Forex Today: Dollar weaker at the beginning of the week

What you need to take care of on Tuesday, October 18:

The American dollar edged lower at the beginning of the week as news coming from the UK weighed on global government bonds and the greenback’s demand. GBP/USD surged to 1.1439, to later finish the day at around 1.1350

The new Chancellor of the Exchequer, Jeremy Hunt, announced the government would drop most of the tax-related measures announced on September 23, meant to stabilize the financial system. Prime Minister Liz Truss anticipated tax cuts and price caps on energy before becoming elected, but the British Pound collapsed after revealing her plan. The mini-budget meant to provide peace generated chaos amid funding black holes and ended up with Kwasi Kwarteng, the former Chancellor of the Exchequer, being sacked after just a couple of weeks in office. Market players reduced their bets on future rate hikes, now expecting it to total 175 bps by the end of the year.

 The AUD/USD pair trades around 0.6280 after failing to retain gains above 0.6300, while USD/CAD is down to 1.3720, despite discouraging Canadian data. The Bank of Canada survey on business sentiment showed that it saw its worst drop since 2022.     

USD/JPY extended its rally, now hovering around 149.00 despite Japanese Finance Minister Suzuki announcing they would respond to speculative moves while warning they are observing FX “motions.”

Gold flirted with $1,670 a troy ounce but finished the day at around $1,647, easing ahead of Wall Street’s close. Crude oil prices were under mild pressure, with WTI now trading at around $84.85 a barrel.

US government bond yields recovered ahead of the close, ending the day pretty much unchanged, despite substantial gains among US indexes.

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