What to watch for on Wednesday, October 26:
The US dollar eased in the US session and ended the day with losses against all of its major rivals. The EUR/USD pair is trading close to parity early on Wednesday and ahead of major events scheduled for next Thursday, when the US is expected to report economic growth in the three months to September. Gross Domestic Product growth is expected to of the third trimesteris 2.4%, reversing the negative trend of the two previous quarters.
At the same time, the Central Bank European will announce its latest monetary policy decision. The central bank is expected to raise rates by 75 basis points, increasing the pace of tightening amid signs of rapidly deteriorating economic conditions. The focus will be more on the plans of policymakers than on the hike itself. Markets would be quite surprised if Chairman Christine Lagarde comes out with a hard line message.
US data and central bank announcements will define whether the dollar has hit a temporary bottom.
On Wednesday, the focus will be on the The Bank of Canadamonetary policy decision.
The GBP/USD pair settled at 1.1465, helped by the weakness of the dollar in general and despite the political noise that continues to exist in the UK. The New UK Prime Minister Rishi Sunak came back to the fore, anticipating that “difficult decisions” are ahead. Meanwhile, Attorney General Brandon Lewis and Business Secretary Jacob Ress-Mogg have resigned. Jeremy Hunt has been re-elected as Chancellor.
Commodity-linked currencies benefited from the rise in US stocks. AUD/USD is flirting with 0.6500, while USD/CAD is about to break through the 1.3600 level.
The dollar sell-off unexpectedly helped the Bank of Japan. USD/JPY is trading below 148.00 as investors move away from the greenback as a haven.
Gold rose slightly and is trading around $1,653, while crude oil prices ended the day little changed. WTI is currently trading around $84.90 a barrel.
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Source: Fx Street
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