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Forex Today: Investors Cautious As Critical Week Starts For Central Banks

This is what you need to know to trade today Monday October 31:

Market sentiment deteriorates on the final trading day of October as investors brace for key central bank meetings and high-level data releases later in the week. The Dollar Index builds on Friday’s gains and remains in positive territory near 111.00, US stock index futures post modest losses and the 10-year US Treasury yield remains quiet above 4%. On Monday, Eurostat will publish the advanced estimate of the growth of the Gross Domestic Product (GDP) for the third quarter and the inflation data for October. Later in the day, market participants will closely watch the ISM Chicago PMI and the Federal Reserve Bank of Dallas Texas Manufacturing Survey.

Earlier in the day, data from China showed that the manufacturing PMI and non-manufacturing PMI fell into contraction territory in October, hitting 49.2 and 48.7 respectively. Adding to the disappointing PMI data, ongoing coronavirus-related lockdowns and restrictions in numerous cities across China forced investors to seek shelter, with the Shanghai Composite down nearly 1% on the day. In the early hours of the Asian session on Tuesday, the Reserve Bank of Australia will announce its decision on interest rates. Despite the negative change observed in risk appetite, the AUD/USD it is trading in a tight channel slightly above 0.6400.

The EUR/USD failed to regain parity on Friday and started the new week relatively quietly. At the time of writing, the pair is trading sideways around 0.9950.

The GBP/USD posted gains for the third week in a row and entered a consolidation phase near 1.1600 early on Monday. The Bank of England will announce its policy decisions later in the week and British Prime Minister Rishi Sunak will unveil the fiscal plan on November 17.

Following the Bank of Japan’s decision to keep monetary policy unchanged on Friday, the USD/JPY won more than 100 points. The pair is trading in a relatively tight range near 148.00 heading into the European session on Monday.

The Prayed suffered heavy losses on Friday as the 10-year US Treasury yield snapped a three-day losing streak and rebounded 4%. XAU/USD consolidates its losses around $1,640 on Monday.

Bitcoin he struggled to make a decisive move in either direction over the weekend, but managed to end the week above the key $20,000 level. ethereum gained over 15% last week and eased above $1,500 early on Monday, awaiting the next significant catalyst.

Source: Fx Street

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