Forex Today: Markets remain cautious as US producer inflation release approaches

Key developments to watch on Friday, 13 November:

Above 103.00, the US Dollar (USD) Index is consolidating after a three-day advance took it to its highest point since April 2025. The index measures the greenback against a basket of six major currencies. Friday's European calendar includes September Trade Balance figures and revised third-quarter Gross Domestic Product (GDP) growth data. October's Producer Price Index (PPI) figures will follow later in the day from the US Bureau of Labor Statistics (BLS).

With no major economic releases on Thursday, risk aversion helped the USD extend its gains against other currencies. Additional support came from the benchmark 10-year US Treasury bond yield, which rose above 5% as Federal Reserve (Fed) officials made hawkish remarks.

Posting on Truth Social on Thursday, US President Donald Trump said they do not "need a deal with Iran." The comments were followed by a rise in oil prices, with a barrel of West Texas Intermediate (WTI) gaining more than 2% over the day. Meanwhile, modest selling pressure persisted in Wall Street's main indices after trading opened. This followed reports that Nvidia's (NVDA) long-serving CEO and co-founder Jensen Huang was resigning as CEO amid board scrutiny over several affairs. US stock index futures are slightly lower in early Friday trading.

Fed's Williams highlights US resilience while warning of persistent inflation risks

A 7/10 FXS Speechtracker score, against a 6.1/10 baseline, placed New York Fed President John Williams's speech modestly above the historical average for hawkishness. He described a resilient, robust US economy that is gaining strength without overheating. By stressing that inflation remains “stubbornly persistent and elevated” and that the central bank “still has work to do” before reaching the appropriate monetary policy stance, he maintained a data-dependent message with a clear bias towards tightening.

San Francisco Fed President Mary Daly struck a similar tone, highlighting upside inflation risks from technology-led momentum and sticky services prices, even though AI's current contribution to inflation is modest. Her emphasis on a “bias” towards further tightening, willingness to support a September rate rise and assessment that inflation pressures are “up, not down” signalled that reducing inflation remains the Fed's priority. That stance also acknowledged that future AI-driven productivity improvements could potentially help lower inflation.

According to strategists at National Bank of Canada, the dollar “remains supported by persistent inflation and the prospect of further Fed tightening.” Their assessment is that “following October’s pause, another firm CPI report reinforces our expectation for tighter policy before year-end,” while a “deterioration in global risk appetite could provide further support through safe-haven demand.”

Gold fell by more than 2.5% on Thursday, reaching its lowest point since October 2025 at around $3,850. Friday has brought an upward correction, although the precious metal is still trading below $4,000.

EUR/USD is recovering during European trading, moving above 1.1050, but is still heading for a weekly decline.

GBP/USD is confined to a narrow range beneath 1.3250 on Friday, following three successive days of declines. Its loss for the week exceeds 0.8%.

USD/JPY climbed above 160.00 during Asian trading to reach its highest point since early September, before pulling back sharply as the European session approached. At the time of writing, it stood at 159.80, broadly flat on the day. On Friday, Japanese Prime Minister Sanae Takaichi said the government was maintaining close contact with US financial authorities over currency markets. She also reaffirmed officials' commitment to keeping the foreign exchange market orderly.