Forex News
UOB strategists Quek Ser Leang and Lee Sue Ann note that USD/SGD slipped overnight as Asian currencies stayed resilient and the SGD NEER held well above its mid-point. Their short-term view sees the pair confined to a tight intraday range, while the 1–3 week outlook still favours mild Dollar weakness toward key support levels unless resistance is broken.
Dollar softness capped by nearby support
"24-HOUR VIEW: We expected USD to “consolidate between 1.2785 and 1.2815” yesterday. We were incorrect as USD declined to a low of 1.2766 before recovering to close 0.21% lower at 1.2777. Despite declining, USD has not gained much momentum, and it is unlikely to weaken much further. Today, USD is more likely to trade in a range between 1.2765 and 1.2795."
"1-3 WEEKS VIEW: We turned slightly negative on USD on Monday (19 Oct, spot at 1.2800), indicating that “there has been a tentative buildup in downward momentum.” We highlighted that USD “may edge lower, but based on the prevailing momentum, any decline is unlikely to break the support at 1.2765.” Yesterday, USD fell to a low of 1.2766. Downward momentum has increased further, and USD could decline to 1.2750. Overall, only a breach of 1.2805 (‘strong resistance’ level previously at 1.2830) would indicate that the buildup in downward momentum has faded."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Elias Haddad at Brown Brothers Harriman reports that Bank Indonesia left its policy rate unchanged at 5.75% for a fourth meeting, even as IDR weakened slightly following MSCI’s downgrade consultation. BI expects the current account deficit to widen by 2026, increasing external funding needs, though ample FX reserves are seen as cushioning further Indonesian Rupiah weakness.
Rupiah pressured by external risks
"IDR weakened slightly. Bank Indonesia (BI) kept rates on hold at 5.75% for a fourth straight meeting. Markets were split, with some expecting a hike to support the currency after MSCI’s surprise downgrade warning last week heightened the risk of capital outflow."
"BI projects Indonesia’s current account deficit (1% of GDP in Q2) to widen to be between 1.6% and 2.4% of GDP in 2026. That raises external funding needs just as MSCI downgrade risks threaten capital outflows, keeping IDR under downside pressure."
"Still, BI’s ample FX reserves provide scope to cushion IDR weakness, particularly against a relatively modest spot turnover of around $7bn a day. BI FX reserves totaled $125bn in September (8.4% of GDP)."
"As a background, MSCI announced the launch of a consultation on a proposal to reclassify Indonesia’s stock index from Emerging Market to Standalone Market status, bypassing Frontier Market classification. MSCI will announce its final decision by the end of June 2027."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/MXN surges 1.49% to 18.70, approaching an 11-month high.
- Escalating US-Iran tensions trigger safe-haven flows into the US Dollar.
- Narrowing US-Mexico rate differential threatens Peso carry-trade appeal.
The Mexican Peso (MXN) weakened for the second straight day on Wednesday, down more than 1.49% against the US Dollar (USD), as the US-Iran conflict continues to underpin Oil prices and increases the chances that the Federal Reserve (Fed) might raise interest rates to control high inflation. USD/MXN trades at 18.70, near 11-month highs.
Mexican Peso suffers sharp losses as geopolitical risks and narrowing rate spreads fuel Dollar demand
An escalation of the US-Iran conflict seems to take its toll on the Peso. Recent news reported that a US official said the State Department is preparing to issue an order to depart for some personnel and family members at US embassies near the Persian Gulf.
Earlier, Iran’s Foreign Minister said that Iran is ready to give diplomacy another chance, but if the US chooses war, it'll result in an even greater strategic failure. In the meantime, Fars reported multiple explosions in Sirik, with their origin and nature unknown.
As tensions in the Middle East rise, market participants usually sell risk-sensitive currencies, such as the Mexican Peso, and flee towards the safety of the US Dollar.
Also, the narrowing interest-rate differential between the US and Mexico supports further upside in the USD/MXN pair. Towards the end of 2026, the rate differential will narrow, as the Fed is expected to hike in December, while the Bank of Mexico (Banxico) is projected to hold rates unchanged through 2026 and towards the end of 2027, as expected by analysts according to Citi Mexico Expectations Survey.
Mexico’s President Claudia Sheinbaum said a trade deal with the US was “very close”, though some issues remained unresolved. Her counterpart, US President Donald Trump, said that a “great trade deal with Mexico is very close.
The news is positive for Mexico: a swift resolution of trade and tariff issues with its largest trading partner, the US, could support the Peso. It follows an October 15 Wall Street Journal report that progress on tariffs and a trade deal had stalled.
Investors await Mexico’s October Retail Sales and Mid-Month Inflation data. In the US, the docket features jobless claims for the week ending October 17, S&P Global Flash PMIs, and the University of Michigan’s final October Consumer Sentiment reading.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades at 18.6908, extending its advance well above the latest triple simple moving average cluster around 17.5087, which now underpins a bullish near‑term bias. Price stands comfortably above the prior horizontal floor at 16.8866, while the Relative Strength Index (14) holds in elevated territory near 73, hinting at strong but increasingly stretched upside momentum as the pair pushes further away from its medium‑term averages.
On the downside, initial support appears at the triple simple moving averages near 17.51, followed by the more distant horizontal line at 16.89 if a deeper correction unfolds. While no nearby mapped resistance levels cap the move for now, the overbought RSI suggests that any further rally from current levels could be prone to consolidation or a pullback toward the 17.50 region before bulls attempt another leg higher.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Standard Chartered’s Dan Pan expects Banco de la República to deliver a final 25bps rate hike at the 30 October meeting, citing a positive output gap, high Oil prices and El Niño-related inflation risks. Pan notes sustained inflation and elevated expectations, but also highlights concerns that further tightening could drive Colombian Peso (COP) appreciation and deepen external imbalances.
BanRep weighs inflation against COP strength
"We expect Banco de la República (BanRep) to deliver a final 25bps hike at its 30 October meeting. The sustained inflation uptrend and elevated inflation expectations warrant continued tightening, in our view. Higher oil prices and possible disruptions from a ‘super El Niño’ are still skewing inflation risks upwards."
"The already-tight monetary stance and early signs of slowing growth may argue against consecutive hikes, but growth weakness likely reflects the temporary drag from the earthquake, while demand continues to overheat. Historically wide trade deficits in July and August may complicate the rate decision. Another hike could further drive currency appreciation, boost import demand and deepen external imbalances."
"Concerns about excessive COP strength could tilt the board majority towards a pause, similar to the July meeting. But the currency upside might be limited, as the market is already pricing in 25bps of hikes over the next three months (though this is not fully priced in for October). The currency is also 3% weaker than before the July meeting."
"BanRep may want to prioritise addressing domestic demand imbalances rather than temporary currency moves driven by rate differentials."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
MUFG’s Michael Wan notes stabilising global risk sentiment but highlights growing concerns over sustainability of the AI trade and its spillover to FX markets. He expects 2027 to be more challenging for risk assets, with Asia’s export growth rolling off. The bank currently prefers Asia Tech FX such as KRW, TWD and CNY, while favouring long positions in Dollar, JPY and CNH versus higher beta currencies.
Risk assets face tougher 2027 backdrop
"Risk sentiment in markets stabilised overnight, although under the hood there remains concerns around the sustainability of the AI trade, and with that the spillover to FX markets as well."
"From a macro perspective the best lead indicators we track are starting to show signs that Asia’s export growth is rolling off into 2027 but to be clear implied growth rates remain healthy into 2027 just not as high as what we’ve seen."
"Our best guess looking ahead is that 2027 could prove somewhat more challenging for risk assets, and in particular because we could also see the Democrats flip both the House and the Senate with the possibility of greater AI regulation and also a more divided and partisan push on fiscal policies."
"Meanwhile for Asia our FX relative preference remains for now for outperformance in the Asia Tech FX such as KRW and TWD and also CNY, with underperformance in the likes of INR and IDR due to domestic reasons as well."
"Overall, we could perhaps see greater instances of risk-off, with the likes of safe haven currencies such as JPY and CHF outperforming and so overall going long the Dollar, JPY, or CNH against higher beta currencies may make sense moving forward."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Citigroup Mexico released its survey, in which most private economists shared their expectations for Mexico’s economy.
Banxico to hold rates; USD/MXN forecasts upward revised
Regarding the Bank of Mexico (Banxico), the central bank is expected to hold rates at 6.50% “through the end of 2027, with few participants anticipating any move.” For the end of 2026, the median forecast puts Mexico’s main interest rate reference at 6.50%, but for 2027, estimates range from 6% to 7.25%.
Meanwhile, the USD/MXN exchange rate is expected to be at 18.20 towards the end of 2026, up from 18.00 in the previous survey. For 2027, the USD/MXN is expected to end at 18.60, “with expectations ranging from 17.00 to 19.80.”
At the time of writing, the exotic pair trades at 18.64, an indication that the carry trade continues to wane.
Regarding inflation, headline inflation is forecast at 3.90% towards year-end, unchanged from the previous poll. Underlying inflation is expected to decrease from 3.88% to 3.80%. For 2027, headline inflation was revised up from 3.83% to 3.86%, and the core reading is projected to remain unchanged at 3.80%.
Expectations for Mexico’s Gross Domestic Product (GDP) for the end of 2026 remained unchanged from the previous poll at 1.4%. For 2027, the median projection is for the economy to grow 1.8%, with projections ranging from 1% to 2.1%.
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- Gold gains 0.15% to $4,132 after bouncing from $4,106.
- Oil prices retreat as the US authorizes the offloading of blocked cargoes.
- October Fed hike odds remain at 14%, compared with 89% for December.
Gold price (XAU/USD) registers modest gains on Wednesday as Oil prices edge lower after the US authorized the offloading of cargo from some blocked vessels, triggering a downside reaction in Oil markets. At the time of writing, XAU/USD trades at $4,133, up 0.25%, after bouncing off daily lows of $4,106.
XAU/USD recovers as falling Oil prices and steady Treasury yields support bullion
Bullion’s advance remains contained by an improvement in market mood, despite ongoing developments in the US-Iran war. Newswires reported that the Pakistani Army chief Asim Munir met with Iranian officials in Tehran, where he presented a “compromise proposal,” while N12 news reported that Munir delivered the US “final warning” to Tehran, meaning that if Iran does not agree to a peace deal, attacks could resume.
Al Hadath reported that Iran's Secretary of the Supreme National Security Council, Mohsen Rezaei, informed Munir of Iran's explicit rejection of the American demands.
Meanwhile, good news emerged about the Russia-Ukraine war, as the Kremlin agreed that a new round of trilateral talks among the United States, Russia, and Ukraine may take place in Abu Dhabi.
In the US, the economic docket remained scarce, but market participants are getting a nod from US equities, which continued to extend their gains amid a surge in technology stocks driven by AI hype.
Steady US Treasury yields are supporting Gold's advance. The US 10-year benchmark note is yielding 5.111%, flat, while the Greenback registers minimal losses.
The US Dollar Index (DXY), which measures the buck’s performance against a basket of six currencies, is down 0.05% at 101.67.
Gold’s advance also lies on what the Federal Reserve (Fed) might do in the foreseeable future. Markets are pricing in a 14% chance of a 25-basis-point hike in October, but the odds for December remain high at near 89%, according to Prime Terminal.
Traders' eyes are shifting to next week's Fed meeting, along with the release of the US central bank's favorite inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index.
This week, traders are eyeing the release of US Initial Jobless Claims and the University of Michigan Consumer Sentiment for October.
XAU/USD technical analysis: Gold consolidates at around $4,100-$4,200
Gold price continues to trade sideways within the $4,100-$4,200 range for the sixteenth straight day. There is no clear bias, but the yellow metal has fallen nearly 26% from its record high near $5,600, indicating a mid-term downward trend.
Momentum, as measured by the Relative Strength Index (RSI), is bearish, but the index points modestly up, a mixed reading that suggests that further consolidation lies ahead.
Hence, XAU/USD’s path of least resistance is downwards. The first support is $4,100. A breach of the latter will expose the October 14 low of $4,073, followed immediately by the July 29 cycle low of $3,996. Below lies the July 17 low at $3,959 and the year-to-date (YTD) low at $3,941.
For a bullish reversal, XAU/USD faces resistance at $4,200, at the 100-day Simple Moving Average (SMA) at $4,235, at the 50-day SMA at $4,316 and at $4,500.
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.
The US Dollar (USD) has navigated an inconclusive range, struggling to reverse the weekly correction, while market participants continued to assess developments from the geopolitical landscape, all amid a steady pre-Fed lull.
The US Dollar Index (DXY) has traded in a tight range, alternating gains with losses in the 101.80-101.60 band. The usual weekly Initial Jobless Claims are due alongside the CB Leading Index.
EUR/USD has receded a tad, coming close to the 1.1200 contention zone amid a generalised lack of direction in the FX galaxy. Next of note on the domestic docket will be the flash Consumer Confidence in the euro area along with the speech by the ECB’s Panetta.
GBP/USD has managed to build on Tuesday’s gains, briefly surpassing the 1.3400 barrier, up modestly for the day. The CBI Business Optimism Index and CBI Industrial Trends Orders will be released across the Channel.
USD/JPY has come under further downside pressure, returning to the sub-158.00 region and adding to the previous day’s decline. The weekly Foreign Bond Investment figures are due In Japan.
AUD/USD has advanced for the fourth day in a row, further extending its recent break above the 0.7000 yardstick. Next on the Australian docket will be the advanced S&P Global Manufacturing and Services PMIs on October 23.
Front-month WTI futures have come under extra selling pressure, trading at shouting distance from the $96.00 mark per barrel, always amid steady hopes of a diplomatic end to the US-Iran confrontation.
Gold has managed to regain some composure and clinch acceptable gains, putting the $4,150 mark per troy ounce to the test once again. The yellow metal’s bounce has followed marginal losses in US Dollar and mixed US Treasury yields across the curve.
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