Forex Today: ECB commentary and German inflation take centre stage

Strong buying has returned to the US Dollar (USD), reversing a substantial part of Monday’s decline. Investors have begun pricing in the possibility of another Federal Reserve rate hike in December, particularly after the October inflation data.

With the 102.00 barrier reclaimed, the US Dollar Index (DXY) has moved higher and is once again eyeing recent peaks near 102.50. The regular MBA Mortgage Applications release and a speech by the Fed’s Bowman are next on the calendar.

Renewed US Dollar strength has pushed EUR/USD back towards the 1.1170 area as the pair resumes its downward move. Germany’s final Inflation Rate reading is up next, ahead of speeches by 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 12 November, alongside the preliminary Q3 GDP Growth Rate, flash quarterly Business Investment figures, Balance of Trade results, Construction Orders/Output, Industrial/Manufacturing Production and the NIESR Monthly GDP Tracker.

A sharp rally has carried USD/JPY above the 158.00 barrier and into the region of two-week highs. The upcoming releases are the Reuters Tankan Index and Machine Tool Orders. 

Monday’s attempted rally in AUD/USD has been fully reversed, with the pair tumbling to eight-month lows near 0.6850. Australia’s quarterly Home Loans data and Investment Lending for Homes figures are next on the calendar.

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

Heavy US Dollar buying, higher US Treasury yields across the curve and mounting speculation about further Fed tightening have pushed Gold to two-day lows, putting its key $4,000 per troy ounce level at risk.