Forex Today: Markets turn their attention to UK inflation

With investors continuing to weigh hopes of a possible US-Iran agreement following reports that remain unconfirmed, the US Dollar (USD) has extended its correction, briefly slipping to three-week lows.

A marked improvement in appetite for risk assets has kept the US Dollar Index (DXY) under pressure for another day, taking it briefly back towards 101.50, its lowest level in three weeks. Next on the calendar are the regular MBA Mortgage Applications figures, ahead of the EIA’s weekly US crude oil inventories report.

Around 1.1260, the latest advance in EUR/USD lost momentum, although the pair has extended its rebound. Attention on the domestic economic calendar now turns to the euro area’s flash Consumer Confidence reading on 22 October.

Ahead of the key UK Inflation Rate release and Public Sector Net Borrowing figures, GBP/USD has strengthened further, reaching five-week highs just above 1.3400.

Range-bound trading has continued in USD/JPY, with the pair edging lower on this occasion to revisit the low 158.00s. Japan’s Balance of Trade figures will be the main domestic economic release to watch.

A third successive daily advance has brought AUD/USD up to test the key 0.7000 level. Australia’s next scheduled releases are the flash S&P Global Manufacturing and Services PMIs on 23 October.

After earlier climbing above the psychological $100.00 per barrel level, front-month WTI futures have faced renewed selling pressure. Expectations of an agreement to bring the Middle East crisis to an end appear to have weakened the commodity’s recent strong upward momentum.

Despite a softer US Dollar and broadly lower US Treasury yields, Gold has extended its earlier decline. The precious metal slipped towards $4,100 per troy ounce on Tuesday.