Forex News

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week.

• The Saudi-led coalition said in a statement that an unidentified projectile hit a passenger terminal at King Khalid International Airport in Riyadh on Sunday. The Houthis swiftly claimed the attacks, saying they were a response to “Saudi aggression.”
• The incident followed the strike on King Khalid airport on Saturday that killed 12 people and injured 309 others, marking the deadliest single event in Saudi Arabia since the Iran war began in late February.
• US President Donald Trump warned on Saturday that Iran "will not exist" if it does not cooperate with the US in negotiations. He further stated that he is considering joining Saudi Arabia in its retaliation against Tehran-backed Houthis in Yemen after a deadly attack on Riyadh’s main airport.
• US Central Command (CENTCOM) said that it disabled a commercial cargo vessel in the Gulf of Oman after the ship’s crew "ignored repeated warnings and attempted to run the ongoing naval blockade against Iran" on Saturday.
• The United Kingdom Maritime Trade Operations (UKMTO) said on Sunday that it reclassified an incident in the vicinity of Sohar anchorage in Oman as an attack after confirmation that the tanker was struck by a drone.
• Secretary of Iran’s Supreme National Security Council, Mohsen Rezaei, said Washington has accepted some of Tehran’s conditions for an agreement, but its response remains “inadequate”.

• AUD/USD rises 0.38% on Friday, securing a 0.58% weekly gain.
• US consumer sentiment falls to 46.3, while inflation expectations climb.
• Markets see an 81% chance of an October Fed hold and December hike.

The Aussie Dollar ended Friday’s session on a positive note, gaining 0.38% and 0.58% weekly as the US Dollar trimmed some of its weekly gains, while US data confirmed investors' expectations that the Federal Reserve would hold rates steady in the October meeting. The AUD/USD trades at 0.6983.

AUD/USD closes at 0.6983 as softer US sentiment supports the Aussie despite renewed December hike bets

Market mood was upbeat on Friday, with Wall Street posting losses, as a solid earnings session drove US equities close to record highs. The US Dollar Index (DXY), which tracks the buck’s performance against six currencies, drifted higher by 0.12% to 102.73.

Data from the US revealed that consumers are becoming pessimistic about the economy, as the Consumer Sentiment Index for October slipped to 46.3, down from 48.1 and missing estimates of 47.6. The same survey showed that inflation expectations for 1- and 5-year horizons rose, with the former from 4.6% to 4.7% and the latter from 3.4% to 3.5%.

The FOMC minutes showed full support for a rate hike but revealed division: some saw it as precautionary, others as the start of a tightening cycle.

Fed speakers continue this week. Fed Governor Waller favors more rate hikes, not necessarily consecutive. St. Louis Fed's Musalem says inflation is high and the strong labor market requires the Fed to address it.

Money markets suggest no Federal Reserve rate hike in October, with 81% chance that rates will stay pat. For December, there's an 81% chance of a 25-basis-point increase to the Fed funds rate, based on Prime Terminal data.

Over the next week, Australia’s economic docket will feature the release of the Reserve Bank of Australia (RBA)'s minutes from its last meeting. Two days after that, employment data would dictate the Aussie Dollar’s direction.

In the US, traders will focus on inflation data for consumers and producers, then look at Retail Sales, Fed speeches, and employment reports.

AUD/USD Price Forecast: Technical Outlook

In the daily chart, AUD/USD trades at 0.6984, keeping a bearish near-term tone as spot holds beneath the triple simple moving average cluster around 0.7089. The pair also remains below a well-defined horizontal barrier at 0.7198, suggesting rallies are likely to face selling pressure while price stays capped under these overhead levels. The Relative Strength Index (14) near 40 hints at weak but not extreme bearish momentum, aligning with a corrective phase rather than an oversold capitulation.

On the topside, immediate resistance is seen at the 50/100/200-day simple moving averages grouped near 0.7089, followed by the horizontal line at 0.7198, where previous supply is likely to re-emerge. On the downside, the broader structure is underpinned by several rising trend-line supports originating from the 0.68–0.69 area, which suggest that while the short-term bias is negative, the medium-term uptrend is still intact unless price decisively breaks below those ascending baselines.

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

Commerzbank’s FX team highlights that the People’s Bank of China rejected claims the yuan is undervalued, linking export strength to industrial competitiveness rather than currency manipulation. The central bank will start reporting FX operations to the IMF from 2027, while reserves slipped to USD3.40tn. In FX, USD/CNY fell 30 pips to 6.70, with USD/CNH little changed at 6.70.

Policy paper counters undervaluation claims

"The People’s Bank of China (PBoC) issued a policy paper rejecting claims that the yuan is undervalued, arguing that China's export strength reflects industrial competitiveness rather than currency manipulation."

"The statement came as EU trade officials opened two days of talks with Chinese counterparts, with Brussels increasingly framing bilateral trade imbalances as a currency issue. The PBoC’s paper signals Beijing’s intent to shape the narrative before any formal demands on exchange rate adjustment can gain traction."

"PBoC argued there is no linear relationship between the exchange rate and the current account balance, and that past periods of yuan depreciation did not accelerate China’s export market share gains. The central bank also announced that China will begin reporting foreign exchange operation data to the IMF starting in 2027, a concession to longstanding calls for greater transparency."

"Credit demand remains sluggish, and the investment-led policy push has not yet generated a broader economic rebound. China’s foreign exchange reserves fell to USD3.40tn at end-September (Bloomberg consensus: USD3.43tn) vs USD3.44tn at end-August, partly reflecting valuation effects from gold price weakness during the month."

"The move is modest in scope but notable in timing, offering a goodwill gesture to multilateral institutions as bilateral trade tensions with Europe escalate. Separately, the broader global push back against Chinese export dominance is intensifying, with France and Germany pushing the European Commission toward more assertive protective measures."

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

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note that USD/SGD remains supported within the Monetary Authority of Singapore’s policy band, with SGD NEER likely between 1.50% and 1.80% above midpoint, implying a 1.279–1.283 range. Short-term price action shows limited upward momentum, with resistance near 1.2835 and revised strong support at 1.2775.

Dollar-Singapore pair stuck in tight band

"24-HOUR VIEW: Two days ago, USD rose to 1.2810 and then closed 0.10% higher at 1.2797.” Yesterday, we noted that “the increase in upward momentum is insufficient to suggest a sustained rise.” However, we held the view that “there is a chance for USD to edge above 1.2810.” We added, “the major resistance at 1.2835 is unlikely to come into view.” USD subsequently rose to 1.2827 before easing to close 0.10% higher at 1.2810. There has been no further increase in upward momentum. Today, we expect USD to trade in a range, most likely between 1.2785 and 1.2820."

"1-3 WEEKS VIEW: The following are excerpts from our update yesterday (08 Oct, spot at 1.2795): “While upward momentum is building again, it is weaker than before, and USD is unlikely to reach 1.2835. On the downside, a breach of 1.2765 (‘strong support’ level) would indicate a period of range-trading.” There is no change in our view, but we are revising the ‘strong support’ level higher to 1.2775."

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

Commerzbank analysts note Taiwan’s September trade surplus hit a record USD23.6bn, with exports surging 60.9% year-on-year on strong AI-related demand. The Central Bank of the Republic of China may lean more hawkish if inflation’s uptrend persists. USD/TWD rose 0.3% to 31.90, but the pair’s upside may be limited as the central bank disclosed FX intervention in September.

Record surplus and CBC intervention

"September trade surplus surprised on the upside, widening to a record USD23.6bn (Bloomberg consensus: USD19.0bn) vs USD22.3bn in August. As a result, the surplus from January to September rose 61.9% yoy to USD160.6bn, which has already exceeded the full-year 2025 surplus of USD157.1bn."

"Overall, the stronger-than-expected trade surplus should reinforce the Central Bank of the Republic of China's (CBC) confidence in Taiwan's growth outlook. This could see them place a greater emphasis on inflation at the next meeting on 17 December meeting. Inflation averaged 1.9% between January and September but they picked up to 2.7% yoy in September."

"In FX, USD/TWD rose 0.3% to 31.90 yesterday, driven by broad USD strength, higher oil prices, and foreign portfolio outflows. Foreign investors were net sellers of USD2.6bn of Taiwanese equities, the largest daily outflow in nearly a month."

"USD/TWD has consolidated within the 31.65-31.95 range over the past month. Further upside to the pair may be capped by CBC intervention. The central bank disclosed that it intervened in September and may have sold up to USD1.1bn in the FX market."

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