Dollar.

Election positioning tempers Dollar upside

"Fresh pressure on tech stocks has triggered some safe-haven buying in US Treasuries and weighed on the dollar as the front end followed lower. Moves are contained in both equities and FX, but it’s a reminder that the greenback still faces downside risks from oscillating AI sentiment."

"At the same time, whenever tech stocks don’t dominate headlines, the dollar has had no trouble attracting buyers, and we don’t think Wednesday’s FOMC changed that. Incidentally, yesterday’s US data was hawkish-leaning, with 3Q growth slightly above consensus at 3.4% and core PCE at 0.3% month-on-month in September – enough to keep the Federal Reserve on high alert."

"To us, the main risk for the dollar today is some precautionary unwinding of net-long positions ahead of Tuesday’s US midterm elections. A Democratic sweep is trading around 68% in prediction markets, and that could be seen as slightly negative for the US dollar from a few angles, from higher risk of government shutdown and gridlock on debt ceiling negotiations to potential damage to already shaky AI-related sentiment. We’d be cautious in chasing the USD upside in the next few days."

"Meanwhile, resurgent AI-related jitters and the upcoming US midterms are increasing downside risks for the dollar, in our view, although a still-hawkish Fed argues against major corrections."

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

• US index futures decline as weak earnings and forecasts from Amazon, Intel, and Alphabet dampened overall market sentiment.
• Third-quarter GDP grew 3.4%, beating estimates thanks to steady consumer spending and AI investment.
• The Federal Reserve held interest rates steady, with markets pricing a 75% chance of a December hike.

Dow Jones futures inches lower 0.05% to trade around 52,490, while S&P 500 futures fall 0.90% to around 7,680 and Nasdaq 100 futures decline over 2% to near 28,960.

US stock futures declined sharply as disappointing earnings reports from major technology companies weighed heavily on market sentiment. During pre-market trading, Amazon shares are down over 7% after the company missed both earnings and revenue estimates while announcing a significant increase in capital expenditures to accommodate rising demand for AI services. Intel sank nearly 23% following a weak quarter-ahead forecast, which it attributed to softening demand in the PC market. Meanwhile, SanDisk slipped nearly 4% despite delivering better-than-expected top and bottom-line results.

This pre-market weakness follows a losing regular trading session on Thursday, during which the tech-heavy Nasdaq Composite dropped 1.38%, while the Dow Jones Industrial Average and S&P 500 fell 0.25% and 0.3%, respectively. Alphabet, the parent company of Google, plummeted 12.6% after reporting softer search and advertising revenues, amplifying investor concerns about potential AI-driven disruptions to its core business.

The broader US economy showed resilient momentum, with US GDP growing at an annualized rate of 3.4% in the third quarter. This surpassed market expectations of 3.2%, fueled largely by consistent consumer spending and heavy investment in AI infrastructure. In light of these macroeconomic conditions, financial markets continue to anticipate further policy tightening. According to the CME FedWatch Tool, traders are pricing in roughly a 75% probability of a 25-basis-point rate hike in December, down slightly from 84.2% the previous day.

Norman Liebke at Commerzbank notes the ECB delivered a widely expected pause, while Christine Lagarde signalled that another rate hike in December remains possible and largely priced in. The Euro’s path beyond December will hinge on energy prices and potential second-round effects on wages and inflation expectations. Higher bond yields already tighten financing conditions, limiting scope for an extended hiking cycle.

ECB pause but December still live

"The ECB delivered the largely expected pause at yesterday’s meeting. However, ECB President Christine Lagarde made it clear that, in light of higher energy prices, the Governing Council had indeed discussed another rate hike. She also left the door open to a third rate increase this year in December."

"Our economists also expect a rate hike at the end of the year. However, the message contained little that was new for markets, as a December hike is already largely priced in and rate expectations changed only marginally following the meeting."

"For the euro, therefore, the more important question is likely to be what happens after December. Much will depend on energy-price developments."

"As things stand, the ECB will probably have to revise its oil and gas price assumptions from the September projections higher in December. The key question, however, is whether the energy-price shock also feeds through to underlying inflation."

"For the euro, the picture therefore remains mixed: if energy prices remain high and signs of second-round effects increase, the market could once again price in more rate hikes, benefiting the euro. If, by contrast, price pressures remain largely confined to energy, the bar for further rate hikes after December is likely to remain high and the euro’s additional upside potential limited, especially as energy inflation is likely to partly decline again next year due to base effects."

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

• Silver declined as persistent inflation and strong economic growth heightened expectations of a Federal Reserve rate hike.
• Higher September PCE inflation and 3.4% third-quarter GDP growth pointed to continued US economic resilience.
• Fed rates remained unchanged ahead of midterm elections, with markets pricing a 75% chance of a December hike.

Silver price (XAG/USD) extended its losses for the third successive day, trading around a fresh 11-month low of $50.69 per troy ounce during European hours on Friday. Silver prices faced downward pressure as persistent inflation and resilient economic growth in the United States (US) reinforced market expectations of a potential Federal Reserve interest rate hike later this year.

Inflationary pressures were highlighted by the US PCE price index, which increased by 0.5% month-on-month in September, its largest rise since March, pushing annual inflation up to 3.6%, while core PCE inflation climbed to 3.1% year-over-year.

Meanwhile, the broader economy demonstrated continued strength, with US GDP expanding at an annualized rate of 3.4% in the third quarter. This performance beat market forecasts of 3.2%, driven primarily by steady consumer spending and robust investment in AI-related sectors.

In response to these economic conditions, the Federal Reserve opted to hold interest rates steady on Wednesday ahead of the upcoming US midterm elections. Nevertheless, investors continue to price in a strong likelihood of future tightening.

According to the CME FedWatch Tool, traders are currently assigning approximately a 75% probability to a 25-basis-point rate hike in December, reflecting a moderate decrease from 84.2% recorded just a day prior.

Silver and PGMs lag as macro headwinds bite into demand

According to TD Securities, the post-FOMC landscape continues to highlight a divergence within the precious metals complex. The bank notes that "while gold remains fairly resilient post-FOMC, industrial precious metals are skewing to the downside, with silver and PGMs materially underperforming as macro headwinds and the prospect of tightening policy weigh on demand outlooks." This underperformance underscores the growing pressure on more industrially exposed metals relative to Gold as investors reassess the demand outlook under a potentially tighter policy regime.

Here is what you need to know on Friday, October 30:

Markets experience some heightened volatility early Friday as investors assess latest central bank decisions, macroeconomic data releases, while keeping a close eye on the action in US stock index futures. Later in the session, preliminary October inflation data from Germany, third-quarter Gross Domestic Product (GDP) readings from the Eurozone and third-quarter Employment Cost Index data from the US will be featured in the economic calendar. Moreover, policymakers from the European Central Bank (ECB) and the Federal Reserve (Fed) are scheduled to deliver speeches.

The ECB left its key rates unchanged following the October meeting on Thursday, as largely anticipated. During the press conference, ECB President Christine Lagarde said that the Governing Council debated whether a rate hike was appropriate, adding that the headline inflation is expected to remain "well above target" in coming quarters. After falling toward 1.1100, EUR/USD reversed its direction on Lagarde's hawkish tone and closed in positive territory above 1.1150 on Thursday. The pair holds its ground in the European morning on Friday but struggles to clear 1.1200 as the souring risk mood caps the upside.

Euro outlook hinges on ECB path beyond December

Analysts at Commerzbank note that the ECB “delivered the largely expected pause” at yesterday’s meeting, but stress that policy remains far from on autopilot. According to the bank, ECB President Christine Lagarde “made it clear that, in light of higher energy prices, the Governing Council had indeed discussed another rate hike” and “left the door open to a third rate increase this year in December.”

For the Euro, Commerzbank argues that “the more important question is likely to be what happens after December,” with the currency’s trajectory set to be driven less by the next meeting and more by the broader inflation backdrop. In their view, “much will depend on energy-price developments,” which will be crucial in shaping expectations for the ECB’s policy path.

Meanwhile, the data from the United States (US) showed that the Gross Domestic Product (GDP) grew at an annual rate of 3.4% in the third quarter, surpassing the market expectation for an increase of 3.2%. Additionally, the core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, increased by 3.1% on a yearly basis in September to match analysts' estimate.

Google parent Alphabet shares plunged more than 10% on Thursday and touched its weakest since April after the company noted that artificial intelligence summaries on search were hurting the ad revenue. Moreover, the company reported a negative free cash flow of about $9 billion. In the European morning on Friday, Nasdaq Futures are down about 2% on the day, the US Dollar Index stays flat near 101.80, while the benchmark 10-year US Treasury bond yield remains virtually unchanged on the day below 5% after falling more than 1% on Thursday.

During the Asian trading hours, the Bank of Japan (BoJ) announced that they left the short-term interest rate unchanged at 1.25% following the conclusion of its two-day monetary policy review meeting. In the post-meeting press conference, BoJ Governor Kazuo Ueda repeated that they will continue to raise the policy rate and adjust the degree of monetary easing in response to the economic activity, prices and financial condition developments. After falling toward 157.00, USD/JPY regained its traction and was last seen trading virtually unchanged at 157.55.

FXS Speechtracker scored Ueda's comments at 7.2/10, slightly below the historic 7.7/10 baseline, and signaling a mildly less confident tone despite clear acknowledgement that underlying CPI inflation is now broadly consistent with the 2% target. The commitment to continue raising the policy rate and to adjust the degree of monetary easing as economic activity, prices and financial conditions evolve marked a modestly hawkish tilt, tempered by repeated emphasis on accommodative financial conditions and government support for growth.

After posting marginal gains for three consecutive days, Gold came under heavy bearish pressure on Thursday and lost more than 1%. The precious metal continues to push lower and was last seen trading near $3,980, down about 1% on the day.

Gold rebound stalls as OCBC flags limited fresh buying and risk of renewed lows

Strategists at OCBC note that gold’s recent recovery has "despite some easing in US Treasury yields and oil prices.” They highlight that “more notably, Gold’s inability to benefit from lower yields suggests that fresh buying interest remains limited, even as earlier liquidation pressures may be easing.” OCBC adds that “renewed weakness in technology equities also weighed on sentiment as it raises concerns over another bout of broader deleveraging.” Against this backdrop, the bank says, “we remain cautious near term, with further consolidation or another test of recent lows not ruled out,” stressing that Friday’s Employment Cost Index and “the direction of equities, yields and USD will be important to watch.”

GBP/USD holds its ground and trades in positive territory near 1.3400 after gaining about 0.4% on Thursday.

United Overseas Bank strategists Quek Ser Leang and Lee Sue Ann note that AUD/USD has reversed a recent overbought advance, breaking strong support and eroding prior bullish momentum. The pair is now expected to consolidate within a defined range, with short-term risks tilted slightly lower, while medium-term signals still point to broader downside potential toward previous multi-month lows.

Australian Dollar seen range-bound

"24-HOUR VIEW: After AUD rose more than we expected two days ago, we highlighted the following yesterday: “AUD rose more than expected to 0.7065 before settling at 0.7055 (+0.42%). While conditions are overbought, AUD could test 0.7070 today. Given the overbought conditions, a continued rise above this level appears unlikely.” While AUD subsequently rose to 0.7068, it then fell sharply to 0.7015. AUD closed on a soft note at 0.7028 (-0.38%). The slight increase in downward momentum suggests the bias is on the downside today. That said, any decline should stay within a 0.7005/0.7050 range."

"1-3 WEEKS VIEW: We turned positive on AUD in the middle of last week. Yesterday (29 Oct, spot at 0.7025), we highlighted that “while the renewed momentum suggests AUD could move above 0.7070, it is too early to tell whether it can strengthen sufficiently to carry AUD toward 0.7095.” However, after rising to 0.7068, AUD fell and broke below our ‘strong support’ level at 0.7020. Upward momentum has faded, and the outlook for AUD is neutral now. From here, we expect it to trade in a range of 0.6985/0.7070."

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