The dollar strengthened as markets awaited decisions from major central banks.
2026-10-27 18:36:22
The dollar remained strong ahead of Wednesday's Federal Reserve decision—the market expected the Fed to hold rates steady, but investors were looking for clues about a possible December rate hike. The European Central Bank faced a dilemma: persistently high inflation on one hand, and the French debt crisis on the other. Technology stocks drove US stocks higher, oil prices were influenced by geopolitical factors, and gold prices approached the $4,000 mark. 
Dollar Rises Ahead of Key Fed Decision On Monday, the dollar rose against most major currencies, weakening only against the Canadian dollar, one of the two major central banks expected to raise interest rates this week. The dollar continued its strength today, only underperforming against the New Zealand dollar. The Reserve Bank of New Zealand is another central bank expected to raise rates during the Asian session tomorrow. Dollar traders are increasingly focusing on the Federal Open Market Committee (FOMC) meeting that begins today, with the decision to be announced tomorrow. The market widely expects the Fed to keep interest rates unchanged at this meeting, with federal funds rate futures showing only a 10% probability of a rate hike. Even so, this meeting is still significant. Investors believe there is a 90% probability of a rate hike in December, and the market has already priced in approximately 70 basis points of cumulative rate hikes by the end of 2027. Given the further rise in inflation in September, investors will carefully study the policy statement and Warsh's press conference to determine whether a December rate hike is essentially a done deal and whether officials are still willing to continue raising rates in 2027. No economic projections or dot plot will be released at this meeting. If the Federal Reserve adopts a hawkish stance and holds rates steady, especially if some members do not support maintaining interest rates and favor a rate hike, it will strengthen expectations of a December rate hike and further boost the dollar. Conversely, if its stance is neutral and emphasizes patience in subsequent actions, the dollar may come under pressure. The French debt crisis is dragging down the euro, making the ECB's decision highly anticipated . Although Moody's maintained France's credit rating at Aa3 without downgrading it, the euro still weakened yesterday. While the spread between French and German bond yields has narrowed somewhat, it remains at historically high levels due to the ongoing French debt crisis. Data released after the ECB's last meeting initially supported further rate hikes, but the French debt crisis has caused the market to no longer price in a rate hike this week. This puts the ECB in a dilemma: on the one hand, it needs to continue raising rates to combat persistent high inflation; but on the other hand, aggressive tightening policies will suppress economic growth and lead investors to demand higher yields on French debt. Against this backdrop, while the market expects the ECB to maintain interest rates, euro traders are focusing on Lagarde and her team's statements: will they continue to raise rates when data conditions are met, or will they slow the pace of rate hikes due to the turmoil in France? US stocks rebounded, oil prices were constrained by geopolitical tensions, and gold prices tested the $4,000 mark. The three major US stock indices all closed higher on Monday, with the Nasdaq leading the gains, led by technology stocks. Anthropic's IPO ignited market enthusiasm for the artificial intelligence sector, becoming a catalyst for the rise. Oil prices had previously fallen to some extent, easing inflation concerns, but rebounded again today. Oil prices fell yesterday after Saudi, Turkish, and Pakistani officials held talks with Iran to ease tensions. However, continued Houthi attacks on Saudi Arabia keep supply risks high, limiting the downside for oil prices. Spot gold rebounded from the psychological level of $4,000 yesterday, but fell back again today and is currently fluctuating below $4,000. If the Federal Reserve makes a hawkish statement tomorrow, indicating it will hold rates steady, it could push shorts to break through this level and target $3,915, a position that provided strong support in October-November 2025.
Dollar Rises Ahead of Key Fed Decision On Monday, the dollar rose against most major currencies, weakening only against the Canadian dollar, one of the two major central banks expected to raise interest rates this week. The dollar continued its strength today, only underperforming against the New Zealand dollar. The Reserve Bank of New Zealand is another central bank expected to raise rates during the Asian session tomorrow. Dollar traders are increasingly focusing on the Federal Open Market Committee (FOMC) meeting that begins today, with the decision to be announced tomorrow. The market widely expects the Fed to keep interest rates unchanged at this meeting, with federal funds rate futures showing only a 10% probability of a rate hike. Even so, this meeting is still significant. Investors believe there is a 90% probability of a rate hike in December, and the market has already priced in approximately 70 basis points of cumulative rate hikes by the end of 2027. Given the further rise in inflation in September, investors will carefully study the policy statement and Warsh's press conference to determine whether a December rate hike is essentially a done deal and whether officials are still willing to continue raising rates in 2027. No economic projections or dot plot will be released at this meeting. If the Federal Reserve adopts a hawkish stance and holds rates steady, especially if some members do not support maintaining interest rates and favor a rate hike, it will strengthen expectations of a December rate hike and further boost the dollar. Conversely, if its stance is neutral and emphasizes patience in subsequent actions, the dollar may come under pressure. The French debt crisis is dragging down the euro, making the ECB's decision highly anticipated . Although Moody's maintained France's credit rating at Aa3 without downgrading it, the euro still weakened yesterday. While the spread between French and German bond yields has narrowed somewhat, it remains at historically high levels due to the ongoing French debt crisis. Data released after the ECB's last meeting initially supported further rate hikes, but the French debt crisis has caused the market to no longer price in a rate hike this week. This puts the ECB in a dilemma: on the one hand, it needs to continue raising rates to combat persistent high inflation; but on the other hand, aggressive tightening policies will suppress economic growth and lead investors to demand higher yields on French debt. Against this backdrop, while the market expects the ECB to maintain interest rates, euro traders are focusing on Lagarde and her team's statements: will they continue to raise rates when data conditions are met, or will they slow the pace of rate hikes due to the turmoil in France? US stocks rebounded, oil prices were constrained by geopolitical tensions, and gold prices tested the $4,000 mark. The three major US stock indices all closed higher on Monday, with the Nasdaq leading the gains, led by technology stocks. Anthropic's IPO ignited market enthusiasm for the artificial intelligence sector, becoming a catalyst for the rise. Oil prices had previously fallen to some extent, easing inflation concerns, but rebounded again today. Oil prices fell yesterday after Saudi, Turkish, and Pakistani officials held talks with Iran to ease tensions. However, continued Houthi attacks on Saudi Arabia keep supply risks high, limiting the downside for oil prices. Spot gold rebounded from the psychological level of $4,000 yesterday, but fell back again today and is currently fluctuating below $4,000. If the Federal Reserve makes a hawkish statement tomorrow, indicating it will hold rates steady, it could push shorts to break through this level and target $3,915, a position that provided strong support in October-November 2025.
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