Forex Today: Fed Unlikely to Spring Any Surprises

Caution across global markets ahead of the Fed meeting has accompanied further gains in the US Dollar (USD), which has built on Monday’s positive momentum to trade around fresh two-week highs amid mixed US Treasury yields.

Fresh two-week highs are in place for the US Dollar Index (DXY) as it builds on its recent move above the key 102.00 barrier. Attention now turns to the FOMC meeting and the customary press conference by Chair Warsh that follows. On the data calendar, the regular MBA Mortgage Applications release precedes the advance Goods Trade Balance figures, Wholesale Inventories and the EIA’s weekly update on US crude oil stockpiles.

With selling pressure intensifying, EUR/USD has slipped towards two-week lows around 1.1130. Germany’s domestic calendar features just the GfK Consumer Confidence release.

A third consecutive day of losses has brought GBP/USD close to the key 1.3300 area, corresponding to five-day lows. In the UK, attention will centre on the Autumn Budget.

Three-day highs have come into view for USD/JPY after another strong session carried the pair towards the 15800 barrier. Japan’s next releases, all scheduled for October 29, comprise 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 economic calendar will be dominated by the release of September inflation figures.

As traders continue to assess hopes for a diplomatic resolution to the US-Iran-Hormuz conflict, front-month WTI futures (December contract) have faced renewed pressure. Prices are testing $99.00 per barrel, extending Monday’s pullback.

Strong gains have taken gold further above the key $4,000-per-troy-ounce level to three-day highs, building on Monday’s rise. Tuesday’s support for the precious metal appears to have come partly from lower crude oil prices and mixed US Treasury yields.