EUR/USD Struggles Due to Less Dovish Fed

The EUR/USD pair remains firm around 1.0780 despite market expectations of a less dovish approach from the Federal Reserve (Fed) in November due to recent upbeat economic data from the US. The US Michigan Consumer Sentiment Index increased to 70.5 in October from 68.9, exceeding the forecast of 69. Durable Goods Orders fell by 0.8% month-over-month in September, slightly below the forecasted 1.0% decrease. Additionally, rising concerns around the Middle East conflict continue to bolster the safe-haven appeal of the US Dollar (USD). On the Euro front, the currency is pressured by increasing expectations of an easing cycle from the European Central Bank (ECB) due to signs of cooling inflationary pressures and economic weakness. On Saturday, ECB Governing Council member Klaas Knot commented, "We believe that our meeting-by-meeting and data-dependent approach has served us well.” In upcoming sessions, the EUR/USD dollar exchange rate will be influenced by broader market sentiment around geopolitical developments and the uncertainty surrounding the upcoming US presidential election.

AUD/USD Depreciates Due to Market Caution

The AUD/USD pair loses ground around 0.6600 amid the stronger USD due to the Fed’s less aggressive approach and strong University of Michigan (UoM) sentiment data. Friday’s US Michigan Consumer Sentiment Index increased to 70.5 in October from 68.9, surpassing expectations. Meanwhile, Durable Goods Orders declined by 0.8% month-over-month in September, surpassing the expected 1% decline. Additionally, heightened tensions in the Middle East and indecision surrounding the US presidential election could bolster demand for safe-haven currencies like the USD. Meanwhile, the Reserve Bank of Australia’s hawkish stance supports the AUD. Traders will be closely watching Wednesday's domestic inflation data from Australia and any political or geopolitical developments that might impact the AUD/USD trajectory.

GBP/USD Firms Ahead of the UK Budget

The GBP/USD pair hovers around 1.2968 amid expectations for a policy easing cycle from the Federal Reserve (Fed) and the United Kingdom (UK) Autumn Forecast Statement due on Wednesday. Market anticipation for further interest rate cuts by the Bank of England (BoE) in November and December, encouraged by cooling inflationary pressures, weakens the Pound. On the other hand, growing geopolitical concerns and market speculation regarding the Fed’s interest rate outlook bolster the Dollar. Additionally, uncertainty surrounding the US presidential election could influence the USD. The upcoming US preliminary Q3 Gross Domestic Product (GDP) and Nonfarm Payrolls (NFP) data for October, along with the UK’s Autumn Forecast Statement, could provide fresh direction for GBP/USD price dynamics.

USD/CAD Steady Amid Falling Oil Prices?

The USD/CAD pair holds steady around 1.3900, as a drop in crude oil prices pressures the commodity-linked CAD, with Canada being a major crude oil exporter to the United States. Furthermore, weaker-than-expected Canadian retail sales for August showed an increase of 0.4% month-over-month from a rise of 0.9% in July, below the market consensus of 0.5%. On the Dollar front, the upcoming US presidential election and positive US economic data provide support for the USD. Forthcoming US data, including advanced Gross Domestic Product (GDP), Core Personal Consumption Expenditures (PCE) Price Index, and Nonfarm Payrolls (NFP), will be crucial for upcoming Fed policy decisions, impacting the USD. Today’s speech by Bank of Canada (BoC) Governor Tiff Macklem and market sentiment surrounding geopolitical developments could shape USD/CAD price dynamics further.

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