Forex Today: Markets remain cautious ahead of the Fed

With US Treasury yields showing a mixed performance and market participants generally cautious, the US Dollar (USD) has made a firm start to the week. The Greenback has extended its recovery towards multi-day highs.

Ahead of the week’s key events and data releases, the US Dollar Index (DXY) briefly moved above the 102.00 threshold, extending Friday’s gains. First up are the ADP Employment Change Weekly figures, followed by final Building Permits data, Durable Goods Orders, New Home Sales, the FHFA’s House Price Index, the Conference Board’s Consumer Confidence gauge and the API’s weekly report on US crude oil inventories.

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Improving sentiment towards the US Dollar has pushed EUR/USD back below 1.1200, taking the pair to multi-day lows. On the calendar, the ECB’s Loan to Companies/Households figures precede a speech by the ECB’s Lagarde.

As sentiment towards risk-sensitive assets deteriorated, GBP/USD dropped to four-day lows within the 1.3330-1.3320 range. The next measure of UK inflation comes from the BRC Shop Price Inflation release.

USD/JPY has recovered appreciably, reaching two-day highs near 157.60 as further US Dollar gains coincided with a mixed performance in the US money market. Japan’s forthcoming releases include the regular weekly Foreign Bond Investment figures and the Consumer Confidence reading.

For now, support around 0.7000 appears to have largely held back selling pressure in AUD/USD, although trading remains choppy. Attention in Australia will centre on the key Inflation Rate release on 28 October.

Renewed hopes of a possible US-Iran agreement to end the conflict in the Middle East have put front-month WTI futures (December contract) under further pressure. Extending Friday’s retreat, prices briefly neared the psychological $100.00-per-barrel level before recovering some ground.

Despite a firmer US Dollar and mixed US Treasury yields, Gold has recovered above the key $4,000-per-troy-ounce level after two consecutive daily declines. Lower crude oil prices appear to have supported the precious metal’s rebound.