Forex Today: Dollar strengthens ahead of RBA, Fed and more

What you need to take care of on Monday, November 1:

The American dollar surged on Monday, posting uneven gains against most major rivals. Tepid Chinese data released at the beginning of the day, alongside continued signs that global inflation is out of control, fuel risk-averse trading.

At the beginning of the day, Australia reported that TD Securities Inflation was up by more than anticipated in October, now at 5.2% YoY from 5% in the previous month. Later in the day, the Eurozone published the preliminary estimate of the October Consumer Price Index, up at an annualized pace of 10.7%, a new record.

Central banks have adopted aggressive quantitative tightening to bring inflation down, but so far, there are no signs that price pressures have begun receding. The Bank of Canada and the Reserve Bank of Australia have already started easing the pace of tightening.  

The Reserve Bank of Australia will open the central banks’ calendar on Tuesday and is expected to announce a modest 25 bps rate hike despite inflation jumping to a two-decade high in the third quarter of the year. The US Federal Reserve will announce its decision on Wednesday, and market players anticipate a 75 bps hike and hint it will start slowing the pace of rate hikes in December. Finally, the Bank of England will have a Super Thursday, with the latest political turmoil in the United Kingdom generating uncertainty on what Governor Andrew Bailey and co can do this time. Finally on Friday, the US will publish the October Nonfarm Payrolls report.

In the UK, Prime Minister Rishi Sunak and Chancellor Jeremy Hunt were on the wires, anticipating that it is unavoidable that all Britons would pay more taxes.

The EUR/USD pair lost the 0.9900 threshold and trades near a daily low of 0.9872, while GBP/USD trades around 1.1470. Commodity-linked currencies recovered some ground ahead of the close as Wall Street trimmed most of its early losses. AUD/USD trades just below 0.6400, while USD/CAD is down to 1.3620.

The USD/JPY pair advanced and is now trading around 148.60, while USD/CHF hovers around parity.

Gold trades at its lowest in a week, now hovering around $1,635, while crude oil prices edged lower and WTI changes hands at $86.40 a barrel.

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