Forex Today: Caution prevails ahead of the Fed

The US Dollar (USD) has started the week in an auspicious fashion, further extending its recovery to the area of multi-day highs. The Greenback’s extra strength has followed a mixed tone in US Treasury yields amid a generalised cautious stance among market participants.

The US Dollar Index (DXY) has briefly surpassed the 102.00 barrier, building on Friday’s advance ahead of key events and data later in the week. The ADP Employment Change Weekly figures are due in the first turn, seconded by the 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.

EUR/USD has receded to multi-day troughs, returning to the sub-1.1200 region in response to the extra improvement in the US Dollar’s sentiment. The ECB’s Loan to Companies/Households data will be released prior to the speech by the ECB's Lagarde.

GBP/USD has followed the gloomy mood in the risk-associated universe, tumbling to four-day lows in the 1.3330-1.3320 band. Another gauge of UK inflation is due, this time from the BRC Shop Price Inflation.

The mixed tone in the US money market and extra gains in the US Dollar have sparked a decent recovery in USD/JPY, sending spot to two-day peaks around 157.60. Next on tap on the Japanese calendar will be the usual weekly Foreign Bond Investment figures along with the Consumer Confidence reading.

AUD/USD has further extended its bumpy trade, although the 0.7000 contention zone seems to have contained the bearish impulse fairly well for now. The key Inflation Rate will gather all the attention in Oz on October 28.

Front-month WTI futures (December contract) have come under extra pressure, adding to Friday’s retracement and briefly approaching the psychological $100.00 mark per barrel before staging some recovery. The commodity’s decline has followed renewed hopes of a potential US-Iran agreement to end the conflict in the Middle East. 

Gold has managed to regain some composure, setting aside two daily pullbacks in a row and regaining the area beyond the key $4,000 mark per troy ounce. The yellow metal’s bounce has come despite a stronger US Dollar and mixed US Treasury yields, although declining crude oil prices appear to have underpinned the move.