Forex News

Societe Generale analysts Michael Haigh and Jeremy Sellem say disruptions to Qatari LNG capacity and slower recovery of Gulf exports have delayed global gas-price convergence. They now expect US-Europe LNG arbitrage profitability to approach zero only by December 2028, implying a longer period of regional price dislocations before TTF, JKM and Henry Hub move towards tighter correlation.

US Europe arbitrage closure delayed by conflict

"We expect the LNG glut and the regional convergence in pricing to be delayed but not cancelled. The war has pushed global gas-price convergence back by more than two years. Before the war rapid infrastructure growth meant US-European gas-price convergence was expected by early 2027, as the arbitrage for shipping US LNG to Europe approached zero."

"Convergence is now pushed back to the end of 2028. With Qatari exports not expected to recover to pre-war levels until end-2027, Europe remains reliant on US LNG for longer. Current forward curves suggest US-Europe LNG arbitrage profitability only approaches zero around December 2028, delaying the emergence of a genuinely integrated global gas market."

"The next wave of LNG infrastructure should accelerate the convergence of global gas markets. Based on projected liquefaction additions through 2030, our regression suggests the TTF-JKM correlation could climb from around 0.79 today to 0.90 by 2028, moving towards near-perfect correlation by the end of the decade."

"The continued expansion of LNG infrastructure should ultimately create a deeper, more flexible and increasingly interconnected global gas market, narrow regional price differences and pushing TTF, JKM and Henry Hub towards greater convergence. But the US-Iran war has interrupted that process. By damaging existing Qatari capacity, delaying future supply growth and disrupting flows through Hormuz, the conflict has pushed the expected LNG glut from early 2027 to late 2028."

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

Commerzbank’s research team highlights that Brent and WTI have rallied on renewed Middle East and Russian supply risks, with Brent near USD110 and Oil up strongly year-to-date. Despite some recovery in Middle East exports via “dark transits”, the bank expects fossil fuel prices to decline only gradually, implying Euro area inflation will ease slowly from spring.

Supply risks keep crude elevated

"Brent crude surged to just under USD110 per barrel amid renewed supply disruptions in the Middle East and Russia, adding to inflation concerns and complicating the Fed's monetary policy outlook."

"Brent crude oil prices rose 3.7% to just under USD110 last Friday, marking its second consecutive weekly gain, up 4.9%."

"The rally in oil reflected renewed concerns over supply disruptions amid continued Houthi attacks on Saudi Arabia and further strikes on Russian energy infrastructure."

"Oil exports from the Middle East have recovered significantly, thanks in part to the “dark transits” of tankers through the Strait of Hormuz that we had anticipated. Nevertheless, prices for fossil fuels such as crude oil, diesel and natural gas remain high. We analyze the reasons for this and outline our forecast for prices to decline gradually."

"As a result, inflation in the euro area is also likely to begin falling only slowly in the spring."

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

Brown Brothers Harriman’s Elias Haddad highlights that the Australian Dollar is outperforming, with AUD/USD trading near the top of its recent 0.6900–0.7000 range. Despite IMF estimates of notable overvaluation, BBH notes that AUD/USD is broadly aligned with Australia–US 2‑year rate differentials, suggesting limited immediate downside risk from valuation alone.

Outperformance despite valuation concerns

"AUD is outperforming, with AUD/USD trading near the top of its three-week 0.6900-0.7000 range."

"RBA Assistant Governor Christopher Kent noted the “Aussie dollar at the moment is marginally above the long-run equilibrium estimates for the real trade-weighted index"."

"Indeed, the IMF estimates AUD overvaluation at 17% on a real effective exchange rate basis."

"Nonetheless, AUD/USD is generally in line with real and nominal 2-year Australia-US interest rate differentials, suggesting its lofty valuation poses little immediate downside risk."

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

Francesco Pesole at ING expects Canadian inflation to remain contained, keeping a December ‘insurance’ rate hike by the Bank of Canada on the table. With markets already fully pricing a 25 bp December move and some odds for October, he sees limited Canadian Dollar upside and maintains a USD/CAD return to 1.420 by month- and year-end.

BoC pricing curbs Canadian Dollar strength

"Canada releases inflation data for September today. The headline rate should accelerate at a 0.2% month-on-month pace, not particularly hot, especially given core measures have remained anchored around 2.0%."

"The jobs market has given some warning signals, with two consecutive negative prints in August and September and the unemployment rate rising to 6.5%. Still, with growth proving resilient and a widening rate spread with the Fed, an (insurance) rate hike in December by the Bank of Canada remains a clear possibility. The BoC also releases its business outlook survey today."

"Markets are fully pricing in a 25bp December hike, as well as 9bp for next week’s meeting. That suggests limited upside for the Canadian dollar, even if the October meeting is used to set the stage for a December move. That is, barring a surprise October hike, although we don’t sense that markets are underpricing here."

"We don’t see much more downside for USD/CAD at this stage, with a return to 1.420 still our baseline for the month-end and year-end."

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

• USD/JPY rises to near 158.25 as the Japanese yen underperforms.
• BoJ’s Ueda stresses on anchoring core inflation growth near 2%.
• The appeal of the US Dollar slightly improves due to rising French bond yields.

The Japanese Yen (JPY) is down against its major currency peers at the start of the week. In the European trade, the US Dollar (USD) is up 0.17% at around 158.25 against the Asia-Pacific currency.

The Japanese currency is under pressure even as Bank of Japan (BoJ) Governor Kazuo Ueda signals that the underlying inflation is close to the 2% target. However, Ueda stated that “anchoring core inflation near 2% growth more crucial.”

Ueda leans cautiously hawkish as inflation loop firms and JGB guidance stays vague

Ueda scores 7/10 on FXS Speechtracker versus a 7.4/10 historic average, but the emphasis on “underlying inflation near 2%” and a positive wages–prices loop marks a mildly hawkish tilt for the YEN. The focus on demand-led inflation from robust global AI-related capex, tight domestic labor markets, and the warning that long-term rates could rise if the policy rate is not adjusted properly all support a gradual normalization bias that can underpin YEN yields.

At the same time, Ueda stresses that financial conditions remain accommodative, confirms no shift in the fundamental bond taper approach, and refuses to preannounce emergency JGB measures, which tempers the hawkish tone. For FX, the combination of firmer inflation dynamics and data-dependent rate guidance is modestly supportive for the YEN, but the lack of explicit tightening timelines and the pledge to stabilize the JGB market limit immediate upside and keep carry trades only cautiously challenged.

This week, investors will focus on National Consumer Price Index (CPI) data for September, which will be released on Friday.

Meanwhile, the US Dollar trades slightly higher as French fiscal concerns resurface. As of writing, 10-year French bond yields are up 0.56% to near 4.88% amid civil unrest in France. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.12% higher to near 101.90.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 158.20, holding the short-term Moving Average Exponential (20, close) at 157.87. The pair is inside the Symmetrical Triangle formation, reflecting broader indecisiveness among investors.

The Relative Strength Index (14) at 53.92 sits in neutral-positive territory, hinting that upside momentum is steady rather than stretched, leaving room for the pair to consolidate gains while staying supported by the underlying trend.

On the downside, initial support is reinforced by the 20-period exponential moving average near 157.87. A major action in the pair will likely only after a decisive break of the volatility contraction pattern on either side. The pair could slide to 156.00 if the formation breaks on the downside. Looking up, the pair would aim to revisit the 160.00 hurdle if it manages to break the immediate hurdle near 159.00.

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

• USD/CAD drops 0.3% on Monday and extends its reversal from 1.4300 highs to levels below 1.4100.
• Later on Monday, Canada's CPI is expected to show raising inflation prices, and add pressure on the BoC to hike interest rates.
• The US Dollar remains in the same weak tone seen late last week as markets cut back hopes of back-to-back Fed rate hikes.

The Canadian Dollar (CAD) appreciates further against a moderately offered US Dollar (USD) on Monday, with markets awaiting the release of Canada’s Consumer Price Index (CPI) figures for September. The USD/CAD pair drops 0.3% in the day so far, hitting session lows sub-1.4100 for the first time in nearly one month and extending the reversal from last week’s highs at 1.4300.

Canada's consumer inflation is expected to have bounced up 0.2% in September after a 0.1% contraction in August, while the yearly CPI is forecast to have accelerated to a 3.2% rate, from 3% in the previous month.

BoC reveals increasing challenges to leave monetary policy steady

The Bank of Canada’s (BoC) Governor, Tiff Macklem, warned that week that the rising oil prices are making it increasingly difficult to maintain a steady monetary policy, which gave a hawkish tilt to October's meeting and provided additional support to the CAD. The BoC, however, is unlikely to hike rates next week, as tariff uncertainty and a softer labour market are likely to outweigh inflationary risks at the October 28 monetary policy meeting.

Francesco Pesole, analyst at ING, highlights that markets are “fully pricing in a 25bp December hike, as well as 9bp for next week’s meeting.” In his way, however, this “suggests limited upside for the Canadian Dollar, even if the October meeting is used to set the stage for a December move.”

Cooling hopes of another Fed rate hike are hurting the Greenback

In the US, the calendar is light on Monday and for most of the week. US data released last week confirmed that high energy prices are keeping inflationary pressures high, well above the Federal Reserve’s target. Fed officials, however, cooled hopes of back-to-back interest rate hikes.

Futures markets have cut back expectations of a Fed interest rate hike to 15%, from near 60% one month ago, according to data released by the CME’s FedWatch Tool, which sent the US Dollar tumbling against most of its peers last week.

Against this background, Economists at DBS Group Research suggest that “the coming week could see a shift from extending the USD’s recent rally to reassessing its sustainability.”

DBS experts observe that the Fed enters its blackout period, which will leave markets with fewer policy cues. With officials unable to guide expectations, DBS notes that “investors may be reluctant to add to crowded long USD positions,” particularly as “the same inflation pressures that have supported the USD amid Fed-hike expectations are now feeding political risks into the US outlook.”

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann observe that USD/JPY held within 157.67–158.33 on Friday, closing almost unchanged at 157.99. Short-term momentum is tilting lower, with scope to test 157.50, though a decisive break below that level is not expected. Over the next 1–3 weeks, the pair is still seen consolidating in a broad 157.50–159.05 range.

USD/JPY retains a slight downside bias within range

"24-HOUR VIEW: We expected USD to “range-trade between 157.80 and 158.50” last Friday. USD then traded within a range of 157.67/158.33, closing largely unchanged at 157.99 (+0.01%). Despite range-trading and the largely unchanged close, downward momentum appears to be building. Today, we expect USD to edge lower and test 157.50. A break below this level is not ruled out, but based on the prevailing momentum, a clear break below this level is unlikely. Resistance is at 158.10, followed by 158.30."

"1-3 WEEKS VIEW: In our most recent narrative from last Wednesday (14 Oct, spot at 158.35), we highlighted that USD “has likely moved into a range-trading phase between 157.50 and 159.05.” Since then, USD has traded within the range, and there is no change in our view."

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

Societe Generale’s Kenneth Broux notes that USD/CAD has reversed from overbought territory near 1.43 and broken below a recent consolidation floor at 1.4200. The bank highlights nearby support at 1.4075 and the 50-day moving average around 1.4000, while seeing 1.4300 as a key resistance on rebounds. The move contrasts with still-supportive 2-year spreads.

Key supports and resistance in focus

"For Canada CPI today, core inflation is forecast to have stayed unchanged at 1.9% in September."

"USD/CAD rolled over and exited overbought levels at 1.43 last week but the profit taking is out of kilter with 2y spreads."

"The pair has now breached the lower limit of this range (1.4200), resulting in a deeper pullback."

"The next potential supports are located at the projection level of 1.4075 and the 50-DMA near 1.4000."

"If a short-term rebound develops, the recent pivot high at 1.4300 could act as an important hurdle."

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

• XAU/USD consolidates last week's recovery, trading between $4,150 and $4,200 on Monday.
• A moderately soft US Dollar is keeping precious metals supported on Monday.
• Key resistance remains at the $4,230 area.

Gold (XAU/USD) trades sideways on Monday with upside attempts capped below $4,200 and bears contained above the $4,150 area. Precious metals are drawing support from a moderately softer US Dollar, but the uptick in US Dollar yields limits rallies in an otherwise calm trading session.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of six peers, maintains the weak tone seen late last week and dips 0.1% from the daily opening level, although it remains trading within Friday’s range. 

US data released last week confirmed that inflation is well above the Federal Reserve’s (Fed) 2% target for price stability, but Fed officials cooled hopes of back-to-back interest rate hikes. This prompted traders to scale down US Dollar long positions and provided some oxygen for precious metals.

Technical Analysis: Gold bulls aim for the $4,230 resistance area

XAU/USD trades at $4,171, holding a mildly bullish near-term bias yet with price action contained within Friday's trading range. Momentum indicators on 4-hour charts show a neutral-to -bullish trend, with the Relative Strength Index (RSI) near 53 and Moving Average Convergence Divergence (MACD) still in positive territory. Buyers, however, seem to need additional stimulus to breach overhead resistance.

Upside attempts remain capped below the $4,200 psychological level opn Monday, which is closing the path towards the top of the previous two weeks' range, in the $4,230 area. A break above that level would confirm a deeper recovery, with the next targets being the September 25 high, at $4,315, and the mid-September highs, in the $4,400 area.

Bears, on the other hand, remain contained below Friday's low near $4,150 ahead of the range bottom of $4,070. A bearish reaction below here cancels the bullish view and would likely increase pressure towards the late July and early August lows around the $4,000 psychological area.

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