Forex Today: More expectations than action

What you need to take care of on Friday, October 28:

First-tier events flooding the macroeconomic calendar had far less impact than anticipated, despite bringing some fresh, interesting developments. Generally speaking, the American dollar retains its previous weak tone, as US Treasury yields edged sharply lower following the release of the preliminary estimate of the Q3 Gross Domestic Product. The  Bureau of Economic Analysis reported that the economy grew at an annualized pace of 2.6% in the three months to September, better than anticipated.

Wall Street got an unexpected boost ahead of the opening but finished the day mixed on the back of earnings reports.

The EUR was the worst performer against the greenback as the ECB announced its monetary policy decision. As widely anticipated, the central bank hiked the three main rates by 75 bps, but the message on growth and economic developments was most discouraging. In one line, policymakers expect inflation to remain elevated and growth to slow further. Upcoming rate hikes will be data-dependant and a meeting-by-meeting decision. The only thing clear about them is that more hikes are needed to reach the ECB’s inflation goal.

Additionally, the ECB introduced changes to the Targeted Longer-Term Refinancing Operations (TLTRO) III program, also meant to tighten financial conditions further.  the interest rate on TLTRO III operations will be indexed to the average applicable key ECB interest rates over this period. The existing interest rate calculation method will be maintained for the period from the settlement date of each respective TLTRO III operation until 22 November 2022, albeit with indexing to the applicable key ECB interest rates ending on that date.

GBP/USD trades around 1.1570, marginally lower for the day. AUD/USD also shed some ground and hovers around 0.6460. The USD/CAD, on the other hand, trades little changed around 1.3550.

The greenback also appreciated against the CHF, with the pair now trading at 0.9915, while USD/JPY pivots around 146.10 ahead of the Bank of Japan monetary policy decision.

Gold shed some ground but is little changed at around $1,660 a troy ounce, while crude oil prices ticked higher. WTI settled at $88.90 a barrel.

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