Forex Today: Mood improves slightly to begin critical central bank week
Here is what you need to know on Monday, October 26:
There seems to be a positive shift in risk mood at the beginning of the week as crude Oil prices edge lower. The European economic calendar will feature business sentiment data from Germany on Monday. Later in the week, all attention will be on policy meetings of major economies' central banks, including the Reserve Bank of New Zealand (RBNZ), the Bank of Canada (BoC), the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BoJ).
Yemen's Houthis said on Sunday that they will keep attacking Saudi Arabia's King Khalid Airport in Riyadh, Reuters reported. This move came hours after the kingdom announced that flights had resumed despite repeated attacks by Houthis. Meanwhile, United States (US) President Donald Trump has ruled out immediate military action against Iran, saying “there will not be a strike today,” as per Aljazeera. Following the previous week's sharp upsurge, crude Oil prices opened with a bearish gap and the barrel of West Texas Intermediate (WTI) was last seen losing more than 2% on a daily basis.
Reflecting the improving market sentiment, US stock index futures rise about 0.2% on a daily basis, while the US Dollar (USD) Index trades marginally lower near 101.70. Finally, the benchmark 10-year US Treasury bond yield stays in negative territory below 5% after posting losses for the third consecutive week.
FOMC patience in October seen boosting odds of December Fed hike
According to TD Securities, the Federal Open Market Committee (FOMC) is likely to "keep rates on hold this week despite rising inflation risks," with analysts judging that while "the chance of a surprise hike is higher than normal," policymakers are still expected to "prioritize patience and wait until December." In their view, "a hold in October will make a December hike all the more likely," particularly after the "upside surprise in September CPI," which underscores that "inflation risks are still pertinent." TD Securities adds that "the evolution of inflation data will determine the extent and pace of hikes later in the cycle," suggesting that incoming price figures will be crucial in shaping the Fed’s next steps.
EUR/USD fluctuates in a narrow range above 1.1200 after closing the previous week marginally lower.
GBP/USD registered marginal losses on Friday but managed to post gains for the second consecutive week. The pair stays quiet on Monday and moves sideways below 1.3400.
USD/JPY clings to small gains near 157.00 in the European morning on Monday after falling about 0.7% last week.
Gold lost nearly 4% in the previous week before stabilizing slightly above $4,000 on Monday.
Gold demand from ETFs and central banks faces another test near $4000
TD Securities analysts noted that we continue to see "strong physical demand from ETFs and central banks," even as Gold remains under pressure from systematic selling. The bank argues that prices "drifting back toward the $4000/oz level yet again will be another test if these flows can offset near-term systematic flows," underscoring the importance of official and investment demand in counterbalancing CTA-driven weakness.
AUD/USD stays in a consolidation phase above 0.7000 after rising more than 1% last week. In the early trading hours of the Asian session on Wednesday, September inflation data from Australia could ramp up the pair's volatility.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Nebius (NBIS.US) CEO admits new cloud company financing is becoming difficult; Musk warns “major reshuffling,” intensifying market concerns
Volorozh admitted that it is becoming increasingly difficult for Neocloud to obtain debt financing.

The market is "shivering"! As "capital expenditure" becomes highly sensitive, the three US cloud giants will all release their earnings reports this week.
Google, Microsoft, and Amazon are all expected to report strong quarterly results, with revenue growth likely reaching double digits. However, what investors are truly focused on is the scale of capital expenditures and the trend of free cash flow. If expectations for free cash flow are downgraded again, concerns about the sustainability of AI spending will intensify and spread to the cloud computing sector. If there is a positive revision, the market will consider the most challenging phase of the spending cycle to be over.

PE only 3x, valuation has dropped to financial crisis levels! With Samsung and SK Hynix earnings reports approaching, can they reverse the downward trend in stock prices?
Samsung Electronics and SK Hynix are facing an extreme divergence of "record-breaking profits and rock-bottom valuations," with their price-earnings ratios dropping to around 3x and foreign ownership at historic lows. Institutions believe the market is overly pessimistic, as significant profit growth for both companies over the next two years is largely secured. With this week's earnings reports, the market is focusing on management's statements regarding long-term supply outlooks and shareholder returns, in hopes that these will serve as catalysts for a revaluation of their stock prices.

A Perfect Storm for Bitcoin? Fed, PCE, GDP and Big Tech Earnings Ahead

