The Indian rupee remained weaker than 84 in mid-October, holding near its record low amid persistent pressure from some fresh foreign exchange outflows as markets assessed the policy outlook for the RBI. Consumer inflation soared past expectations to 5.5% in September, rebounding past the RBI’s target of 4% to drive markets to reconsider whether the central bank will still commence its loosening cycle this year. Still, evidence of foreign currency outflows from Indian financial markets offset the impact of hawkish RBI and maintained the rupee close to its lowest on record. The robust economic backdrop and sticky stubborn inflation in the United States reiterated a less-dovish outlook for the Federal Reserve and pared demand for riskier currencies that perform better when the world’s largest economy eases their financial conditions. Additionally, investors have also pivoted some positions toward China among bets that fresh stimulus measures will bring better returns.

Indian Rupee Holds Near Record Low

The British pound remained below $1.31, the lowest level in about a month, after fresh labour data for the UK reinforced the bets the Bank of England will continue to cut borrowing costs, with another reduction expected next month. Wage growth continued to slow and hit a fresh tow-year low in the three months to August, indicating easing pay pressures in the economy. Inflation data and retail sales figures are also due this week and will provide further insights on price pressures and consumer strength. At the same time, investors are also looking towards the 2025 Budget presentation later this month for clarity on government policies and taxes. In addition, the pound has been pressured by a general dollar strength as the Federal Reserve is expected to reduce borrowing costs at a slower pace than previously thought.

British Pound Remains at One-Month Lows

The Australian dollar held its recent decline to around $0.672 on Tuesday, hovering near a one-month low as the greenback rallied further on bets that the Federal Reserve will take a more moderate approach to cutting interest rates in its upcoming meetings. The Aussie also came under pressure from softer oil, copper and iron ore prices as Australia’s economy relied heavily on commodity exports. Moreover, the local currency tracked weakness in the yuan after China’s fiscal stimulus plan announced over the weekend failed to inspire market confidence by leaving investors guessing on the size of the rescue package. On the monetary policy front, minutes of the Reserve Bank of Australia’s last meeting hinted at dovish considerations as board members discussed scenarios for both lowering and raising rates. However, RBA Deputy Governor Andrew Hauser later emphasized that the central bank’s fight against inflation is “far from over.”

Australian Dollar Remains Under Pressure

The Japanese yen traded around 149.5 per dollar on Tuesday, sliding toward the psychologically important 150 level as the dollar rallied further on bets that the Federal Reserve will take a more moderate approach to cutting interest rates in the upcoming meetings. The yen also tracked weakness in the yuan after China’s fiscal stimulus plan announced over the weekend failed to inspire market confidence by leaving investors guessing on the size of the rescue package. Domestically, dovish signals from Bank of Japan Governor Kazuo Ueda and an opposition to further rate hikes by new Prime Minister Shigeru Ishiba pressured the local currency further. Ishiba said earlier this month that current economic conditions may not warrant additional rate hikes. Investors now look ahead to Japanese trade and inflation data later this week for fresh insights on the economy.

Japanese Yen Weakens Toward 150/dollar

The offshore yuan weakened past 7.11 per dollar, hitting its lowest level in over a month, as the US dollar continued to strengthen amid growing expectations that the Federal Reserve will take a more cautious approach to cutting interest rates in the months ahead. The yuan's weakness was also attributed to China's lower-than-expected trade data, with both exports and imports falling short of market expectations. Additionally, China reported softer-than-expected consumer inflation over the weekend, marking the lowest reading since June, reinforcing the need for stronger policy interventions from Beijing. Also, the country’s producer price index extended its deflationary trend for the 24th straight month, signaling persistent weakness in domestic demand despite government efforts to stabilize the economy. Further weighing on the yuan, sentiment was dampened after a weekend briefing from China’s Finance Ministry, which failed to impress with its vague fiscal stimulus plan.

Offshore Yuan Hits Over 1-Month Low

The New Zealand dollar traded around $0.609 on Tuesday as investors awaited the release of the third-quarter CPI data. The country’s inflation is seen falling back into the central bank’s 1-3% target range, easing to 2.2% in the September quarter from 3.3% in the previous period. Markets are currently pricing in an 80% chance that the RBNZ will deliver another half-point reduction at its final meeting of the year in November. Externally, the Kiwi is facing downward pressure from a firm US dollar, driven by expectations that the Federal Reserve may adopt a more measured pace of rate cuts in the coming months. Additionally, sentiment was dampened after China’s recent fiscal stimulus briefing lacked clarity, providing little details on its economic support measures.

New Zealand Dollar Holds Steady Ahead of CPI Data

USDCNY increased to a 4-week high of 7.11. Over the past 4 weeks, US Dollar Chinese Yuan gained 0.21%, and in the last 12 months, it decreased 2.67%.

Chinese Yuan Hits 4-week Low

The dollar index held above 103 on Tuesday, hovering at its highest levels in over two months amid bets that the Federal Reserve will take a more moderate approach to cutting interest rates in the coming months. The latest US economic data showed that the labor market remains resilient, while consumer inflation came in stronger-than-expected in September. On Monday, Fed Governor Christopher Waller also called for “more caution”  on further rate cuts amid solid data. Markets are currently assigning an 87% probability for a more modest 25 basis point rate cut in November, while pricing out any chances of another half-percentage point reduction. Investors now look ahead to more Fed commentary from Daly, Bostic and Kugler on Tuesday, as well as the latest consumer inflation expectations data. The dollar held recent gains against most major currencies, and continued to strengthen on the yuan following China’s disappointing stimulus announcements.

Dollar Hovers at Over 2-Month High

Bitcoin rallied to around $66,000 in mid-October, marching toward its highest levels since late July as US presidential candidate Kamala Harris pledged to support a regulatory framework for cryptocurrencies, allaying some concerns about the administration’s critical approach to the crypto industry. Her rival former president Donald Trump has voiced support for crypto throughout his campaign. Bitcoin also got a boost after China’s weekend stimulus announcements failed to excite investors, prompting a rotation from Chinese equities back into cryptocurrencies. Elsewhere, BlackRock CEO Larry Fink called bitcoin a legitimate investment and as an asset class in itself, downplaying regulatory concerns amid wider acceptance and liquidity.

Bitcoin Surges to Around $66K

The Mexican peso weakened past 19.35 per USD in October, retreating from monthly highs as investors assessed the latest domestic economic data amid a strengthening US dollar. Mexico's consumer confidence index fell to 47.1 in September from 47.6 in August, which had marked the highest level since February 2019. This decline reflects a deterioration in sentiment regarding both household finances and the country’s economic outlook, alongside a reduced willingness among consumers to make significant purchases. Furthermore, Mexico's economic outlook appears bleak, with recent data revealing a contraction in industrial production, showing a 0.9% annual decrease in August, way below expectations and the sharpest contraction since March. Minutes from the Bank of Mexico highlighted the necessity for a less restrictive monetary policy in light of the economic slowdown and easing price pressures. The central bank is expected to reduce rates by 50 basis points to 10% for the remainder of 2024.

Mexican Peso Weakens Amid Dimming Economic Outlook

USDHKD decreased to a 10-week low of 7.76. Over the past 4 weeks, US Dollar Hong Kong Dollar lost 0.39%, and in the last 12 months, it decreased 0.69%.

Hong Kong Dollar Hits 10-week High

The Euro weakened to $1.0932, a two-month low, as monetary policies diverge between the European Central Bank (ECB) and the US Federal Reserve. The ECB is expected to cut its deposit rate by 25 bps on Thursday, following reductions in September and June. Traders anticipate more cuts at every meeting through March, reflecting the ECB's response to slowing inflation, which dropped to 1.8% in the Eurozone, the lowest since April 2021. In contrast, stronger-than-expected US jobs and inflation data have reduced bets on further significant rate cuts by the Federal Reserve, maintaining pressure on the Euro.

Euro at 2-Month Low as ECB Meeting Approaches

The Japanese yen weakened past 149 per dollar on Monday, sliding toward its lowest levels since early August as the dollar strengthened on firm expectations that the Federal Reserve will not deliver further supersized rate cuts at its remaining meetings this year. The yen also tracked weakness in the yuan after China’s fiscal stimulus plan announced over the weekend failed to inspire market confidence by leaving investors guessing on the size of the package. In Japan, Prime Minister Shigeru Ishiba said earlier this month that current economic conditions may not warrant additional rate hikes. However, other top Japanese officials subsequently watered down the PM’s comments, with Chief Cabinet Secretary Yoshimasa Hayashi saying Ishiba did not make any specific request to Bank of Japan Governor Kazuo Ueda during their meeting.

Japanese Yen Remains Under Pressure

The Australian dollar depreciated to around $0.673 on Monday, snapping a two-day advance as China’s fiscal stimulus plan announced over the weekend failed to inspire market confidence by leaving investors guessing on the size of the package. The Aussie is a liquid proxy for the yuan, and Australia’s economy relies heavily on exports to China. The local currency also came under pressure from a strong US dollar amid firm expectations that the Federal Reserve will not deliver further supersized rate cuts at its remaining meetings this year. Domestically, minutes of the Reserve Bank of Australia’s last meeting revealed that board members discussed scenarios for both lowering and raising interest rates in the future amid considerable uncertainty about the economic outlook. Still, the central bank concluded that the current level of the cash rate best balanced risks to inflation and the labor market.

Aussie Slips as China Stimulus Vows Disappoint

The dollar index traded around 103 on Monday, hovering near its highest levels in two months on firm expectations that the Federal Reserve will not deliver further supersized rate cuts at its remaining meetings this year. Those views developed as the latest monthly jobs report and consumer inflation data came in stronger-than-expected, although higher weekly jobless claims and slowing producer inflation provided a counter argument. Markets are currently assigning an 87% probability for a more modest 25 basis point rate cut in November, while pricing out any chances of another half-percentage point reduction. Investors now look ahead to retail sales and fresh jobless claims data this week, as well as Fed Governor Christopher Waller’s remarks later today. The dollar strengthened across the board, and gained notably on the yuan following China’s disappointing stimulus announcements over the weekend.

Dollar Hovers Near 2-Month High

The New Zealand dollar fell to around $0.608 on Monday, weighed down by a strong US dollar and uncertainty surrounding China's fiscal support measures. Last week’s US economic data led traders to scale back expectations for large interest rate cuts by the Federal Reserve at its remaining meetings this year. Meanwhile, China announced more fiscal stimulus over the weekend, but the lack of specifics on the size of the package left markets disappointed. Domestically, the Kiwi faced additional pressure after the Reserve Bank of New Zealand cut interest rates by half a percentage point and hinted at the possibility of further aggressive easing. On the economic data front, New Zealand's manufacturing activity improved slightly in September but remained in contraction for the 19th consecutive month. Similarly, the services sector continued to contract for the seventh straight month, reflecting ongoing challenges in the economy.

New Zealand Dollar Weakens

The offshore yuan depreciated past 7.07 per dollar following China's announcement of a new fiscal stimulus package aimed at propping up its slowing economy. On Saturday, the Chinese government unveiled plans to bolster the property sector, raise public debt to support economic growth, boost bank capital to stimulate lending, and offer subsidies to low-income households. However, markets found the announcement underwhelming due to the lack of concrete additional stimulus measures. Further weighing on the yuan was the softer-than-expected consumer inflation data, marking its lowest level since June, underscoring the need for more robust policy interventions from Beijing. Moreover, China's producer price deflation worsened beyond market forecasts, marking the 24th consecutive month of contraction and the sharpest decline since March. This reflects ongoing weakness in domestic demand despite repeated government efforts to support the economy.

Offshore Yuan Falls Amid New Fiscal Stimulus and Inflation Data

The South Korean won depreciated past 1,350 per dollar, hitting a near two-month low amid ongoing dollar strength as investors scaled back expectations of significant rate cuts by the Federal Reserve this year. Recent higher-than-expected US September inflation fueled speculation that the Fed may slow rate cuts, as FOMC minutes showed officials were divided on the recent rate cut. Domestically, the Bank of Korea reduced its base rate by 25 basis points to 3.25%, as widely expected, joining other regional peers in the easing cycle. BOK Governor Rhee Chang-yong described the move as a 'hawkish cut,' signaling that the central bank is expected to proceed cautiously with further easing of borrowing costs due to constraints on property prices and rising household debt. Investors now look ahead to a slew of economic reports later today including South Korean import and export prices for September, as well as the latest unemployment rate.

South Korean Won Weakens to 2-Month Low

The Euro traded around $1.09, the weakest level in about two months, prompted by a general dollar strength amid prospects the Federal Reserve will lower borrowing costs at a slower-than-anticipated pace. In Europe, the ECB is expected to lower the deposit rate by 25bps when it meets next week, following similar moves in both September and June. Traders are now betting the central bank will continue to reduce costs by a quarter-point at every meeting through March. Annual inflation rate in the Eurozone fell to 1.8% in September 2024, the lowest since April 2021.

Euro Hovers Around 2-Month Lows

The dollar index rose further to test the 103 mark on Friday, its highest in nearly two months, as the latest economic data continued to favor a less-dovish outlook by the Federal Reserve. Domestic producer prices stagnated in September, but the core gauge rose slightly more than the market consensus. The developments underscored concerns that underlying inflation may remain sticky in the US economy and prevent the Federal Reserve from delivering many rate cuts next year after elevated prices for shelter and transportation services lifted the CPI by more than expected. Consequently, Atlanta Fed President Raphael Bostic noted he would consider holding rates steady at the November meeting depending on economic conditions.

US Dollar Index Rises to Near 2-Month High

The Canadian dollar depreciated to 1.37 per USD, the weakest level since mid-August, prompted by a general dollar strength amid prospects the Federal Reserve will lower borrowing costs at a slower-than-anticipated pace. In Canada, investors lowered bets for a 50bps reduction in the key policy rate by the Bank of Canada this month, following a stronger-than-expected jobs report. The Canadian economy created 46.7K jobs in September, way above forecasts of 27K and the unemployment rate unexpectedly declined to 6.5% compared to forecasts of 6.7%. The Bank of Canada is expected to reduce interest rates by 25bps on October 23rd, in line with the last three meetings.

Canadian Dollar Weakens After Jobs Data

The Indian rupee weakened past 84 per USD in October, a fresh record low, as dovish signals by the RBI magnified the impact of foreign currency outflows. The RBI held its benchmark policy rate at 6.5% this month but set the stage for lower rates by noting that food inflation is expected to ease in coming months, relaxing the concern of upside risks to inflation that was repeatedly flagged by the central bank previously. Still, the central bank warned that it would remain cautious not to overhaul its progress in fighting inflation. In the meantime, the rupee remained under pressure from foreign currency outflows. These were magnified by lower confidence in riskier currencies and stronger demand for the dollar’s safety amid heightened geopolitical tensions in the Middle East and the Fed’s less-dovish outlook following a strong jobs report and concerns of sticky US inflation. Additionally, investors also pivoted toward Chinese markets amid Beijing’s aggressive stimulus measures.

Indian Rupee Falls to Record Low

The British pound traded below $1.31, the lowest level in about a month, prompted by a general dollar strength amid prospects the Federal Reserve will lower borrowing costs at a slower-than-anticipated pace. In the UK, investors are anticipating a more aggressive stance from the Bank of England on interest rate cuts, following Governor Andrew Bailey's suggestion at this possibility if inflation pressures continue to ease. The central bank held interest rates steady at 5% in September, following a quarter-point rate cut in August. Traders are now betting on two more cuts in 2024. The British GDP expanded 0.2% in August in line with expectations, indicating the economy is on track for growth in the third quarter, albeit at a slower rate than earlier in the year.

British Pound Little Changed after GDP

The South Korean won strengthened to around 1,350 per dollar after two consecutive declines, following the widely expected decision by the Bank of Korea to cut its rate for the first time in four years. The BOK reduced its base rate by 25 basis points to 3.25%, joining other regional peers in the easing cycle. Recent data showed that the South Korean economy contracted for the first time in one and a half years, while September's inflation slowed to 1.6%, the lowest since February 2021. Still, the BOK is expected to proceed cautiously with any further easing of borrowing costs due to ongoing constraints on property prices and rising household debt. In the US, higher-than-expected inflation data for September reinforced speculation that the Federal Reserve's next policy moves may not be as aggressive as initially anticipated. This came alongside the latest FOMC minutes, which revealed that officials were divided on the size of the recent US rate cut.

South Korean Won Strengthens on BOK Outlook

The Australian dollar stabilized above $0.674 on Friday, but traded close to its lowest levels in four weeks amid growing expectations that the US Federal Reserve will proceed more cautiously with interest rate cuts. Those views came on the heels of strong US jobs and inflation data, while a key Fed official signaled willingness to hold rates steady in November. Investors also cautiously awaited announcements of further stimulus measures in top trading partner China, with the finance ministry scheduled for a press conference on Saturday. Domestically, minutes of the Reserve Bank of Australia’s last meeting revealed that board members discussed scenarios for both lowering and raising interest rates in the future amid considerable uncertainty about the economic outlook. Still, the central bank concluded that the current level of the cash rate best balanced risks to inflation and the labor market.

Australian Dollar Holds Near 4-Week Low

The Japanese yen traded around 148.7 per dollar on Friday, hovering close to its lowest levels since early August and facing pressure from the dollar’s strength amid growing expectations that the US Federal Reserve will proceed more cautiously with interest rate cuts. Those views came on the heels of strong US jobs and inflation data, while a key Fed official signaled willingness to hold rates steady in November. In Japan, Prime Minister Shigeru Ishiba said earlier this month that current economic conditions may not warrant additional rate hikes. However, other top Japanese officials subsequently watered down the PM’s comments, with Chief Cabinet Secretary Yoshimasa Hayashi saying Ishiba did not make any specific request to Bank of Japan Governor Kazuo Ueda during their meeting.

Japanese Yen Hovers Near 2-Month Low

The offshore yuan stabilized at 7.07 per dollar as traders awaited potential additional stimulus announcements from a finance ministry press conference scheduled for Saturday. Traders are highly anticipating a major fiscal package, estimated at CNY 2-3 trillion. Earlier in the week, the People's Bank of China introduced a new funding scheme, initially valued at CNY 500 billion, to support the capital markets. Financial institutions are now able to apply for the program, reflecting the PBOC's proactive approach to stabilizing market conditions. Additionally, NDRC Chairman Zheng Shanjie unveiled plans to issue special-purpose bonds to drive local government growth, including ultra-long sovereign bonds worth CNY 1 trillion already allocated for regional projects. The central government is also set to unveil a CNY 100 billion investment plan for next year by the end of this month, earlier than previously scheduled.

Offshore Yuan Stabilizes as More Stimulus Eyed

The South Korean won held its recent decline toward 1,350 per dollar, hovering at eight-week lows after the Bank of Korea cut its rate for the first time in four years. The BOK reduced its base rate by 25 basis points to 3.25%, as widely expected, following recent data showing that the South Korean economy shrank by 0.2% quarter-on-quarter in Q2, marking the first contraction in one and a half years, while September's inflation slowed to 1.6%, the lowest since February 2021. Investors are now focusing on comments from BOK Governor Rhee Chang-yong to discuss the decision and insights into future policy direction. Meanwhile, higher-than-expected inflation data for September in the US reinforced speculation that the Federal Reserve's next policy moves may not be as aggressive as initially anticipated. This came alongside the latest FOMC minutes, which revealed that officials were divided on the size of the recent US rate cut.

South Korean Won Holds Decline After BOK Decision

The New Zealand dollar maintained its recent gains around $0.609 on Friday as investors parsed fresh economic data. Annual food inflation in New Zealand rose to 1.2% in September, up from 0.4% in the previous month. Additionally, the country’s manufacturing sector improved in September (46.9 vs 46.1 in August), but stayed firmly in contraction for the 19th consecutive month. Earlier this week, the Reserve Bank of New Zealand stepped up the pace of its policy easing with a half-point rate cut and signaled the possibility of further aggressive measures. This led investors to bet on another 50-basis-point cut at the central bank's November meeting. Meanwhile, slightly higher-than-expected US inflation data and an increase in weekly jobless claims did not reduce expectations that the Federal Reserve will lower rates in November. Other Fed officials also appeared unaffected by the data, indicating the likelihood of additional rate cuts in the coming months.

New Zealand Dollar Holds Gains

The dollar index held around 102.9 on Friday and was headed for a second straight weekly gain as the latest US economic data and central bank indications prompted traders to temper expectations on Federal Reserve interest rate cuts. Data released on Thursday showed that consumer inflation slowed less than expected in September, raising concerns that further hot inflation data could force the Fed to skip a rate cut in the upcoming meetings. Atlanta Fed President Raphael Bostic also said on Thursday he would consider holding rates steady at the November meeting depending on economic conditions. Meanwhile, initial jobless claims surprised on the upside, reaching a fresh 14-month high of 258K. Investors now look ahead to producer inflation data on Friday to gain more insights on price trends. The dollar traded near recent highs against most major currencies, but pulled back slightly on the yen.

Dollar Heads for 2nd Weekly Gain

The Canadian dollar weakened past 1.37 per USD in October, hitting a nine-week low as foreign currency inflows diminished and the US dollar strengthened. Canada’s trade deficit widened to CAD 1.10 billion in August, the largest since May, driven by a 1.0% drop in exports, particularly a 4.1% decline in crude oil shipments, the nation’s top export. This was exacerbated by falling energy prices amid weaker stimulus from China. Additionally, expectations for softening labor market data, due Friday, have fueled speculation of further monetary easing by the Bank of Canada. Meanwhile, hotter-than-expected US CPI figures heightened concerns that inflation may remain persistently above target, supporting the case for more restrictive Fed policies.

Canadian Dollar Depreciates to 9-Week Low

The dollar index initially edged lower but immediately cut the losses to trade little changed at 102.9 on Thursday as traders digest a hotter-than-expected inflation print. The annual inflation rate slowed to 2.4% but traders were expecting a smaller 2.3% rate. Also, the core rate unexpectedly edged up to 3.3%. Both the headline and the core monthly rates also topped forecasts. Meanwhile, initial jobless claims surprised on the upside and reached a fresh 14-month high of 258K. The odds for a 25bps reduction in the fed funds rate in November currently hold at 86%. Minutes from the last FOMC meeting in September reinforced the Fed's view that the half-point should not be seen as a signal of a less favorable economic outlook or that the pace of policy easing would be more rapid from now on.

DXY Wavers After CPI Report

GBPUSD decreased to a 4-week low of 1.31. Over the past 4 weeks, British Pound US Dollar gained 0.17%, and in the last 12 months, it increased 6.08%.

British Pound Hits 4-week Low

The British pound fell below $1.31, the lowest in one month, as the outlook of a less-dovish Federal Reserve magnified the impact that a dovish Bank of England has on the currency pair. Bank of England Governor Andrew Bailey signaled a shift toward a more "activist" and "aggressive" approach to cutting rates, though BoE Chief Economist Huw Pill urged a more cautious path. Markets loosely expect the BoE to end its rate-cutting cycle at around the 3.5% mark, 150bps lower than the current level. In the meantime, investors assessed the fiscal outlook brought by the UK’s new government, and how spending cuts and tax hikes signaled by the Labour Party in the upcoming year’s budget may impact growth concerns. In the US, a strong jobs report lifted the dollar and pressured the currency pair ahead of the key US CPI print.

British Pound Falls to 1-Month Low

The euro weakened to toward the $1.093 mark in October, extending its bearish trend to a two-month low as growing expectations that the European Central Bank will deliver a series of rate cuts to attend to growth concerns contrasted with bets of a less-dovish Federal Reserve. Inflation in the Eurozone fell to below the 2% threshold in September, while PMI data pointed to contractions in aggregate and member-state economic activity in the period. Consequently, the ECB is expected to extend its cutting cycle with a 25bps reduction in its main rates next week. The euro was also pressured by lingering fiscal concerns in France, placing credit risks on the bloc’s second-largest economy and raising the outlook of the country’s debt supply. In turn, fresh evidence of a strong labor market in the US limited the urgency for the Fed to deliver an aggressive amount of rate cuts. Investors now await the US inflation print for more hints on the Fed’s outlook.

Euro Drops to 2-Month Low

The offshore yuan appreciated past 7.07 per dollar, boosted by the People's Bank of China's latest efforts to support the equity market. The central bank announced a new funding scheme, with an initial value of CNY 500 billion, aimed at bolstering the capital market. Financial institutions can now begin applying to participate in the program, signaling a proactive step by the PBOC to stabilize market conditions. Earlier in the week, NDRC Chairman Zheng Shanjie announced a plan to issue special-purpose bonds aimed at driving local government growth, with ultra-long sovereign bonds totaling CNY 1 trillion already earmarked for regional projects. In addition, the central government is set to unveil a CNY 100 billion investment plan for next year by the end of this month, earlier than previously scheduled. Meanwhile, traders now look ahead to the upcoming release of U.S. inflation data later today, hoping to glean insights into the Fed's policy direction.

Offshore Yuan Gains on PBOC Intervention

The South Korean won continued its recent decline toward 1,350 per dollar, hovering close to eight-week lows as the US dollar strengthened after the FOMC minutes revealed that officials were divided on the size of the recent US rate cut. This prompted investors to lower expectations for further significant US rate cuts, following last week's stronger-than-expected US labor market data. Domestically, slowing price growth reinforced expectations that the Bank of Korea will cut its policy rate on Friday for the first time in over four years. The country's consumer inflation recently slowed to 1.6% in September, the lowest level since February 2021. Earlier data also showed that South Korea's manufacturing PMI dropped sharply to 48.3 in September from 51.9 in August, marking the first contraction in factory activity in five months, further supporting the case for a dovish decision by the BOK.

South Korean Won Remains Under Pressure

The Australian dollar traded around $0.672, hovering near its lowest levels in nearly a month as investors recalibrated expectations on Federal Reserve interest rate cuts in light of the latest US jobs report and FOMC minutes. The lack of further stimulus measures in China also weighed on the Aussie, which is a liquid proxy for the Chinese yuan given Australia’s economic reliance on China. Domestically, a private survey showed that consumer inflation expectations in Australia fell to a three-year low of 4% in October. Meanwhile, minutes of the Reserve Bank of Australia’s last meeting revealed that board members discussed scenarios for both lowering and raising interest rates in the future amid considerable uncertainty about the economic outlook. Still, the central bank concluded that the current level of the cash rate best balanced risks to inflation and the labor market.

Australian Dollar Hovers at Near 1-Month Low

The Japanese yen depreciated past 149 per dollar, sliding toward its lowest levels since early August as traders scaled back expectations of aggressive Federal Reserve rate cuts in light of the latest US jobs report and FOMC minutes. Investors also geared up for the latest US inflation data that could influence the Fed’s interest rate decision in November. Domestically, data showed that producer prices in Japan rose more than expected in September, marking the 43rd consecutive month of producer inflation. Meanwhile, lending activity in the country slowed for the second straight month in September to the softest pace in nearly a year. The yen came under pressure recently when new Prime Minister Shigeru Ishiba and his economy minister Ryosei Akazawa advocated for caution before raising rates further given current economic conditions.

Japanese Yen Slides Toward 2-Month Low

The New Zealand dollar rose to around $0.607 on Thursday, after falling 1.2% to a seven-week low in the previous session, following a supersized interest rate cut by the Reserve Bank of New Zealand. The RBNZ lowered its official cash rate to 4.75% from 5.25% on Wednesday, marking its second consecutive cut since August, amid moderating inflation and subdued economic activity. The central bank also hinted further easing ahead, prompting markets to bet on another 50-basis-point reduction in November. Meanwhile, investors reassessed future US rate cut prospects, after minutes from the Federal Reserve’s September meeting revealed policymakers were divided on the size of the cut. Attention now turns to the US CPI data, due later in the day, and the PPI report on Friday, both of which could provide further insights into the Fed’s next policy move.

NZ Dollar Nurses Losses After Hefty Rate Cut

The dollar index held around 102.9 on Thursday, hovering at its highest levels in nearly two months as investors prepared for the September consumer price index report that could influence the Federal Reserve’s interest rate decision in November. Minutes of the Fed’s September meeting revealed that policymakers were divided on how aggressively to cut rates, but ultimately decided on a jumbo 50 basis point reduction in an effort to balance inflation targeting with rising labor market risks. Traders have been scaling back expectations for aggressive Fed rate cuts after last week’s strong US jobs report. Markets now see around an 83% probability that the Fed will deliver a more modest 25 bps cut in November, while pricing out any chances of another half-percentage point reduction. The dollar held gains against most major currencies, but pulled back slightly versus the kiwi in a likely technical correction.

Dollar Firms Up Ahead of CPI Report

The New Zealand dollar extended its recent decline toward $6.05 in October, the lowest since mid-August after the Reserve Bank of New Zealand cut interest rates by half a percentage point. This marked the second consecutive reduction, bringing the official cash rate to 4.75% from 5.25%. The move followed a 25-basis-point cut during the central bank's previous meeting in August. The central bank expressed confidence that next week’s CPI data would show annual inflation not only within the target range of 1-3% but nearing the 2% midpoint. Meanwhile, minutes from the Federal Reserve’s last meeting showed that multiple policymakers preferred a softer 25bps cut instead of the aggressive 50bps reduction that was ultimately delivered by the central bank, adding to the less-dovish outlook for the Fed following the US’s strong jobs report.

New Zealand Dollar Extends Losses

The dollar index rose for an eights straight session and topped 102.9 on Wednesday, the highest level since mid-August, as traders bet the Fed will deliver a smaller 25bps reduction in the Fed funds rate in November. Minutes from the last FOMC meeting in September showed policymakers were divided on the size of the rate cut, with some participants favoring a quarter-point reduction instead of the 50bps cut delivered. The minutes reinforced Fed's view that the half-point should not be seen as a signal of a less favorable economic outlook or that the pace of policy easing would be more rapid from now on. Traders now wait the CPI and PPI data due this week to assess how price pressures are evolving in the economy. The odds for a 25bps cut in the fed funds rate currently stand around 78%. The greenback strengthened against major currencies, notably the yen and euro.

Dollar at Near 2-Month High

The Mexican peso weakened past 19.4 per USD, moving further away from a two-week high of 19.27 reached on October 4, as investors evaluated the latest domestic inflation data while the US dollar gained ground. Mexico's core annual inflation rate fell to 3.91% in September, its lowest level since February 2021, down from 4% in August and slightly below forecasts. Similarly, the headline annual inflation rate declined for the second consecutive month to 4.58%, its lowest since March and below market expectations of 4.62%. Easing price pressures could prompt the Bank of Mexico to consider further interest rate cuts after a recent reduction, pressuring the Mexican peso. Meanwhile, the US dollar strengthened due to expectations of a less dovish Federal Reserve and increased safe-haven demand, further weighing on the peso.

Mexican Peso Retreats Further

The Brazilian real weakened past 5.47 per USD in October, a four-week low, amid concerns of lower foreign exchange inflows and a strengthening US dollar, while investors digested the latest inflation data. Investor sentiment was dampened by China’s lack of additional fiscal measures following its large monetary stimulus, tempering hopes for increased demand for Brazilian commodities from its key trading partner. Meanwhile, US dollar strength further pressured the real,as expectations of a less dovish Federal Reserve compounded with safe-haven demand to support the greenback. Domestically, the annual inflation rate rose to 4.42% in September, up from 4.24% in August and in line with forecasts, increasing pressure on the central bank to maintain its hawkish stance.

Brazilian Real Weakens to 4-Week Low

The US Dollar exchange rate rose above 100 Russian Ruble in the foreign exchange interbank market.

Russian Ruble traded above 100

The Indian rupee held at the 84 per USD level, remaining close to the record low of 84.05 touched on October 4th amid dovish signals by the RBI and an upturn in foreign currency outflows. The RBI held its benchmark policy rate at 6.5% in its October meeting, as expected, but set the stage for the start of its loosening cycle by noting that food inflation is expected to ease in coming months, relaxing the upside risks to inflation that was repeatedly flagged by the central bank previously. Still, the central bank warned that it would remain cautious to not overhaul its progress in fighting inflation. In the meantime, the rupee remained under pressure from foreign currency outflows. These were magnified by lower confidence in riskier currencies amid heightened geopolitical tensions in the Middle East, the Federal Reserve’s less-dovish outlook, and pivots toward Chinese markets amid Beijing’s aggressive stimulus measures.

The South African rand traded around 17.6 per USD, its lowest since mid-September, amid a stronger dollar as traders remained focused on the Fed's interest rate path and ongoing geopolitical tensions. At the same time, uncertainty around China's stimulus plans added further pressure given the strong economic ties between South Africa and China. Meanwhile, the new Government of National Unity (GNU) remains a positive development for South Africa, but internal clashes and the absence of a comprehensive policy plan to advance the country pose significant challenges. On the monetary policy front, the South African Reserve Bank cautiously began its rate-cutting cycle with a 25 basis-point reduction in September. The next cut is expected at the November 2024 meeting, the Reserve Bank’s final meeting of the year, with another 25bp cut anticipated.

South African Rand at Near 1-Month Low

The offshore yuan steadied around 7.07 per dollar as traders awaited further economic stimulus from China to bolster sentiment. On Tuesday, a briefing from the National Development and Reform Commission (NDRC) disappointed, as no immediate new measures were announced, leaving markets underwhelmed. However, NDRC Chairman Zheng Shanjie announced a plan to issue special-purpose bonds aimed at driving local government growth, with ultra-long sovereign bonds totaling CNY 1 trillion already earmarked for regional projects. In addition, the central government is set to unveil a CNY 100 billion investment plan for next year by the end of this month, earlier than previously scheduled. Traders are also keenly awaiting the release of the Fed's September FOMC minutes later today, hoping to gain insights into the central bank’s policy trajectory.

Offshore Yuan Stabilizes as Traders Await More Stimulus

The dollar index traded around 102.5 on Wednesday, hovering near seven-week highs as investors awaited minutes of the Federal Reserve’s last meeting to gain fresh insights on the monetary policy path. Markets also look forward to the September Consumer Price Index report on Thursday that could influence the trajectory of Fed rate cuts. Last week, a stronger-than-expected US jobs report prompted traders to price out any chances of another jumbo 50 basis point rate cut in November. Markets now see about an 85% probability of a more modest 25 bps reduction and 15% odds of no change in policy. The greenback held steady against most major currencies, but strengthened further on the kiwi after the Reserve Bank of New Zealand lowered its cash rate by 50 bps, cutting rates for the second straight meeting amid easing inflation and subdued economic activity.

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Indian Rupee Holds Near Record Low

British Pound Remains at One-Month Lows

Australian Dollar Remains Under Pressure

Japanese Yen Weakens Toward 150/dollar

Offshore Yuan Hits Over 1-Month Low

New Zealand Dollar Holds Steady Ahead of CPI Data

Chinese Yuan Hits 4-week Low

Dollar Hovers at Over 2-Month High

Bitcoin Surges to Around $66K

Mexican Peso Weakens Amid Dimming Economic Outlook

Hong Kong Dollar Hits 10-week High

Euro at 2-Month Low as ECB Meeting Approaches

Japanese Yen Remains Under Pressure

Aussie Slips as China Stimulus Vows Disappoint

Dollar Hovers Near 2-Month High

New Zealand Dollar Weakens

Offshore Yuan Falls Amid New Fiscal Stimulus and Inflation Data

South Korean Won Weakens to 2-Month Low

Euro Hovers Around 2-Month Lows

US Dollar Index Rises to Near 2-Month High

Canadian Dollar Weakens After Jobs Data

Indian Rupee Falls to Record Low

British Pound Little Changed after GDP

South Korean Won Strengthens on BOK Outlook

Australian Dollar Holds Near 4-Week Low

Japanese Yen Hovers Near 2-Month Low

Offshore Yuan Stabilizes as More Stimulus Eyed

South Korean Won Holds Decline After BOK Decision

New Zealand Dollar Holds Gains

Dollar Heads for 2nd Weekly Gain

Canadian Dollar Depreciates to 9-Week Low

DXY Wavers After CPI Report

British Pound Hits 4-week Low

British Pound Falls to 1-Month Low

Euro Drops to 2-Month Low

Offshore Yuan Gains on PBOC Intervention

South Korean Won Remains Under Pressure

Australian Dollar Hovers at Near 1-Month Low

Japanese Yen Slides Toward 2-Month Low

NZ Dollar Nurses Losses After Hefty Rate Cut

Dollar Firms Up Ahead of CPI Report

New Zealand Dollar Extends Losses

Dollar at Near 2-Month High

Mexican Peso Retreats Further

Brazilian Real Weakens to 4-Week Low

Russian Ruble traded above 100

Indian Rupee Holds Near Record Low

South African Rand at Near 1-Month Low

Offshore Yuan Stabilizes as Traders Await More Stimulus

Dollar Holds Gains Ahead of Fed Minutes