Forex Today: Fed expected to deliver no surprises

With US Treasury yields mixed and global markets remaining cautious ahead of the Fed, the US Dollar (USD) has built on Monday’s positive tone to trade around fresh two-week highs.

Having recently broken above the key 102.00 barrier, the US Dollar Index (DXY) has pushed further ahead to new two-week highs. Attention will centre on the FOMC meeting, followed by Chair Warsh’s customary press conference. On the data calendar, the regular MBA Mortgage Applications release precedes the advance Goods Trade Balance figures, Wholesale Inventories and the EIA’s weekly report on US crude oil stockpiles.

Renewed selling has pulled EUR/USD towards two-week lows around 1.1130. Germany’s domestic calendar contains just one release: the GfK Consumer Confidence gauge.

A third consecutive daily decline has taken GBP/USD towards the key 1.3300 area, close to five-day lows. In the UK, the Autumn Budget will dominate the agenda.

USD/JPY has reached three-day highs after another strong session brought the pair close to the 15800 barrier. Japan’s next scheduled releases, all due on 29 October, are the regular weekly Foreign Bond Investment figures and the Consumer Confidence reading.

Fresh five-week highs above the key 0.7000 level have marked AUD/USD’s outperformance against its risk-sensitive peers. Australia’s September inflation figures will be the principal release on the domestic calendar.

As traders continue to assess hopes for a diplomatic resolution to the US-Iran-Hormuz conflict, front-month WTI futures (December contract) have faced further selling pressure. Prices have extended Monday’s retreat to test $99.00 per barrel.

Lower crude oil prices and mixed US Treasury yields appear to have provided some support for Gold on Tuesday. The precious metal has gained considerable momentum, building on Monday’s rise to reach three-day highs further above the key $4,000 level per troy ounce.