Daily Financial Breakfast 27 October 2026: WTI Recovers to $101; Is Japan Ready for FX Action? Katayama Says Yes

Market News Today: What Is Driving Oil, Currencies and Digital Assets?

• Oil rebounded, with WTI moving above $101 per barrel even as shipping attacks persisted following regional security talks in Tehran.
• Decisive intervention in the foreign exchange market remained within the government's options, Japanese Finance Minister Satsuki Katayama said.
• An additional £20.4 billion could flow into UK investment through public financial institutions, Financial Times and Times reporting cited by Deutsche Bank indicated.
• Final OCC approval has cleared the way for Ripple National Trust Bank to manage RLUSD reserves and extend digital asset custody services, according to an announcement by Ripple CEO Brad Garlinghouse.
• For its proposed US perpetual futures arrangement, Hyperliquid identified Kraken parent Payward as the intended first CFTC-regulated HIP-3 deployer; the arrangement still requires regulatory approval.

How Are Major Markets Trading?

Where Are Currency Markets Heading?

A firmer US Dollar Index approached 102.00 on Monday. Even a stronger-than-expected Ifo survey in Germany did not prevent EUR/USD from reaching its lowest level since October 15 that day. Further weakness took the pair to around 1.1170 in early Asian trade on Tuesday. AUD/USD, by contrast, recovered to around 0.7025 on Tuesday, having lost 0.26% to 0.7016 on Monday. Tuesday's rise in USD/CAD extended its advance to a second successive day and brought it to around 1.4020. The recovery had begun on Monday, when the pair moved off a six-week low to end seven days of losses.

Can Gold Sustain Its Recovery Above $4,000?

Fresh selling limited gold's recovery during Tuesday's Asian session as the US dollar gained ground, though the metal continued to trade above $4,000. Gold had regained that threshold with a 0.6% advance on Monday, after ending the previous week below it.

How Are Energy Markets Responding to & Geopolitics?

What Has Changed as WTI Rebounds Above $101 Despite Attacks and Tehran Talks?

Continued attacks on ships seeking to cross the Strait of Hormuz accompanied Tuesday's recovery in WTI above $101 per barrel. Earlier in the Asian session, oil had traded around $100.10 as renewed Middle East diplomacy coincided with losses for a second successive day.

High-level discussions in Tehran ended on Monday with Iran, Saudi Arabia, Pakistan and Turkey agreeing to keep security talks going and reinforce regional cooperation, Islamic Republic of Iran Broadcasting reported. The meeting was also presented by Saudi Arabia's foreign minister as an effort to reduce tensions.

Four Houthi drones heading towards southern Saudi Arabia were intercepted and destroyed by air defences on Tuesday, the Saudi-led coalition said, Reuters reported. Separately, weekend attacks on pumping stations along the country's east-west pipeline and on Riyadh airport were claimed by the Houthis. According to Commerzbank's Carsten Fritsch, a fire erupted near Ras Tanura, Saudi Arabia's largest Persian Gulf export terminal, after an attack on Tuesday. What caused the fire remained unclear.

Since the start of October, 28 confirmed and reported incidents involving Iranian attacks on ships in the Strait of Hormuz and neighbouring waterways had been recorded, Fritsch said, citing Washington Institute for Near East Policy figures. The count reached 113 when measured from the start of the war nearly eight months earlier. More than 1.5 billion barrels of oil had moved through the strait since the summer with assistance from US armed forces, according to a senior US military official.

Fritsch also noted that Friday had taken Brent to $117.45 per barrel, a peak of nearly six months. Its weekly closing price was the highest since June 2022.

What Is in Focus for Government & Fiscal Policy?

Could Japan Take Decisive FX Action, as Katayama Signals Readiness?

Currency movements would be watched with heightened urgency, including while she was speaking, Japanese Finance Minister Satsuki Katayama said on Tuesday. She reiterated the government's preparedness to take decisive measures in the foreign exchange market.

Gains in USD/JPY continued into a third consecutive day on Tuesday. A move on Monday from just above 156.50 to just above 157.50 had left the pair close to its session high at the finish, reversing about half of the losses incurred on October 22–23. Before that rebound, Friday's trading had seen 156.08, the lowest reading since September 18.

Could Reported UK Budget Plans Add £20.4 Billion to Public Investment?

Public financial institutions, or PuFins, would play a larger role under plans reported by the Financial Times and Times, rather than under a confirmed Budget announcement. Citing that reporting, Deutsche Bank economists Sanjay Raja and Maui Brennan identified an additional £20.4 billion of investment through the National Wealth Fund and British Business Bank, with outlays concentrated in the later years from 2028/29.

The investment Chancellor Healey would deploy in the Autumn Budget appeared larger than Deutsche Bank's previous assumption, the bank said in its assessment of the reports. It had assumed an £8 billion expansion and an equivalent increase at next year's Spending Review. Around £20 billion over five years was the investment figure carried in Financial Times headlines.

The economists put the government's gross financing requirement for 2030/31 at just over £250 billion. Their projections, which allowed for slightly higher HMRC savings, showed cash borrowing rising by nearly £10 billion each year towards the end of the Office for Budget Responsibility's forecast period. Applying OBR multipliers to the financial transactions, they estimated a possible 0.5% addition to GDP by 2031/32.

After Monday's decline, sterling was changing hands around $1.3335 in early European trade on Tuesday. The previous session had seen a fall of about 0.22% to $1.3342 and a finish just below $1.3350, its lowest level since the October 20 employment data. Tuesday also brought gains against the euro, following little net change on Monday.

What Is Changing in Digital Asset Regulation?

What Does Final OCC Approval Mean for Ripple National Trust Bank?

A Monday announcement on X by Ripple CEO Brad Garlinghouse confirmed that the charter for Ripple National Trust Bank had secured final approval from the Office of the Comptroller of the Currency.

Reserve management for Ripple USD, or RLUSD, is among the activities the federally supervised trust bank can now undertake. The approval also permits it to act as collateral trustee for holders and extend its digital asset custody services. Standard Custody & Trust Company is the issuer of RLUSD. Tuesday saw XRP trading around $1.30.

How Would Payward Support Hyperliquid's Proposed Regulated US Perpetual Futures?

US customers would gain perpetual futures markets built on Hyperliquid's infrastructure under plans described in Hyperliquid's Monday post on X. The company identified Payward, parent of crypto exchange Kraken, as its intended first CFTC-regulated deployer for HIP-3 markets. The proposed arrangement has yet to receive the required regulatory approval.

Responsibility for creating, owning and administering the markets would lie with Bitnomial under the proposal, as would clearing and settlement. Bitnomial serves as Payward's CFTC-regulated designated contract market and derivatives clearing organisation. Optional on-chain allowlists introduced by HIP-3 let deployers limit access without giving up independent control over their markets.

Plans previously set out by Payward would apply perpetual futures models to individual stocks, using the regulated exchange and clearing services of Bitnomial.

Which Key Events Come Next?

• What Will the Federal Reserve Decide on Interest Rates? (28 October 2026): The interest rate decision is announced as the Federal Open Market Committee brings its monetary policy meeting to a close.
• What Will the UK Autumn Budget Set Out? (28 October 2026): The government's proposals for taxation and spending are presented.
• What Is Next for Bank of Canada Interest Rates? (28 October 2026): A monetary policy announcement comes from the Bank of Canada.
• What Will the European Central Bank Decide on Interest Rates? (29 October 2026): The ECB's next policy announcement follows its September increase of 25-basis-point to 2.50%.
• What Will the Bank of Japan Decide on Monetary Policy? (30 October 2026): The monetary policy outcome is announced by the Bank of Japan.
• What Is Due in Australia's Consumer Price Index Release?: Inflation figures for Australia are expected, but the release date and time were not specified.
• When Are Canadian GDP Figures Due?: Later in the week, Canada is due to release its GDP data.