Danske Research reviews today's October FOMC decision and press conference.

"The Fed left policy rates unchanged at 3.75-4.00% at its October meeting, in line with consensus and our expectations. Two members dissented, voting in favour of a rate hike. Even though the market reaction was to the dovish side, we read Warsh's comments on the economic outlook as hawkish," Danske notes.

"Therefore, we think the case for further hikes remains strong, and we maintain our call for two 25bp hikes at the December and March meetings. We see risks tilted towards more than two hikes," Danske adds.

• AUD/USD +0.4% late Wed, breaks above 0.7056 200-DMA & touches 5-week high

• Pair approaching 0.7072 55-DMA, breach would reset topside target to 0.7140

• FOMC stands pat on FFR while acknowledging that inflation remains elevated

• RBA Governor Bullock says inflation too high, indicates incoming rate hike

• Futures pricing implies 84.8% chance of Nov RBA hike, Fed Dec hike at 85.3%

• U.S. core PCE index due Thur, Reuters poll consensus +0.3% m/m, +3.1% y/y

• Overnight range 0.70239-645 support 0.6865 0.6834, resistance 0.7140 0.7282
AUD 21/55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

The dollar held firm after the Fed's expected hawkish hold, but later turned lower as Chair Kevin Warsh unveiled a new meeting schedule and said inflation expectations were moving in the right direction.

The FOMC held rates at 3.75%-4.00% in a 10-2 vote and kept the door open to further tightening amid strong growth and elevated inflation.

DXY was eyeing its 21-DMA at 102.02 after being up marginally prior to the Fed announcement, supported by month-end flows, rising Treasury yields and firmer oil prices.

Elsewhere, the Bank of Canada increased its target rate to 2.5%, as expected and raised growth and inflation forecasts, with Governor Tiff Macklem seeing less room for monetary accommodation.

UK finance minister John Healey's budget offered household and business support while seeking to limit bond market strain.

Iran's foreign minister said Tehran remains in contact with mediators on a proposal to end the Middle East war.

EUR/USD held firm above 1.11 on month-end demand, EUR/JPY strength and USD/CNH weakness, with a daily doji and RSI divergence pointing to scope for a short-covering bounce.

GBP/USD held a modest bid above 1.33 and its nearby 21-DMA after a largely market-friendly UK Budget, with focus turning to US data and the Nov. 5 BoE meeting.

USD/JPY edged up after the Fed's expected hold, with a break above 158.44 cloud resistance and the 200-DMA at 158.55 opening scope for further gains, while a drop below the 21-DMA at 157.95 shifts focus to 157.03 lower Bollinger.

AUD/USD remained constructive above its 21-DMA and 100-DMA, with bullish momentum indicators supporting gains as it nears an upper Bollinger and 200-DMA around 0.7055.

Treasury yields turned mixed after Warsh as the curve steepened. The 2s-10s curve jumped 7 basis points to 33.8bp.

The S&P 500 was nearly flat.

WTI oil rose nearly 3% on supply and geopolitical concerns.

Gold slid 0.37% while copper was down marginally.

Heading toward the close: EUR/USD +0.36%, USD/JPY -0.08%, GBP/USD +0.11%, AUD/USD +0.47%, DXY -0.20%, EUR/JPY +0.29%, GBP/JPY +0.12%, AUD/JPY +0.40%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7025 after AUD/USD traded downward overnight

• The overnight drop reversed in early NY despite firm US yields

• Drops in gold, silver did not deter bulls, 0.7045 traded after Europe's close

• USD/CNH drop to 6.6621 & AUD/JPY rally above 111.40 helped lift AUD/USD

• Muted reaction for AUD/USD after the Fed left rates unchanged as expected

• The pair sat near 0.7040 after the statement and traded up +0.20%

• Techs lean bullish; RSIs indicate bull momentum, pair above 10- & 21-DMAs
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

EUR/USD has turned positive after falling to the October 14 daily low. Traders holding long positions may still be disappointed, though. Until broader market perceptions of the Fed and ECB move toward a more favorable setting, the pair's upside looks limited.

The rally off the October 14 low stalled near the downward-sloping 21-day moving average and resistance in the 1.1265/85 zone. It had been helped by a narrowing of the US-German 2-year yield spread , which the pair is correlated with. From October 2 to October 19, that spread tightened from roughly -181 bps to -164 bps. It then stalled at a key resistance zone. Since late last week, the spread has been widening again, which is weighing on EUR/USD.

Fed and ECB policy expectations help drive those spread moves. Investors currently expect the Fed to stay hawkish. They think the ECB may lean dovish, partly because of sell-offs in French, Italian and Spanish government bonds. The Fed is focused on fighting inflation, and the ECB faces downside economic risks amid uncertainty. Those perceptions are therefore unlikely to change soon, which should cap any significant EUR/USD rally and keep risks tilted to the downside.

The main threat to this bearish view would be a change in sentiment. If markets begin to price in a less hawkish Fed and a potentially hawkish ECB, EUR/USD could rally sharply and put the current downtrend in jeopardy.
DEUS


eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

The following are brief expectations for today's October FOMC decision as compiled from the related notes of 10 banks and eFX Sentiment Indicators.

Out of the 10 banks below, 8 banks expect a hold, 1 bank (BofA) expects a hike, and 1 bank (ANZ) sees a 50-50 outcome for a hawkish hold or a 25bp hike. On the Press Conference, the expectations are leaning for Fed Warsh to sound hawkish.

On the USD front, both of eFX's LSI and ISI Indicators point to USD tactical and strategic built into the meeting, suggesting that investors may look to buy USD dips if emerging post the meeting especially vs GBP and CHF.

MUFG: The FOMC is very likely to remain on hold but the OIS indicates close to 10% probability of a hike. A hold would likely be accompanied by a statement similar to the statement in September when the FOMC hiked underlining the fact that the economy remains resilient. There is a risk that there could be some dissents and that would certainly be one signal of the leaning and would strengthen the market’s conviction of a hike in December. A December hike is close to fully priced. If the press conference is similar in tone to previous public engagements by Chair Warsh he is likely to come across as hawkish.

Bank of America: BofA economists are the market outlier in their call for an Oct hike.. We agree the Fed should hike, but markets price a Fed willing to wait until after the election, especially given rising credit risks. Ultimately, persistent inflation could drive further Fed tightening...USD risks skew to the downside on a hold. A convincing, hawkish hold could leave the USD and rates broadly near current levels, while a dovish or poorly explained hold risks renewed Fed credibility concerns, bear steepening in 2s30s and potentially significant USD weakness.

Goldman Sachs: Comments from FOMC participants since their last meeting point to a compromise to raise the funds rate every other meeting. This means that the FOMC is set to skip raising rates at its October meeting but is likely to deliver a second hike in December...We do not expect significant new information from the press conference.

Danske: We expect the Federal Reserve to keep policy rates unchanged at the October meeting, in line with consensus. Markets price in a 15-25% probability of a hike.  Most central FOMC members have signalled they can wait until December before hiking again, though a few see more urgency. We expect 2-3 votes for a hike.

Morgan Stanley: We expect the Fed to hold rates at 3.75-4.0% in October, with two dissents. Chairman Warsh is likely to signal further tightening while emphasizing a gradual, trend-dependent approach. We expect 25bp hikes in December and March, with risks skewed toward more tightening.   No dissents, financial stability concerns, or a benign inflation assessment would be dovish signals. Three or more hawkish dissents, explicit tightening guidance, or heightened concerns about inflation and energy spillovers would be hawkish.

Credit Agricole: e expect the Fed to keep rates on hold. The tightening cycle should resume in December, however, and result in two additional hikes by March 2027, according to our US economist. That being said, ours is a less hawkish Fed outlook compared to the US rates markets, at the time of writing. We continue to think many Fed related positives are already in the price of the USD and expect the October FOMC meeting to confirm that view especially if the Fed Chair Kevin Warsh fails to signal that another rate hike is imminent.

SEB: Unchanged. Key Fed policy makers have signalled a pause to await more data. Warsh abstained from his usual hawkish comments in his appearance at the IMF. Some members have indicated concerns about rising yields, while jittery equity markets may weigh on financial conditions in a situation where the stock market has been highlighted as supportive for the economy. However, high energy prices and more worrisome inflation pipeline in the PPI mean Fed.

Westpac: Given the concerns shown by Committee members over price risks and their collective resolve to return annual inflation to target, the above data could easily justify a follow-up hike at the October meeting. That said, Committee members who have spoken recently have shown patience with respect to assessing the economy and positioing policy. The market has responded, effectively pricing out the chance of an October hike in favour of a December move, which is also our expectation.

ANZ: We see two broad scenarios: Hawkish hold: Rates are left unchanged, but Chair Warsh emphasises that inflation remains too high and a rate hike in December is live. OIS is largely reflecting this outcome (20bp priced) so it would be unlikely to shift the DXY meaningfully. Any dissents will indicate how hawkish the FOMC is tilting. 25bp hike: The Fed responds to recent firm inflation data with a rate rise. Because markets are pricing this as only a modest probability (6%), the USD would likely rally sharply as investors adjust expectations for the timing of further hikes. However, we do not expect such a rally would last. With OIS reflecting a total of two or three hikes to September 2027, it is difficult to see much room for additional hikes to be priced in.

ING: Despite hot inflation prints in September and the Fed having signalled that further action to tame inflation will likely be needed, markets and economists are united in expecting the central bank to leave interest rates on hold at the 28 October FOMC meeting. Ongoing concerns about elevated price pressures mean we do expect a December interest rate rise.

• Cable nudges up to 1.3300 as pound benefits from low-key UK budget

• 1.3300 is Ldn/NY session high. 1.3274-1.3295 was pre-budget range

• UK doubles tax surcharge on banks to 6%. Fiscal headroom £15 billion

• OBR says UK's economic and fiscal position remains very challenging

• Fed rate hold expected at 1800 GMT; Warsh briefing starts 1830 GMT

• Dollar might strengthen on a more hawkish-than-expected Fed hold

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

CIBC Research reviews today's BoC October policy decision.

"The Bank of Canada raised its overnight rate by 25bp to 2.50% as widely expected today, as it looks to guard against the threat of elevated energy prices becoming a widespread inflationary problem. While the statement admitted that core measures of inflation remained close to 2% currently, it noted rising inflation expectations and producer prices as likely to drive an acceleration ahead, with the Bank's surveys suggesting greater passthrough of higher transportation costs is likely.  The Monetary Policy Report (MPR), utlilising the Bank's new economic model, showed a forecast for headline inflation to still be elevated at 2.6% at the end of 2027, even with the energy component being slightly negative by that time. However, the forecast for the output gap of between -1.25% and -0.25% shows that the Bank still believes that the economy is in excess supply, and the bank expects that new US tariffs will, at least temporarily, slow growth to 0.8% annualized in Q4," CIBC notes.

"As to what's ahead, the statement noted that there "could" be a need for further rate increases but that given continued economic uncertainty that they would "proceed carefully". We currently forecast that the Bank will hold in December before hiking once more in January," CIBC adds.

• AUD/USD rallied to a 1-month high in Asia, hit the 200-DMA, traded 0.7055

• Rally aided by Australia CPI, which upped chance RBA hikes, rallied yields

• Sellers emerged, 0.7024 hit in Europe, NY opened near 0.7030, pair up only +0.04%

• Fall from the high driven by USD buying, US yield

& USD/CNH gains

• Drops in gold, silver and copper also contributed to AUD/USD's slide from the high

• Daily techs warn bulls, RSI didn't confirm the high, gravestone doji candle formed

• Hold above 10- & 21-DMAs, rising monthly RSI gives bulls some comfort though

• Fed decision in focus, investors are leaning towards a hawkish hold
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• EUR/USD is hugging the YTD lows after a brief probe of 1.1113 during London session

• The bounce has been shallow, so risks remain firmly skewed to the downside

• Spot is in a narrow range ahead of the Fed decision

• No hike is expected, but rhetoric is likely to stay hawkish, which should keep the USD supported

• Corporate month-end today, which often coincides with dollar strength

• Should we see a clean break below 1.1113, this will open up 1.1000

• Initial resistance comes in at 1.1190-1.1205 (200-hour MA cluster)
EURUSD hourly chart

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

• Overnight expiry GBP/USD FX option implied vols are higher since including the UK budget and US Fed

• The gains show that the market is not ruling out increased volatility from these impending events

• Risk reversals have increased their vol premium and demand for GBP puts over calls this week

• Moves not excessive, but do suggest traders are more concerned about GBP/USD losses than gains

• Benchmark 1-month 25 delta risk reversals from 0.55 to 0.7 - recent highs since May were 1.0 on Oct. 1
GBP/USD 25 delta FX option risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY has slipped from 158.03 to 157.65, on Wednesday, EBS data shows

• Market on tenterhooks ahead of the Fed decision rate decision, a hawkish hold is eyed

• Daily cloud, that currently spans the 156.23-158.44 region, should continue to underpin USD/JPY

• If there is a eventual break above the cloud top, that would be quite bullish development

• USD/JPY and EUR/JPY tend to move in tandem, 30 and 60-day log correlations are high above +0.5

Daily Chart


Correlation Chart

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• AUD/USD jumped to 0.7055 in Asia on hot Australian Q3 CPI data

• 0.7055 is highest level since Sept 23 (0.7056 is 200DMA)

• Australian CPI data spurs hawkish shift in RBA rate expectations

• Markets now see 88% chance of RBA rate hike next week (Nov 3)

• AUD/NZD soared to 1.26 in Asia as kiwi sank on RBNZ rate hold shock

• 1.26 is 13-year high. Fed rate hold expected at 1800 GMT

AUDUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Cable falls to 1.3274, its lowest level since Oct 16, as oil prices rise

• Britain is net energy importer; US is net energy exporter

• 1.3300 (last week's low) is now a GBP/USD resistance level

• UK finance minister Healey to unveil his first budget from 1230 GMT

• Healey says he will help households by scrapping fixed gas charges

• Fed rate hold expected at 1800 GMT; Warsh briefing starts 1830 GMT

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• New Zealand central bank unexpectedly votes 4-3 to hold, sending kiwi dollar plunging as much as 1.7%

• US dollar in holding pattern ahead of pivotal Federal Reserve meeting, BoC decision also due

• Israeli shekel sinks as exit polls signal political deadlock after election

(Adds RBNZ commentary, Bank of Canada, Israeli shekel; updates markets through Asia afternoon)

By Gregor Stuart Hunter

SINGAPORE, Oct 28 (Reuters) - The US dollar held onto gains on Wednesday after rallying to a two-week high ahead of policy decisions from central banks including the Federal Reserve, though the kiwi dollar plunged after the country's central bank unexpectedly kept rates on hold.

Most of the dollar's peers were unmoved ahead of the Fed decision. The euro was flat at $1.1124, while the British pound slipped 0.1% to $1.32945. Against the yen , the dollar moved between gains and losses and was last flat at 157.945 yen.

The New Zealand dollar sank as much as 1.7% to an intraday low of $0.55831 after the Reserve Bank of New Zealand unexpectedly held interest rates at 2.75%. A Reuters poll said 22 of 27 economists expected the central bank to raise rates.

"The market just got that wrong," said Mike Houlahan, director at Electus Financial in Auckland.

"The election is only 10 days away," he added. "It's common courtesy not to get involved in politics."

The currency trimmed some losses after Governor Anna Breman said the central bank's rate-setting committee expected to see further official cash rate increases in coming meetings. She also said, "They may even be higher than we said at the September meeting."

"It looks like the RBNZ has delayed tightening rather than cancelled it outright and they'll probably resume before long," said Thomas Mathews, head of markets for Asia-Pacific at Capital Economics in Wellington. "That said, given the economic backdrop, it always seemed as though market pricing was a bit too aggressive. I wouldn't be surprised if we get more dovish 'surprises' over time and more kiwi weakness."

The Australian dollar was 0.1% stronger at $0.70345 after the release of inflation data, which stood at 1.3% in the third quarter of the year, up from 0.6% in the previous quarter. The trimmed mean measure of core inflation was 1%, matching market estimates and keeping the annualised rate at an above-target 3.6%.

The Reserve Bank of Australia will debate whether four interest rate hikes this year will prove sufficient to return inflation to its target at a policy meeting next week, Governor Michele Bullock told lawmakers on Wednesday.

"Today’s inflation data and Senate testimony are the final pieces of information before the RBA Monetary Policy Board (MPB) meets next week," Westpac analysts wrote. "Recent data and communication have consistently pointed to the staff recommending an increase in the cash rate," they added.

"We expect a majority of the external members to agree, though some members might dissent."

In the US, traders broadly expect no change in central bank policy. Fed funds futures are pricing an implied 91% probability that the Federal Open Market Committee will keep its policy interest rate on hold, the CME Group's FedWatch tool showed.

"The Fed doesn't need to hike today to move markets," said Chris Weston, head of research at Pepperstone Group in Melbourne. "It simply needs to change the perceived probability of hiking in December."

The US dollar index , which measures the greenback's strength against a basket of six currencies, was flat at 102.40, trading around its highest level since October 14. The yield on the US 10-year Treasury bond was up 2.2 basis points at 5.0112%.

Against the Canadian dollar , the US dollar was up 0.1% at C$1.4063 ahead of an interest rate decision from the Bank of Canada. The central bank will likely raise its benchmark interest rate as a pre-emptive move to stop energy-led inflation from spreading into the rest of the economy, according to money market data implying a 77% chance of a 25-basis-point increase. Economists surveyed by Reuters were more sceptical, with 19 out of 34 polled expecting a hike.

The Israeli shekel also weakened 1% on renewed political uncertainty as exit polls pointed to deadlock after the country's elections.

In cryptocurrencies, bitcoin was 0.4% higher at $81,062.47, while ether climbed 0.8% to $2,360.81.

(Reporting by Gregor Stuart Hunter; Editing by Christopher Cushing, Jacqueline Wong and Thomas Derpinghaus)

• USD/JPY remained bid in Asia, 157.80-158.03 EBS, in 156.23-158.44 Ichi cloud

• Market on tenterhooks ahead of FOMC policy announcement, hawkish hold eyed

• Moves in US yields, market reaction to FOMC to be eyed closely

• Case of buy-the-rumour, sell-the-fact? Plenty of uncertainties

• Further USD/JPY resistance at 158.54 200-DMA, 159.27 100-DMA

• Hourly Ichimoku tenkan 157.91, kijun 157.79, 200-HMA 157.70, cloud 157.04-38

• Option expiries today include 157.00/50 $1.9 bln, 157.75-85 $3.2 bln

• Also $1.5 bln at 158.00 strike and $1.4 bln between 158.25-30

• Large to massive option expiries today to help contain FX action into FOMC?

• JPY crosses mostly in stasis for now awaiting fresh flows

• EUR/JPY 175.57-84 EBS, holding above 175.19 low Friday, lowest since Oct '25

• Back below 175.80-176.06 hourly Ichimoku cloud

• CHF/JPY 190.15-65, 190.58 100-HMA cap? Below 191.58-194.53 daily Ichi cloud

• GBP/JPY 209.86-210.27, below 210.71-213.31 daily cloud, near 210.06 100-HMA

• AUD/JPY bid on hawkish RBA-speak, 110.84-111.34, below 111.71-112.09 cloud

• NZD/JPY 89.85 to 88.13 before steadying, against expectations, RBNZ holds

• RBNZ maintained its hawkish bias but did not hike as generally expected

• Related comments , , , also
USD/JPY hourly:


AUD/JPY hourly:


NZD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

(Adds RBNZ decision and moves in kiwi dollar)

By Gregor Stuart Hunter

SINGAPORE, Oct 28 (Reuters) - The US dollar held at a two-week high on Wednesday ahead of policy decisions from central banks, with the Federal Reserve widely expected to leave its policy interest rate unchanged while signalling the probability of any December move.

Most of the dollar's peers were unmoved ahead of the Fed decision. The euro was flat at $1.1129, as was the British pound at $1.3307. Against the yen , the dollar oscillated between gain and loss and was last 0.1% weaker at 157.81 yen.

The kiwi dollar sank as much as 1.7% to $0.5585 after the Reserve Bank of New Zealand unexpectedly held interest rates at 2.75%. A Reuters poll had 22 of 27 economists forecasting the central bank would raise rates.

"The market just got that wrong," said Mike Houlahan, director at Electus Financial Ltd in Auckland. "The election is only 10 days away," he added. "It's common courtesy not to get involved in politics."

The Australian dollar was 0.1% stronger at $0.7035 after the release of inflation data, which was 1.3% in the third quarter of the year, after 0.6% the previous quarter. The trimmed mean measure of core inflation was 1%, matching market estimates and keeping the annualised rate at an above-target 3.6%.

The Reserve Bank of Australia will debate whether four interest rate hikes this year will prove sufficient to return inflation to target at a policy meeting next week, Governor Michele Bullock told lawmakers on Wednesday.

In the US, traders broadly expect no change in central bank policy. Fed funds futures are pricing an implied 91% probability the Federal Open Market Committee will keep its policy interest rate on hold, the CME Group's FedWatch tool showed.

"The Fed doesn't need to hike today to move markets," said Chris Weston, head of research at Pepperstone Group in Melbourne. "It simply needs to change the perceived probability of hiking in December."

The US dollar index , which measures the greenback's strength against six currencies, rose 0.3% on Tuesday to 102.40, its highest since October 14. The yield on the US 10-year Treasury bond was unchanged at 4.9967%.

In cryptocurrencies, bitcoin was flat at $80,736.07, while ether nudged up 0.1% to $2,345.25.

(Reporting by Gregor Stuart Hunter; Editing by Christopher Cushing and Jacqueline Wong)

• NZD/USD -1.2% Wed after RBNZ unexpectedly leaves OCR on hold at 2.75%

• With a rate hike widely anticipated NZD under immediate selling pressure

• Break below 0.5636 21-DMA a very bearish signal, 0.5566 the next target

• RBNZ vote split 4-3 (hold versus hike), says further OCR increases likely

• FOMC outcome and associated dialogue due later Wed, will be closely watched

• Brent crude +0.5% in Asia to $114.40 a barrel as Middle East talks continue

• Overnight USD index gains & firmer UST yields weighed on NZD pre-RBNZ

• Range NZ 0.55831-0.5687, support 0.5566 0.5485, resistance 0.5995 0.6012
NZD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD +0.3% Wed after AU Sep quarter CPI prints above expectations

• AU Q3 CPI +1.3% q/q, +3.9% y/y (poll consensus: +1.2%, +3.9% respectively)

• RBA Governor Bullock says domestic capacity pressures fuelling inflation

• Futures pricing now implies 84% probability of Nov 3 RBA hike

• Contingent of RBA officials (including Bullock) before senate committee Wed

• FOMC widely expected to hold FFR steady Wed, dialogue will be critical

• WTI +0.5% in Asia to $100.42 a barrel as Middle East talks continue

• AUD sellers ahead of 0.7055 200-DMA will slow topside extension short-term

• Range Asia 0.7026-55 support 0.6865 0.6834, resistance 0.7053 0.7282
AUD Hourly Bollinger Study & DXY Daily 55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY from around 157.00 back to @158.00 into FOMC, hawkish expectations

• Though Fed on hold tonight, most see December hike

• USD broadly bid on back of this view, also on Wall St gains, Anthropic IPO

• USD/JPY 157.84-158.03 EBS so far in Asia, in 156.23-158.44 daily Ichi cloud

• Base of cloud rising gradually, top sideways, to eventually fall off sharply

• Move above hourly Ichi tenkan at 157.93 sustainable? Exporter offers 158.00+

• Support from 157.73 hourly kijun, then 157.70 200-HMA, cloud/100-HMA below

• Massive option expiries in area today, between 158.00-50 above $3.8 bln

• Below from 157.90 down to 157.00 total $3.8 bln too

• These option expiries likely to help contain spot into FOMC announcement

• JGB-US Treasury rate differentials in stasis below recent wides

• Related comments , , , also

• US markets , , ,
USD/JPY daily:


USD/JPY hourly:


USD/JPY nearby option expiries this week:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD -0.5% from Tue 0.5707 high as USD index gains 0.4% & UST yields firm

• RBNZ monetary policy meeting outcome due Wed, 25 bps hike widely anticipated

• NZD near lower hourly Bollinger band, downside extension unlikely pre-RBNZ

• FOMC outcome and associated dialogue due later Wed, will be closely watched

• Brent crude -1.4% as Middle East talks temper supply fears for time being

• Range NZ 0.5681-87, support 0.5566 0.5485, resistance 0.5995 0.6012
NZD Hourly Bollinger Study & DXY Daily 55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

MUFG Research previews tonight's October RBNZ meeting.

"First up in the schedule of G10 central bank announcements this week is the RBNZ which will announce later tonight, and the rates market is nearly fully priced for a 25bp hike. NZD is the third best performing G10 currency this month and a hawkish hike is what is required for that currency performance to continue – three rate hikes in total are priced by March so strong guidance supporting that pricing is required," MUFG notes.

"We expect the RBNZ to deliver tonight but ultimately under-deliver what is priced. We expect only one further hike to 3.25% – the market pricing implies 3.5 additional hikes after tonight’s. Q3 inflation was a little weaker than expected and that likely highlights the level of spare capacity in the New Zealand economy that won’t require what market pricing implies. The unemployment rate jumped to 5.6% in Q2, the highest level since Q3 2015. Risks are skewed to the downside for NZD and even if the RBNZ does deliver a hawkish hike, investors will at some point likely question the extent of hikes priced. We expect NZD to underperform over the forecast period ahead," MUFG adds.

• AUD/USD +0.2% from Tue 0.70099 low despite resurgent USD index (+0.4% Tue)

• AU Q3 CPI release 0030 GMT, Reuters poll consensus 1.2% q/q, +3.9% y/y

• Contingent of RBA officials (including Bullock) before senate committee Wed

• FOMC widely expected to hold FFR steady Wed, dialogue will be critical

• WTI -1.7% as Middle East peace hopes temper supply fears for time being

• AUD sellers between 0.7033 100-DMA & 0.7055 200-DMA capping topside moves

• Range Asia 0.70125-40 support 0.6865 0.6834, resistance 0.7053 0.7282
DXY Daily 55/100/200-DMA


AUD Daily 21/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

The dollar rose against most of its G10 peers on Tuesday as buoyant risk sentiment and upbeat US data lifted Treasury 2-year yields ahead of Wednesday's FOMC policy decision.

Meta Platforms raised its equity offerings to a record $97.5 billion, with the common stock offering five times oversubscribed, Bloomberg reported.

Durable goods orders rose 1.8% in September, while stronger-than-expected August home prices, firmer October regional Fed surveys and higher weekly Redbook sales underscored resilient US domestic demand.

Oil prices eased as optimism over Middle East peace efforts offset concerns about Strait of Hormuz shipping risks and Houthi attacks on Saudi Arabia facilities.

Qatar said Iran must demonstrate good intentions for mediation efforts to succeed following talks in Tehran.

The dollar index continues to trend higher in light turnover after clearing its 21-DMA at 101.99, with risk reversals showing growing demand for dollar upside across maturities.

EUR/USD was pressured below its 10- and 21-DMAs amid firmer Treasury yields, exposing its 1.1135 lower Bollinger after slipping under the 1.1140 level.

GBP/USD drifted lower, but light pre-event positioning ahead of the UK Budget and Fed meeting, coupled with expectations for a November BoE hike, helped anchor the pair above 1.3300.

USD/JPY held a firm tone near the 21-DMA at 157.90, with a break above 158.00 targeting the cloud top at 158.44 and 200-DMA at 158.55, while a drop below the Tenkan-sen at 157.32 would expose the lower end of the 156.98-158.89 Bollinger range.

AUD/USD was supported above 0.70 by firmer CNH and metals, ending just below its 0.7040 high and 100-DMA ahead of Australian CPI, while AUD/NZD edged higher into an RBNZ decision.

USD/CAD moved above its 100-DMA at 1.4046 ahead of Wednesday's Bank of Canada decision, recovering after Friday's brief break below 1.4000

Treasury yields rose as much as 2 basis points as the curve flattened. The 2s-10s curve dipped 1 basis point to +25.7bp.

The S&P 500 rose 0.52%, fueled again by tech shares.

WTO oil fell 1.8%, dipping below $100/bbl.

Gold rose 0.99% while copper gained 1.73%.

Heading toward the close: EUR/USD -0.33%, USD/JPY +0.28%, GBP/USD -0.22%, AUD/USD +0.16%, DXY +0.34%, EUR/JPY -0.04%, GBP/JPY +0.09%, AUD/JPY +0.44%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)