Forex Today: German inflation and ECB commentary take centre stage

October’s inflation figures have helped prompt investors to price in the possibility of another Federal Reserve rate increase in December. Against that backdrop, the US Dollar (USD) has rallied strongly, recovering a substantial portion of Monday’s losses.

With the 102.00 threshold reclaimed, the US Dollar Index (DXY) has moved higher and brought recent peaks near 102.50 back into focus. The regular MBA Mortgage Applications release and a speech from the Fed’s Bowman are next on the calendar.

A pronounced strengthening of the US Dollar has sent EUR/USD lower again, with the pair retreating towards 1.1170. Germany’s final inflation reading is the next release, ahead of speeches from the ECB’s Cipollone and Lagarde.

Monday’s recovery in GBP/USD has given way to steep losses, taking the pair back to the 1.3350 area. In the UK, the RICS House Price Balance is due on November 12, alongside preliminary Q3 GDP growth, flash quarterly Business Investment figures, Balance of Trade data, Construction Orders/Output, Industrial/Manufacturing Production and the NIESR Monthly GDP Tracker.

The area around two-week highs is being tested by USD/JPY after a sharp advance through 158.00. Next on the Japanese calendar are the Reuters Tankan Index and Machine Tool Orders. 

Monday’s attempt at a rally has been entirely reversed in AUD/USD, which has slumped to eight-month lows near 0.6850. Australia’s forthcoming releases include quarterly Home Loans figures and Investment Lending for Homes.

Easing tensions in the Middle East have prompted further losses in front-month WTI futures (December contract). Prices briefly slipped below $84.00 per barrel for the first time since late August.

Strong demand for the US Dollar, higher US Treasury yields across the curve and mounting speculation about additional Fed tightening have pushed Gold down to two-day lows, putting its key $4,000 per troy ounce level under threat.