Forex Today: German Inflation and ECB Commentary Take Centre Stage

October inflation data have been a particular focus as investors begin pricing in another possible Federal Reserve rate rise in December. The US Dollar (USD) has consequently gathered strong upward momentum, reversing a substantial portion of Monday’s decline.

102.00 has been reclaimed by the US Dollar Index (DXY), which has moved above that level and turned its attention back to recent highs near 102.50. The regular MBA Mortgage Applications release and a speech from the Fed’s Bowman are next on the agenda.

EUR/USD is retreating towards 1.1170 as renewed selling follows a pronounced advance in the US Dollar. Germany’s final Inflation Rate reading is due next, ahead of speeches from the ECB’s Cipollone and Lagarde.

GBP/USD is back around 1.3350, posting steep losses as Monday’s recovery gives way. Across the Channel, the forthcoming calendar includes the RICS House Price Balance on November 12, alongside the preliminary Q3 GDP Growth Rate, initial quarterly Business Investment data, Balance of Trade figures, Construction Orders/Output, Industrial/Manufacturing Production and the NIESR Monthly GDP Tracker.

USD/JPY has surged through 158.00 and is testing levels around two-week highs. The next releases are the Reuters Tankan Index and Machine Tool Orders. 

AUD/USD has tumbled to around 0.6850, an eight-month low, erasing Monday’s attempted rally in full. Australia’s upcoming releases include quarterly Home Loans data and Investment Lending for Homes.

$84.00 per barrel was briefly breached to the downside by front-month WTI futures (December contract) for the first time since late August. The contract extended its retreat as tensions in the Middle East eased.

Gold’s key $4,000 per troy ounce level is under threat as the metal falls to two-day lows. Strong demand for the US Dollar, higher US Treasury yields across the curve and mounting speculation about further Fed tightening have driven the decline.