Forex markets diverge on monetary policy in the week of 26–31 October 2026
🌐 Central bank meetings highlighted different responses to energy-driven inflation. Currency moves reflected both rate decisions and how far they differed from market expectations.
💵 The Fed held rates at 3.75–4.00%, with two members favouring a 25-basis-point increase. Its call for more data cooled the dollar after the meeting, although resilient US growth and persistent inflation continued to limit downside.
🍁 CAD and NZD showed a clear divergence. The BoC raised rates by 25 basis points to 2.50%, supporting CAD, while the RBNZ’s unexpected hold at 2.75% weighed on NZD. However, the RBNZ still left further tightening open, so the pause did not signal a shift towards easing.
💴 JPY found support as the BoJ held rates at 1.25% while sounding more confident about progress towards its inflation target. Prospects for another hike and lower US yields pressured USD/JPY, although a sustained move still depends on the US–Japan yield gap.
💶 The ECB kept its deposit rate at 2.50% as energy costs threatened both inflation and growth. Better economic data could support EUR, but French fiscal risks and energy import costs remained constraints.
🛢️ Oil remained a shared driver with different effects across currencies. Energy revenues can support CAD, while Europe faces higher import costs. If escalating tensions trigger broader risk aversion, demand for safe havens could outweigh the benefits for commodity currencies.
📅 Next week, attention turns to the RBA on 3 November and the BoE on 5 November, alongside US data and Middle East developments. AUD and GBP reactions will depend on decisions relative to expectations and guidance on the rate path ahead.
#ForexInsights $SOL $BTC
🌐 Central bank meetings highlighted different responses to energy-driven inflation. Currency moves reflected both rate decisions and how far they differed from market expectations.
💵 The Fed held rates at 3.75–4.00%, with two members favouring a 25-basis-point increase. Its call for more data cooled the dollar after the meeting, although resilient US growth and persistent inflation continued to limit downside.
🍁 CAD and NZD showed a clear divergence. The BoC raised rates by 25 basis points to 2.50%, supporting CAD, while the RBNZ’s unexpected hold at 2.75% weighed on NZD. However, the RBNZ still left further tightening open, so the pause did not signal a shift towards easing.
💴 JPY found support as the BoJ held rates at 1.25% while sounding more confident about progress towards its inflation target. Prospects for another hike and lower US yields pressured USD/JPY, although a sustained move still depends on the US–Japan yield gap.
💶 The ECB kept its deposit rate at 2.50% as energy costs threatened both inflation and growth. Better economic data could support EUR, but French fiscal risks and energy import costs remained constraints.
🛢️ Oil remained a shared driver with different effects across currencies. Energy revenues can support CAD, while Europe faces higher import costs. If escalating tensions trigger broader risk aversion, demand for safe havens could outweigh the benefits for commodity currencies.
📅 Next week, attention turns to the RBA on 3 November and the BoE on 5 November, alongside US data and Middle East developments. AUD and GBP reactions will depend on decisions relative to expectations and guidance on the rate path ahead.
#ForexInsights $SOL $BTC
