Forex News

Here is what you need to know on Monday, October 19:

The trading action in financial markets remain subdued at the beginning of the new week, with major currency pairs staying close to the previous week's closing levels. In the second half of the day, September Consumer Price Index (CPI) data from Canada will be featured in the economic calendar. Additionally, the Bank of Canada (BoC) will publish its Business Outlook Survey.

The US Dollar (USD) weakened against its major rivals heading into the weekend and the USD Index closed in negative territory to snap a four-week winning streak. Federal Reserve Chair Kevin Warsh's comments caused investors to refrain from pricing in a potential interest rate increase in October and triggered a USD selloff. In the European mornin on Monday, the USD Index stays flat below 102.00, while US stock index futures rise between 0.4% and 1.3%, reflecting a risk-positive market atmosphere.

Fed seen staying patient as policymakers weigh tighter financial conditions

Economists at Deutsche Bank continue to expect the Fed to stay on the sidelines at the upcoming October FOMC, saying their base case is that “the Fed [will] remain on hold at next week’s October meeting, allowing policymakers more time to assess the underlying inflation trend and the tightening in financial conditions from the recent rise in global yields.” They stress that “there is plenty for the Fed to consider even though officials are now in blackout,” with the pause framed as an opportunity to evaluate how higher market rates are feeding through to the real economy and price pressures.

During the early trading hours of the Asian session, the data from China showed that the Gross Domestic Product (GDP) expanded at an annual rate of 4.5% in the third quarter. This reading followed the 4.3% growth recorded in the second quarter and came in better than the market expectation of 4.4%. Additionally, Industrial Production increased by 5.5% on a yearly basis in September, while Retail Sales rose by 1.1%. Both of these figures surpassed analysts' estimates.

AUD/USD gathers bullish momentum on Monday and trades near 0.6980, rising about 0.5% on a daily basis. Reserve Bank of Australia (RBA) Assistant Governor Chris Kent said on Monday that a reasonable indication is that neutral rates are increasing domestically and globally but added that it’s difficult to pinpoint the neutral rate amid high uncertainty.

US President Donald Trump said he cut a diesel export deal with Russia and blocked numerous sanctions because he doesn’t want to drive Vladimir Putin away from peace talks with Ukraine, Bloomberg reported on Sunday. In the meantime, a secretary of Iran’s Supreme National Security Council, Mohsen Rezaei, warned on Sunday that Tehran has prepared a new retaliation plan for any renewed US-Israeli attack, as maritime authorities reported several separate attacks on commercial vessels around the Strait of Hormuz, as per CNBC. After rising for seven consecutive trading days, crude Oil prices correct lower on Monday, with the barrel of West Texas Intermediate (WTI) losing more than 2% on the day.

USD/JPY stays quiet in the European morning on Monday and fluctuates in a tight channel at around 158.00. Earlier in the day, Bank of Japan (BoJ) Governor Kazuo Ueda said that anchoring core inflation near 2% grows more crucial and argued that long-term interest rates likely to rise steadily with policy if they raise the short-term policy rate.

EUR/USD stays in a consolidation phase at around 1.1200 after ending the previous week marginally higher.

GBP/USD benefited from the broad-based USD weakness and gained 0.7% last week before stabilizing above 1.3300 on Monday.

USD/CAD remains under bearish pressure after posting large losses on Thursday and Friday and trades at its lowest level in nearly a month below 1.4100. Investors expect the CPI inflation to rise by 0.2% on a monthly basis in September following the 0.1% decline recorded in August.

Gold edges higher toward $4,200 in the European session following the volatile action seen in the previous week.

Danske Bank’s Danske Research Team highlights that US equities saw a sharp AI-related selloff on Friday, with energy outperforming technology by more than 4 percentage points. The SOX index logged an eighth straight decline, its longest losing streak since 2006, underscoring concentrated weakness in AI names. Early Monday, sentiment looks more constructive with US futures, led by Nasdaq, trading higher.

AI-driven tech weakness contrasts firmer energy

"Friday's selloff during the US cash session reflected a further unwind of the AI trade, compounded by a rising oil price. Yet the headline indices masked a much more mixed market: most sectors and regions finished higher, while energy outperformed tech by more than 4pp on Friday alone."

"The SOX index nevertheless recorded its eighth consecutive decline, its longest losing streak since 2006, highlighting how heavily the recent weakness has been concentrated in the AI trade."

"Friday also brought the first clearer signs of broader risk aversion, with VIX rising towards 20. Sector performance reinforced that message. Consumer staples and discretionary have often moved together this year as inflation, energy prices and rates shaped the consumer outlook."

"On Friday, however, staples materially outperformed discretionary, a more conventional macro slowdown pattern. Sentiment is more constructive this morning. Although Asia and European futures retain some catch-up to Friday's US weakness, US futures are materially higher, led by Nasdaq."

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

OCBC’s Sim Moh Siong and Christopher Wong argue that Artificial Intelligence (AI) remains a net tailwind for the US Dollar (USD), supporting US growth, yields and asset returns, but recent AI financing concerns have exposed two-way risk. They see the latest USD softness as temporary and still expect the Dollar to stay supported as long as US AI capex and growth remain durable.

AI tailwind but rising downside risks

"AI has been an important USD tailwind. Strong investment has supported US growth and equities, while adding to inflationary pressures, financing demand and Treasury yields. These forces have reinforced the relative appeal of US assets and the USD."

"The USD does not always benefit from risk aversion. When the shock originates in the US, as with recent AI financing concerns, weakness in US assets can overwhelm the USD’s traditional safe-haven appeal."

"There is also an FX hedging angle. If overseas investors become less confident that the USD will hedge declines in their US equity holdings, they may increase FX hedge ratios. That could reinforce USD selling when US equities come under pressure."

"The broader message is about two-way risk. The AI boom remains supportive of the USD, but recent price action shows that the relationship can reverse when the AI narrative wobbles. The USD can still benefit from AI, but it is no longer a one-way trade."

"For now, however, we expect the USD to remain well supported. We see the latest AI jitters as a bump, not a break in the investment cycle. As long as US AI capex remains durable and continues to support growth, yields and asset returns, AI should remain a net tailwind rather than a headwind for the USD."

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

• XAG/USD maintains a moderately bullish tone, but bulls are failing to find acceptance near the $58.00 area.
• Precious metals are drawing some support from the US Dollar's weakness on Monday.
• Market expectations that the Fed will stand pat at next week's meeting are weighing on the USD.

Silver (XAG/USD) has entered the week with a moderately bullish tone, favoured by a soft US Dollar (USD), but the precious metal remains trading within previous ranges, with bulls, so far, capped below the 0.5800 area.  

The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six majors, edges down less than 0.1% on Monday, with the market anticipating a pause at next week’s Federal Reserve (Fed) monetary policy meeting.

US inflation figures released last week confirmed that higher energy prices are boosting consumer prices to levels well above the central bank’s target for price stability. Fed officials, however, requested more time to assess the economic impact of September’s rate hike, and Chair Kevin Warsh refused to give any forward guidance.

Futures markets are pricing in only a 12% chance of a rate hike next week, down from nearly 60% one month ago, according to data by the CME’s FedWatch Tool. This is likely to pose a heavy weight for US Dollar rallies.

Technical Analysis: Bulls face a cluster of resistances above 0.5800

XAG/USD holds gains at $57.74 at the time of writing, after bouncing from three-month lows sub-$56.00. Momentum indicators in the four-hour chart, however, show a neutral stance, with the Relative Strength Index (14) still below the key 50 level and the Moving Average Convergence Divergence (MACD) marginally positive at 0.18, which suggests that the pair would need additional support to break overhead resistance.

Friday's high, at the $58.00 area, is keeping upside attempts limited so far, while the October 8 low, at $58.50, and the descending trendline from mid-September highs, now at $59.05, are likely to pose additional challenges for bulls. A clear break above those levels would confirm a trend shift and set the focus on the October 13 high, net $60,70.

Downside attempts, on the contrary, are likely to find support at the session lows near $56.80, ahead of last week's lows around 55.40.

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

• AUD/USD trades higher at around 0.6980 as the Australian Dollar outperforms.
• Market participants doubt that the RBA will hike interest rates again in November.
• The US Dollar weakened last week due to correction in US AI-related stocks.

The Australian Dollar (AUD) outperforms its currency peers at the start of the week, trading almost 0.5% higher at around 0.6980 against the US Dollar (USD) in the European trade. The antipodean gains even as market participants doubt whether the Reserve Bank of Australia (RBA) will deliver one more interest rate hike this year.

So far in 2026, the RBA has delivered four interest rate hikes of 25 basis points (bps), pushing the Official Cash Rate (OCR) to 4.6%.

What weighs concerns on hawkish RBA bets

Analysts at Rabobank highlight a weaker tone in Australia’s latest labour figures, noting that “the unemployment rate printing at 4.6% and a contraction of almost 40 thousand jobs” has effectively “erasing the job gains seen in July.”

According to the RBA Rate Tracker, there is an almost 82% chance that the RBA will leave its OCR unchanged in the next policy meeting in November.

Meanwhile, the US Dollar trades almost flat at the start of the week. The US Dollar faces significant selling pressure last week amid a significant correction in the United States (US) Artificial Intelligence (AI) stocks.

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.6976, keeping a bearish near-term tone as spot remains capped beneath the 20-period exponential moving average (EMA) at 0.6993. The formation of the Head and Shoulder (H&S) chart pattern also supports the bearish bias whose neckline near 0.6900 is acting as key support for the pair.

The pair has been unable to reclaim the short-term EMA metric since its recent slide, and the Relative Strength Index (RSI) at 44 stays below the neutral 50 line, hinting that downside pressure still outweighs buying interest despite the latest attempts to stabilize.

On the topside, immediate resistance is located at the 20-day EMA around 0.6993, and a daily close above this barrier would be needed to ease the current bearish bias and open the door to a more sustained recovery phase. On the downside, the neckline of the H&S formation near 0.6900 is the key support zone.

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

ING’s Frantisek Taborsky highlights Hungary’s draft budget as key for regional bonds, with much optimism already priced on a deficit below 5% of GDP. He expects the National Bank of Hungary to keep rates at 5.50%, the Central Bank of Turkey to resume cuts to 36.00%, and EUR/RON to stabilise around 5.340, while another Czech rate hike is seen in November.

Hungary, Turkey and Romania drive regional moves

"Today’s focus is Hungary’s draft budget for next year. Hungarian bonds have rallied strongly in recent weeks on growing expectations that the plan will target a deficit below 5% of GDP. However, much of the good news now appears priced in, creating downside risk if the government falls short of expectations. Even so, the broader outlook for bonds remains positive, particularly compared with this year’s 7.0-7.5% deficit, and we expect investors to buy any dip following a sell-off."

"The region’s first economic releases arrive on Tuesday, with Polish wage, PPI and industrial production data. The main focus, however, will be the National Bank of Hungary meeting. We expect rates to remain unchanged at 5.50%, leaving attention on forward guidance. Although the central bank has identified the fiscal plan as a key factor for future easing, we believe cuts remain premature and, global conditions permitting, are unlikely before the end of this year or next year."

"On Thursday, we expect the Central Bank of Turkey to resume its easing cycle for the first time since the US-Iran conflict began, cutting rates by 100bp to 36.00%. September’s inflation data provided a positive signal, while developments in investment funds point to downside risks for the economy in the final quarter. Although crowded long TRY positions offer less and less carry, they remain popular in emerging markets, and we expect this demand to persist in the coming months despite renewed rate cuts."

"Beyond the scheduled events, we are monitoring political developments in Romania, where the new government appears highly likely to win a confidence vote. This should help stabilise EUR/RON after its decline late last week, and we expect the pair to settle around 5.340. In the Czech Republic, the Czech National Bank may offer its first signals ahead of the November meeting, when we expect another rate hike."

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

Deutsche Bank strategists highlight renewed volatility in US equities as the anniversary of Black Monday coincides with a sharp late-Friday sell-off in the S&P 500, followed by a rebound in S&P and Nasdaq futures. They note concentrated weakness in AI-related names and semiconductors, with credit markets showing distress in that sector and key tech indices posting sizable weekly declines.

AI sector drives US equity stress

"39 years ago today we woke up to the origins of what would forever be known as Black Monday, where the Dow fell -22.6% on the day. It’s rare the anniversary falls on a Monday so it’s a more memorable one today. The late US trading session on Friday almost felt people were worried we'd get a repeat today as the S&P fell from flat just before the European close to -1.09% by the US one. However, this morning we are seeing a bounce with S&P (+0.79%) and Nasdaq (+1.29%) futures making up most of their late Friday losses. "

"Clearly the main nervousness last week was around AI-related names, with credit markets starting to show some distress in that sector. The Philly semiconductor index was down -11.41% last week (-3.83% Friday), whilst the NASDAQ was down -4.48% (-2.14% Friday)."

"At the heart of the sell-off was CoreWeave, which was down -25.21% last week (-11.91% Friday), whilst their 5yr CDS was up +225bps on the week to 1128bps with their cash bonds trading at around a 15% yield. Meanwhile, Oracle’s share price was down -9.31% (-4.64% Friday), and their 5yr CDS was up +44bps on the week to 300bps. "

"Asia has started the week relatively calm with the KOSPI (+0.55%) and S&P/ASX 200 (+0.32%) both trading higher, while the CSI 300 (+0.09%) and Shanghai Composite (+0.16%) are just above flat. The Nikkei (-0.73%) is the region’s weakest performer, extending losses after falling -5.4% last week as technology stocks came under heavy pressure."

"Elsewhere, Indonesia’s benchmark stock index is down more than 5% to its lowest level in six years, as concerns over the potential MSCI downgrade we discussed on Friday continues to heighten fears of further foreign investor outflows. The index is down over -16% in these past two sessions."

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

• USD/JPY steadies near 158.00 in Monday’s early European session.
• BoJ’s Governor says underlying inflation is "quite close" to the central bank's 2% target.
• Fed Chairman Warsh says he does not "prejudge meetings.

The USD/JPY pair trades on a flat note around 158.00 during the early European session on Monday. Traders scale back Federal Reserve (Fed) rate hike bets despite hot US inflation data. The Japan’s National Consumer Price Index (CPI) inflation data will take center stage later on Friday.

Bank of Japan (BoJ) Governor Kazuo Ueda said on Monday that underlying inflation is "quite close" to the central ‌bank's 2% target, with strong global AI demand adding to inflationary pressure from a tight job market, signalling scope for further rate increases.

Ueda added that lifting interest rates at an appropriate pace would help avoid spikes in bond yields. Many market players expect the Japanese central bank to leave interest rates unchanged at 1.25% but drop hints that leave open scope for a hike to 1.5% as ‌early as December, according to Reuters.

At the IMF annual meetings in Bangkok on Friday, Fed Chair Kevin Warsh offered no clues about future rate decisions. “We removed a dose of accommodation about a month ago,” said Warsh. “I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,” he added.

Fed funds futures are pricing an implied 83.9% chance that the Fed will hold rates steady at its next two-day meeting on October 28, little changed from Friday, according to the CME Group's FedWatch tool.

BoJ tone turns firmer as Ueda flags inflation progress and yield risks

Analysts at Danske Bank highlight a firmer tone from the Bank of Japan, noting that Governor Kazuo Ueda now judges underlying inflation to be "quite close" to the 2% target, supported by tight labour markets and strong global AI demand as sources of price pressure. Danske adds that Ueda "warned that failing to raise rates at an appropriate pace could push long-term bond yields higher," underscoring the risks of moving too slowly. Looking ahead to the BoJ’s next meeting, which concludes on 30 October 2026, the bank points out that markets expect policy rates to remain at 1.25%, but will be watching closely for any guidance that keeps a hike to 1.5% as early as December "on the table."

Ueda leans mildly hawkish as inflation loop firms and JGB guidance stays cautious

FXS Speechtracker at 7/10 is slightly below Ueda’s 7.4/10 average, but the emphasis on “underlying inflation near 2%” and a “positive loop” of wages, prices, and robust global demand marks a mild hawkish tilt versus past caution. The focus on anchoring core inflation near 2%, demand-led price gains, and a tight labor market suggests the Bank of Japan is more confident that the 2% goal is becoming sustainable, which is Yen-supportive at the margin.

At the same time, Ueda stresses no shift in the fundamental bond taper approach and refuses to preannounce emergency JGB operations, signaling a desire to let long-term yields rise “steadily” alongside any future policy-rate hikes. The message that accommodative conditions will persist, but that miscalibrated policy could push long-term rates higher, frames a gradual normalization path that can underpin the Yen while keeping JGB volatility contained, limiting an immediate bullish impulse for the currency.

Technical Analysis: Negative tone of USD/JPY remains intact under the 100-day SMA

In the daily chart, USD/JPY holds a capped tone as spot remains below the 100-day simple moving average (SMA) despite stabilizing above the 20-day Bollinger SMA. The pair has rebounded from the lower band, but the upper band and the nearby 100-day SMA overhead suggest rallies are likely to meet supply, while the Relative Strength Index (RSI) at 52.35 points to only modest, neutral-to-slightly positive momentum.

On the topside, immediate resistance aligns first at the upper Bollinger band near 158.85, followed by the 100-day SMA at 159.45, a level that would need to be reclaimed to ease the broader downside pressure. On the downside, initial support is seen at the 20-day Bollinger SMA around 158.00, with a break exposing the lower band support at 157.10, where a deeper pullback could attempt to stabilize.

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

• NZD/USD holds recent gains around 0.5660, close to late September highs around 0.5690.
• Upbeat data from China has offset weak Trade Balance data from New Zealand.
• The US Dollar remains on the defensive with investors bracing for a Fed pause in October.

The New Zealand Dollar (NZD) stands its ground against the US Dollar (USD) at the start of the week, as positive data from China offset the downbeat New Zealand Trade Balance earlier in the day. The NZD/USD pair maintains its immediate bullish trend, trading at 0.5660, just below three-week highs and with bulls looking at the late September highs at 0.5990.

Data from China, New Zealand’s main trading partner, revealed that the country’s Gross Domestic Product (GDP) grew at a 4.5% pace in the third quarter, beyond the second quarter’s 4.3% growth and beating expectations of a 4.4% increase. Beyond that, Retail Sales rose 1.1% in September, more than twice the market consensus, easing concerns about the country’s weak domestic demand.

In New Zealand, on the contrary, the trade deficit widened to NZD 1.97 billion in September, from NZD 1.54 billion in August. Also on Monday, the NZ Business PSI, a gauge measuring the services sector’s performance, showed a moderate slowdown, to 50.9 in September from a downwardly revised 51 in the previous month, with businesses showing concern about political uncertainty ahead of the elections and the higher cost of living.

The US Dollar has opened the week in the same bearish trend seen in the previous one. US inflation figures revealed that prices remain well above the Federal Reserve's (Fed) target. Central bank policymakers, however, requested some more time to assess the impact of September's rate hike, which hints at a pause in the October 29-29 monetary policy meeting.

Technical Analysis: Bulls remain in control while above 0.5930

NZD/USD trades at 0.5659, holding a constructive near-term bullish bias as it consolidates above previous highs in the 0.5630-0.5640 area. Momentum conditions favor the upside, with the Relative Strength Index hovering in the low 60s and the Moving Average Convergence Divergence (MACD) line holding in positive territory, which together suggest buyers retain control.

The immediate target is the September 24 and 28 top at 0.5660. Further up, the September 22 high, at the 0,5750 area, would come into focus. On the downside, a bearish reversal below the 1.5130 area (October 6, 14 and 15 highs) would increase pressure towards last week's lows at the 0.5590 and 0.5565 areas.

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

Danske Research Team reports that Brent crude opened lower near USD 108/bbl after touching USD 109/bbl on Friday. The decline followed President Trump’s waiver of key Russia-related sanctions and tariffs, which could boost fuel exports. However, they stress that supply risks remain elevated due to Ukrainian strikes and threats to Gulf crude flows.

Brent slips but supply risks stay high

"In commodities, Brent crude opened lower this morning, trading around USD 108/bbl after reaching around USD 109/bbl on Friday.The decline followed President Trump's waiver of key sanctions and tariffs on Russia, potentially allowing higher fuel exports."

"Still, supply risks remained elevated, as Ukraine struck Russian energy infrastructure on Sunday and attacks on vessels near Hormuz continued to threaten Gulf crude flows."

"In geopolitics, the split between the EU and the US on Russia policy widened over the weekend. EU leaders meeting in Brussels vowed to maintain sanctions on Russia and sustain support for Ukraine, with von der Leyen saying no sanctions would be lifted unless Russia stops the war and that the EU is working on a 22nd sanctions package."

"Zelenskyy criticised the waiver as "wrong", saying it would help Moscow and prolong the war. However, concerns about US support eased somewhat on Sunday after Zelenskyy said US intelligence-sharing had resumed and that he had discussed next diplomatic steps with Trump envoys, including a possible new peace meeting this week."

"Trump then signed an executive order on Friday waiving key Russia-related sanctions and tariffs under the Graham Act, including measures targeting Russian goods and countries buying Russian oil and gas, shortly before they were due to take effect. Secretary of State Rubio said Trump would use up to 60 days to assess the economic impact, while also defending a separate agreement for Russia to increase diesel supplies to the US and global markets."

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