Forex News
ING’s Warren Patterson notes that Oil prices remain firm even as Persian Gulf supply recovers toward pre-war levels. He argues market concern over sustainability of these flows and the absence of a US-Iran deal are keeping a sizeable risk premium in Brent. ING maintains a low-conviction Brent forecast of $80/bbl for 4Q26 and $71/bbl for FY27, expecting lower prices into year-end.
Brent risk premium and supply outlook
"The fact that oil prices are well-supported despite the improvement in flows from the region appears to reflect concerns over how sustainable this supply is, particularly when considering the geopolitical backdrop. The market continues to price in a large risk premium in the absence of a deal between the US and Iran. And to see this risk premium erode, the market may need the comfort of a deal."
"Failing that, time may be enough for oil prices to trend lower, assuming supplies from the region continue to hold up. For now, we are holding onto our 4Q26 Brent forecast of $80/bbl and FY27 forecast of $71/bbl. However, given the high level of uncertainty, this is a low-conviction call, specifically for 4Q26."
"Oil prices remain firm despite rising supply from the Persian Gulf. We expect oil prices to trade lower into year-end. More positive signs of a potential US-Iran deal would give us more confidence in this view."
"As oil flows from the Persian Gulf have picked up, another bottleneck has become increasingly noticeable in the oil market. There is significant tightness in the tanker market, which has seen tanker freight rates surge to record levels. Oil flows from the Persian Gulf have become increasingly inefficient due to the challenging environment, which has absorbed more of the global tanker fleet."
"The other pain point for the oil market remains diesel, which will be a concern as we head further into the Northern Hemisphere winter. Disruptions from the Persian Gulf and Russia have tightened the market, while the risk of export restrictions from the US has kept the market nervous. The risk of US export restrictions appears to have subsided, with Europe set to release diesel from strategic reserves."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD hits fresh two-week lows below 1.4200 after Wednesday's rejection at the 1.4300 area.
- Lower US Treasury yields and dovish comments from Fed officials have hampered the US Dollar.
- Fed officials Bowman and Daly hint at a monetary policy pause in October.
The Canadian Dollar (CAD) has shown a sharp recovery against the US Dollar (USD) over the last few sessions, with the USD losing momentum, weighed by lower US Treasury yields and dovish comments by Federal Reserve (Fed) officials. The USD/CAD pair is trading at fresh two-week lows around 1.4195 as of writing, after being rejected at the1.4300 area for the second time in the last two weeks.
The US Dollar rallied on Wednesday as US Consumer Price Index (CPI) figures confirmed that the impact of higher Crude prices stemming from the Middle East conflict is spreading beyond energy, raising concerns about the feared second-round effects. Inflation figures boosted speculation that the Federal Reserve might hike interest rates at the October meeting, but Fed officials cooled those hopes, triggering a significant reversal in US Treasury yields and the US Dollar.
Fed officials signal cautious post-hike pause
Federal Reserve Vice Chair for Supervision Michelle Bowman agreed that the bank might have to hike interest rates further but hinted at a pause in October to assess how financial markets and the economy evolve after September's rate hike.
Bowman delivered an overall hawkish speech, scoring 6.2 on the FXS Speechtracker, modestly above the 5.9 historical average, indicating a slightly firmer tone relative to the established baseline. Nevertheless, the urge for a more cautious, data-dependent stance clashed with market expectations of a more aggressive approach, with back-to-back interest rate hikes.
In a similar vein, San Francisco Fed President Mary Daly reiterated that more rate hikes are “likely” but warned that the timing is still under consideration. Daly added that it is still uncertain if "inflation will ease as shocks fade or worsen if shocks continue," and affirmed that it is "better to be thoughtful and deliberate."
The Canadian Dollar, on the other hand, is facing moderate headwinds as Crude prices retreat from recent highs, which keeps the Loonie from appreciating further. In the calendar this week, Canada's Manufacturing Sales and Wholesale Sales figures might provide some fundamental guidance later on Thursday. The highlight of the week, however, is likely to be the Bank of Canada (BOC) Tiff Macklem's comments at a panel discussion in the International Monetary Fund (IMF) meeting in Bangkok, Thailand, on Friday.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
MUFG’s Lee Hardman notes the US Dollar has quickly surrendered gains made after the stronger US CPI report, with the Dollar Index retreating from a year-to-date high near 102.95 back towards 102.00. He links the move to an unwind of AI-related trades and risk-off conditions, but stresses that firm inflation data and Fed expectations still provide a supportive backdrop for the Dollar.
AI sell-off reverses CPI boost
"The US dollar has weakened overnight quickly giving back yesterday’s initial gains after the release of the stronger than expected US CPI report for September."
"After hitting a fresh year-to-date high at 102.95 yesterday, the dollar index has since fallen back towards the 102.00-level."
"The reversal lower for Us yields and US dollar appears to have been driven mainly by an unwind of AI-related trades overnight resulting in more risk-off trading conditions."
"After record capital inflows into the US equity market encouraged by investor optimism over AI (click here), the price action overnight highlights that it leaves the US dollar vulnerable to a correction lower when investor sentiment towards AI sours."
"Nevertheless, the current fundamental backdrop remains supportive for the US dollar."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
According to the latest Reuters poll, 54 of 63 economists have voted in favor of a 25 basis point (bps) interest rate hike by the Bank of England (BoE) in policy meeting on November 5.
The poll also showed that UK inflation forecast to average 3.6% in Q4 2026, 3.8% in Q1 2027, 3.0% in year 2027 (vs 3.3%, 3.2%, 2.5% in September poll).
On the economic front, the Gross Domestic Product (GDP) growth is seen at 1.3% in 2026, 1.2% in 2027 (vs 1.1%, 1.2% in September poll).
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
ING strategist Frantisek Taborsky says Romania’s emerging political breakthrough should reduce near-term pressure on the Leu and lower rating risks, but notes a difficult economic backdrop after fiscal tightening. He expects the new government to stabilise EUR/RON around 5.340, with bonds supported by consolidation efforts, though stretched valuations and limited upside constrain further rallies.
Political deal anchors leu but caps gains
"Romania appears closer to ending five months of political deadlock after the Social Democrats agreed to join premier-designate Luca Niculescu’s cabinet with 11 ministers. The Liberals and UDMR will not enter government but have pledged parliamentary support for six months, likely giving Niculescu the majority needed for approval. The cabinet is also expected to include technocrats in finance, energy and foreign affairs."
"This is Niculescu’s fourth attempt by President Nicușor Dan to install a prime minister since May, after the previous coalition collapsed and previous nominees failed. A government should reduce near-term pressure on the leu and lower the risk of Romania losing its investment-grade rating."
"However, the economic backdrop remains difficult after last year’s fiscal tightening pushed activity into prolonged stagnation. Failure to secure parliament’s backing could force an early election, which the president has sought to avoid. If approved, Niculescu’s immediate priorities will be revising the 2026 budget, preparing the 2027 draft and continuing fiscal consolidation. Overall, the political breakthrough is positive for RON, but implementation and the credibility of deficit reduction will remain key."
"As previously discussed, we do not expect RON to rally on political headlines, though the new government should help stabilise EUR/RON around 5.340 and limit further upside. Bonds have already seen a solid rally in recent days, with spreads against CEE peers narrowing to record levels. The new government and budget discussions pointing to further consolidation should sustain positive sentiment in the bond market as well, but stretched valuations limit further rallies there."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
United Kingdom (UK) Chancellor of the Exchequer John Healey said in the European trading session on Thursday that the future of European security relies on the future of Ukraine.
Comments
Now is not the time to dial down sanctions on Ukraine.
Future of Ukraine is future of European security
Important that UK steps up support for Ukraine militarily and economically.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- EUR/GBP retreats to levels below 0.8460 from session highs near 0.8480.
- The Euro pulls back from session highs as Eurozone Industrial Production disappoints, while UK GDP beats expectations.
- Previously, the pair had drawn some support from the Pound's weakness following dovish comments from BoE's Pill.
The Euro (EUR) retreats further from session highs against the British Pound (GBP) on Thursday, as Eurozone Industrial Production misses expectations, while UK monthly Dros Domestic Product (GDP) figures posted a positive surprise. The EUR/GBP pair has retreated below 0.8460 from session highs near 0.8480 during the early Asian trade and is practically flat on the daily chart.
Data released by Eurostat earlier on Thursday revealed that Industrial Production contracted 0.5% in August, marking the third consecutive monthly decline, against market expectations of a flat performance. Apart from that, July's data has been revised to a 0.3% decline from previous estimates of a 0.1% contraction.
These figures add negative pressure on the Euro, which was already on the defensive, following a positive surprise in the UK's Gross Domestic Product (GDP) figures.
UK economy grew 0.1% in August, according to monthly GDP figures released by National Statistics earlier on Thursday, beating expectations of a 0.1% contraction and following a 0.4% growth in the previous month. August's increase has been largely due to better-than-expected UK Industrial Production data, which has offset the poor performance of the construction and services sectors.
BoE’s Pill tempers rate hike expectations, limiting GBP upside
Before that, dovish comments by the Bank of England’s (BoE) chief economist, Huw Pill, downplaying market speculation about an upcoming monetary tightening cycle sent the Pound tumbling against its main peers on Wednesday and early Thursday's trading. The EUR/GBP bounced from 16-month lows at 0.8426 to session highs near 0.8480.
Pill warned on Wednesday that a potential monetary tightening move “should not give the impression that a hike now would be the start of a series of increases,” dampening hopes of a sustained tightening cycle and capping immediate GBP support.
This framing suggests any future move would be more of a fine-tuning than the start of a new hiking phase, which reduces the appeal of GBP versus the Euro and Dollar on a relative policy divergence basis. For FX markets, the speech leans toward a one-and-done narrative, encouraging traders to fade aggressive GBP strength and focus instead on data-dependent, range-bound trading strategies.
Economic Indicator
Industrial Production s.a. (MoM)
The Industrial Production index, released by Eurostat on a monthly basis, measures changes in the price-adjusted output of industry. It is a widely-followed indicator to gauge the strength in the Eurozone’s manufacturing sector. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Last release: Thu Oct 15, 2026 09:00
Frequency: Monthly
Actual: -0.5%
Consensus: 0%
Previous: -0.1%
Source: Eurostat
Economic Indicator
Industrial Production w.d.a. (YoY)
The Industrial Production is released by the Eurostat. It shows the volume of production of Industries such as factories and manufacturing. Up trend is regarded as inflationary which may anticipate interest rates to rise. Usually, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the EUR, while low industrial production is seen as a negative sentiment (or bearish).
Read more.Last release: Thu Oct 15, 2026 09:00
Frequency: Monthly
Actual: -1.1%
Consensus: -0.1%
Previous: 0%
Source: Eurostat
Silver prices (XAG/USD) rose on Thursday, according to FXStreet data. Silver trades at $56.71 per troy ounce, up 1.94% from the $55.64 it cost on Wednesday.
Silver prices have decreased by 20.21% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 56.71 |
1 Gram | 1.82 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 73.31 on Thursday, down from 73.78 on Wednesday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
Antje Praefcke at Commerzbank explains that Norges Bank’s September decision to bring forward a rate hike was driven by persistent inflation above its 2% target. With headline inflation at 3.4% and core at 3.0%, the bank now signals policy will stay elevated for longer and another hike cannot be ruled out, a stance she sees as subtly positive for the Norwegian Krone.
Persistent inflation keeps rates elevated
"It was not a close call for Norges Bank at the end of September to bring forward the policy rate hike rather than wait until December. The reasoning focused on persistently high inflation, since all other factors - including the strong krone, which has a dampening effect on inflation, and businesses’ expectations for economic activity over the next six months - would have made it possible to wait until the end of the year."
"In fact, inflation stands at 3.4% and core inflation at 3.0% compared to the previous year (September) - with an inflation target of 2% that Norges Bank has failed to meet since the pandemic."
"In this regard, Norges Bank’s decision to bring forward the rate hike and to signal that the policy rate will now remain elevated for longer than previously anticipated is entirely understandable. Depending on the data in the coming weeks and months, another rate hike cannot be ruled out, though it is not Norges Bank’s main scenario."
"The “high for longer” stance, along with the signal that rates could be raised again if necessary, is subtly positive for the NOK. In general, however, the currency remains primarily driven by oil and gas prices."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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