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USD Index Steadies Above Key Support, GBP Fails to Recover

FOREX
  • AUD sits higher against most others in G10 following the higher-than-expected CPI print during Asia-Pac hours, with the release putting prices to just below the $0.64 handle. AUD/USD has drifted since, with the gravity of more sizeable option strikes at 0.6325 (A$421mln) and 0.63 (A$727mln) likely weighing.
  • The USD Index is seen firmer, snapping a four session streak of lower highs after markets found firm support ahead of the 50-dma of 105.285 yesterday. The longer prices hold above this mark (which is trending higher), the more likely a resumption of the M/T uptrend drawn off the July low.
  • The single currency trades well, helping pressure the Monday high in EUR/GBP. Strength through 0.8726 opens the bull trigger of 0.8741 for direction, a level that could come into focus in the coming week, which covers both the ECB and BoE rate decisions.
  • The Bank of Canada decision takes focus going forward, with the board seen unanimously keeping its policy rate on hold at 5% for the second meeting running. We focus on updated forecasts for when the Bank sees excess supply (July forecast early 2024) and when it sees inflation returning to the 2% target (July forecast mid-2025).
  • Outside of the BoC, new home sales data for September is set to cross, and while both ECB's Lagarde and Fed's Powell are set to make appearances, they will steer clear of comments on monetary policy given the respective media blackout periods for both the ECB and the Fed.
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