Forex Today: Is the BoJ Set to Hold Rates Steady?

Renewed selling weighed on the US Dollar (USD) on Thursday, pushing it to three-day lows as traders weighed the ECB’s interest rate decision and continued to track the crisis in the Middle East.

A second consecutive session of declines briefly took the US Dollar Index (DXY) below the crucial 102.00 support zone. On the data calendar, the Chicago PMI will round off the releases, alongside the quarterly Employment Cost Index figures.

EUR/USD extended its recovery beyond 1.1170, supported by the ECB’s hawkish stance and a fresh bout of US Dollar selling. Germany’s upcoming releases include the labour market report, flash Q3 GDP growth figures and preliminary inflation data. An advance estimate of Q3 GDP growth for the wider euro area is also scheduled for release.

With Wednesday’s gains extending into a rise to three-day highs, GBP/USD has turned its attention back to the important 1.3400 resistance level. The calendar features Nationwide housing price figures, ahead of the BoE’s Decision Maker Panel (DMP).

After recovering from the previous day’s pullback, USD/JPY returned to levels above 158.00. An unchanged interest rate is expected from the BoJ. Other domestic releases include the unemployment rate, Tokyo CPI, retail sales, preliminary industrial production figures, housing starts and construction orders.

A rise to five-week highs near 0.7070 proved short-lived for AUD/USD, which soon ran out of momentum and finished the day modestly lower in the low 0.7000s. Quarterly producer price data are due alongside housing credit/private sector credit figures.

Fresh optimism over a diplomatic resolution to the Middle East conflict briefly drove front-month WTI futures (December contract) below $100.00 per barrel. Prices subsequently recovered some ground but remained slightly lower.

After three consecutive daily gains, gold reversed course, bringing renewed attention to the pivotal  $4,000 level per troy ounce. The precious metal remains under pressure as persistently high US inflation supports the Fed’s stance of keeping policy tighter for longer.