Forex News
- Gold surges more than 1% to $4,148 despite hotter-than-expected US producer inflation.
- The 10-year Treasury yield tumbles 10 basis points, weakening the US Dollar.
- October Fed hike odds fall to 26% ahead of Warsh's speech.
Gold price climbs after another US inflation report on Thursday. Although the snapshot of US wholesale inflation came in hotter than expected, it was already priced in by investors, who trimmed their hawkish bets on the Federal Reserve (Fed). That produced a tailwind for the yellow metal, which benefits from lower interest rate environments. The XAU/USD trades at $4,148, up 1.1%.
Bullion rebounds as falling Treasury yields and reduced October Fed hike bets lift Bullion
Bullion prices recovered following a red-hot US Consumer Price Index (CPI) report on Wednesday, which prompted investors to increase hawkish Fed bets. Nevertheless, toward the end of the session, traders reduced those bets ahead of the release of Thursday's Producer Price Index (PPI).
The US PPI in September jumped above the 6% threshold, largely due to a rise in energy prices. The headline print exceeded estimates of 5.3%, surging to 6.3% YoY, while underlying inflation jumped from 4.8% to 5%, also above forecasts.
The Greenback and US Treasury yields initially steadied, before weakening, a tailwind for the precious metal. The US Dollar Index (DXY), which measures the performance of the buck’s value against a basket of six peers, edged down 0.4% to 102.11. At the same time, the yield of the US 10-year benchmark bond fell ten basis points to 5.089%.
After the data release, money markets now expect a 26% chance of a 25-basis-point rate hike by the Fed at the October 28 meeting, though for December they priced in a 92% chance.
In the meantime, Federal Reserve officials, led by San Francisco Fed President Mary Daly and Governor Michelle Bowman, stated that an immediate rate hike might not be needed.
US Retail Sales in September also cooled from 1.3% to 0.8% MoM but came in better than economists' projections of 0.3%. Further data showed that Initial Jobless Claims for the week ending October 10 came at 199K, below forecasts of 200K.
Investors are also looking for comments from Fed Chair Kevin Warsh at the International Monetary Fund's annual meeting, looking for clues ahead of this month's Fed meeting.
XAU/USD technical analysis: Gold jumps back above $4,100 but remains bearish
On Wednesday, Gold reached a weekly low of $4,073, but during Thursday’s sessionit reclaimed the $4,100 mark and is hovering near $4,150. Despite this, the Relative Strength Index (RSI) remains bearish but is showing signs that buyers are moving in.
For a bullish reversal, buyers need to clear $4,200 before testing the 100-day Simple Moving Average (SMA) at $4,245. Above lies the 50-day SMA at $4,334.
For a bearish continuation, the first support for XAU/USD is $4,100. A decisive breakdown will expose the October 14 low of $4,073, then the July 29 cycle low at $3,996, and finally the July 17 low at $3,959. Below that is the yearly low at $3,941.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- USD/CAD slides to a two-week low as falling US Treasury yields drag the US Dollar lower.
- Strong US economic data support expectations of another Fed rate hike by December.
- The Fed-BoC interest rate differential remains a key headwind for the Loonie.
USD/CAD loses nearly 0.30% on Thursday as falling US Treasury yields weigh on the US Dollar (USD). Concerns over debt-funded AI investments drive investors away from equities and into government bonds. The Greenback weakens despite stronger-than-expected US economic data reinforcing expectations of further Federal Reserve (Fed) interest rate hikes.
At the time of writing, the pair trades around 1.4189 after touching an intraday low of 1.4169, its lowest level in two weeks.
Data released on Thursday showed that the Producer Price Index (PPI) rose 1.3% MoM and 6.3% YoY in September, exceeding forecasts of 0.5% and 5.3%, respectively. Core PPI, which excludes food and energy, increased 0.7% MoM and 5% YoY, also beating estimates of 0.3% and 4.4%.
Retail Sales increased 0.8%, above the 0.3% forecast, following an upwardly revised 1.3% rise in August. Weekly Initial Jobless Claims came in at 199K, slightly below expectations of 200K and up from 198K the previous week.
The figures follow Wednesday’s Consumer Price Index (CPI) report, which showed headline inflation accelerating to 3.7%, above the 3.6% forecast, while core inflation rose to 2.6%, exceeding expectations of 2.5%.
Together, resilient consumer spending and sticky inflation, driven partly by higher energy prices linked to the war in the Middle East, strengthen expectations of another Fed rate hike before year-end. According to the CME FedWatch Tool, traders expect a pause in October following September’s 25-basis-point hike, while pricing in around a 90% chance of another increase by December.
Against this backdrop, the US Dollar may avoid a deeper sell-off, limiting the Canadian Dollar’s recovery. The Loonie also faces a headwind from Canada’s relatively low interest rates compared with those in the United States. The Bank of Canada (BoC) has kept its policy rate unchanged at 2.25% so far this year.
The bar for a rate increase remains high, as the inflationary impact of elevated energy costs has so far been limited, with underlying inflation near the BoC’s 2% target. A weak labour market and uncertainty surrounding US trade policies also give policymakers reasons to remain cautious, although markets anticipate a rate hike by December.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.53% | -0.59% | -0.09% | -0.34% | 0.77% | -0.37% | -0.85% | |
| EUR | 0.53% | -0.07% | 0.41% | 0.16% | 1.32% | 0.13% | -0.33% | |
| GBP | 0.59% | 0.07% | 0.48% | 0.23% | 1.37% | 0.21% | -0.27% | |
| JPY | 0.09% | -0.41% | -0.48% | -0.25% | 0.89% | -0.30% | -0.76% | |
| CAD | 0.34% | -0.16% | -0.23% | 0.25% | 1.12% | -0.02% | -0.51% | |
| AUD | -0.77% | -1.32% | -1.37% | -0.89% | -1.12% | -1.14% | -1.62% | |
| NZD | 0.37% | -0.13% | -0.21% | 0.30% | 0.02% | 1.14% | -0.49% | |
| CHF | 0.85% | 0.33% | 0.27% | 0.76% | 0.51% | 1.62% | 0.49% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Christopher Wong at OCBC Bank highlights that Monetary Authority of Singapore (MAS) kept its appreciating S$NEER policy stance unchanged after two prior tightening rounds, with output gaps and inflation forecasts suggesting less urgency for further moves. USD/SGD has been driven mainly by broader US Dollar strength and US yields, and Wong expects the pair to stay sensitive to external data, with MAS policy still offering underlying support for the Singapore Dollar.
MAS stance and USD drive USDSGD
"SGD weakened on Wednesday, though much of the move was driven by broad USD strength following stronger-than-expected US CPI rather than MAS’s decision to keep policy unchanged."
"MAS kept policy on hold after tightening twice in April and July. The accompanying statement pointed to a narrowing positive output gap through 2027, while the 2026 core inflation forecast range was narrowed to 1.5–2.0%. While inflation risks remain tilted to the upside, MAS appears to see less urgency for further tightening, with the cumulative effects of earlier policy adjustments and the existing appreciating S$NEER path providing sufficient monetary restraint for now."
"Importantly, a policy hold does not amount to easing, as the appreciating S$NEER stance remains intact. The on-hold decision saw a 20bp decline in our S$NEER to around 1.65% above the model-implied policy midpoint, from 1.85% before the announcement. We expect this deviation to hold largely steady after the adjustment."
"We expect USD/SGD to remain sensitive to broader USD sentiment in the interim. A sustained rise in USD could keep the pair supported, although MAS’s existing appreciating policy stance should continue to provide some underlying support for SGD."
"If the spike fails to build on momentum, then the pair may well revert back to consolidation in previous range of 1.2760 – 1.2840. But if price action is sustained, then bullish pressure may gather further momentum, and the pair may well see 1.28 – 1.29 range take hold."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The US Dollar (USD) has come under strong and renewed downside pressure on Thursday, briefly revisiting the area of multi-day lows amid the equally marked decline in US Treasury yields across the board and a generalised cautious tone amid market participants.
The US Dollar Index (DXY) has broken below the 102.00 support level, briefly slipping back to multi-day lows on the back of the widespread retracement in US Treasury yields. Closing the docket will be Export/Import Prices, Industrial/Manufacturing Production, Capacity Utilisation and Net Long TIC Flows. In addition, Fed Chair Warsh will speak at the IMF-World Bank annual meetings in Singapore.
The fresh weakness hurting the Greenback has lifted EUR/USD to weekly tops past the key 1.1200 barrier. clinched fresh 17-month lows near the 1.1100 level on the back of the strong upside momentum in the US Dollar. The final Inflation Rate in the euro area is due alongside Balance of Trade results.
GBP/USD has faded Wednesday’s deep pullback, managing to challenge the area of multi-day highs past 1.3270. Absent data releases on the UK docket, investors will closely follow remarks from the BoE’s Bailey.
USD/JPY has added to the ongoing correction, revisiting the 157.50 region in tandem with fresh USD selling. The weekly Foreign Bond Investment figures will be the sole data release on the domestic calendar.
AUD/USD has unexpectedly collapsed to three-month lows, piercing the 0.6900 yardstick in response to disheartening results from the Australian labour market report. Next of note for the Aussie will be Monday’s release of GDP data in China alongside Industrial Production, Retail Sales and the Unemployment Rate.
Front-month WTI futures have picked up extra pace, flirting with the area of four-week tops near the $97.00 mark per barrel amid steady uncertainty in the Middle East crisis along with supply concern fears.
Gold has traded with modest gains, always below the $4,200 mark per troy ounce in a context of fresh downside pressure on the US Dollar and a marked retracement in US Treasury yields across the curve.
- DXY round-trips Wednesday's CPI spike and drops to a six-session low.
- Money leaves AI stocks for Treasuries, and the 10-year hits a three-week low.
- Fed Chair Warsh speaks in Bangkok Friday, a day before Fed officials go quiet.
An artificial intelligence (AI) stock rout has pushed money into Treasuries, and the Dollar Index gave back its gain on Wednesday's Consumer Price Index (CPI) print. It dropped from Wednesday's high just under 103.00, its highest in 18 months, to just under 101.90, its lowest since October 7. A spike to about 102.25 on the producer price release was gone by the next five-minute bar.
Higher US rates raised the cost of the debt behind the AI data centre build, and bond yields for the most indebted builders hit records as their shares fell. State Street puts the hedged share of foreign-owned US stocks below 15%, against about 25% in April, so foreigners who sell US tech and take the money home sell Dollars. The rout reaches the Dollar twice, through the 10-year yield's fall to a three-week low and through that selling.
US producer prices rose 1.3% in September, above the 0.5% forecast, with energy accounting for about half. Retail sales rose 0.8%, but the control group rose 0.1% and gas stations took $4.1 billion of the $5.7 billion gain, on the same gasoline that lifted producer prices. The 10-year yield fell after the biggest jump in producer prices since March 2022.
On the calendar
Cleveland Fed President Hammack, who said on October 12 she'd rather hike in small steps quickly than wait, speaks at 20:30 GMT on Thursday. She didn't back a move at the October 27-28 meeting, and bets on a hike there are back near one in four, where they began the week. A December hike is priced near 90%.
Fed Chair Warsh speaks at the International Monetary Fund (IMF) meetings in Bangkok at 03:30 GMT on Friday, and Fed officials stop commenting publicly from October 17. September industrial production follows at 13:15 GMT, forecast up 0.4% after a flat August.
On the charts
The index broke above the 101.75-102.60 range it had held since October 5 on Wednesday's spike, and it's back in the middle of it near 102.10. The drop from that high to Thursday's low is about a quarter of the climb that started near 98.60 on September 9. Daily momentum has dropped out of overbought for the first time since late September.
DXY daily chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
