The US Dollar gathered some bullish momentum with the DXY Index climbing to its highest level since mid-August close to 103.00.
The hawkish tone in the Fed September meeting minutes boosted the greenback. The minutes showed a majority of Fed officials supporting the recent 50 bps cut, however there was a broader consensus that there isn’t a specific pace for future rate cuts. Some Fed officials even supported the idea of a 25 bps cut, showing signs that there may be a more gradual cutting cycle. With time before the Nov. 7 meeting, we’ll wait and see if the priced in 25 bps cut will stick around.
CPI data from the US will be released during the second half of the day, with expectations of inflation to soften to 2.3% in September from 2.5% in August.
EURUSD is trading below 1.0950 at the start of the session. With ECB accounts and US CPI data coming out today, markets are refraining from placing any fresh bets and keeping a cautious position.
GBPUSD is currently trading around 1.3080, having a slight positive bias but still below the 1.3100 mark. Cable is within striking distance of a one-month low as markets await US CPI data coming out later today.
Looking at the rest of the month, sterling may fall in the coming weeks as the US Dollar is rising on safe-haven flows and expectations of reduced US interest rate cuts. Investors will pay close attention to the UK budget release on Oct. 30, looking at spending plans in the budget.
World News
USDJPY gained traction and reached its highest level since early August above 149.50 during Asian trading hours, before settling toward 149.00 at the start of the European session. Uncertainty surrounding BoJ rate-hike plans, along with a risk-on mood, might cap the yen and prevent losses for the currency pair ahead of Japan’s election on Oct. 27.
