Global Currencies Brace for Key Inflation Data as Dollar Surges to Two-Month High

The US dollar extended its post-Fed rebound, reaching a two-month high as investors weighed the Federal Reserve’s cautious tone and the ongoing stalemate over the government funding deal. The strong greenback set the tone across major currencies, while traders turned their focus to inflation readings from Japan and the euro area.

In Europe, the euro weakened to a two-week low, with traders largely unfazed by the European Central Bank’s steady policy stance. Markets are now watching for preliminary inflation figures from the eurozone and retail sales data from Germany, both seen as crucial indicators for the region’s fragile recovery.

The British pound slid to its lowest level since early April amid expectations of a potential rate cut by the Bank of England. Attention now shifts to upcoming housing market data, which could offer clues about the domestic economic outlook.

In Asia, the Japanese yen dropped past the 154 mark for the first time since February after the Bank of Japan maintained its policy stance without clear guidance on future rate moves. Inflation data from Tokyo, along with industrial production and retail sales figures, will be key for assessing the country’s growth momentum.

Meanwhile, the Australian dollar continued to face selling pressure despite positive trade developments. Upcoming producer price and credit data are expected to give more insight into the nation’s economic direction.

On the commodities front, oil prices edged higher toward $61 a barrel as markets reassessed the impact of the recent US-China trade truce. Gold managed to recover slightly after four consecutive declines, though it continued to face resistance near the $4,000 level per ounce. Silver also regained ground, hovering around $49 per ounce.

As the week closes, global markets remain fixated on inflation trends and central bank signals. With currencies and commodities reacting sharply to shifting policy expectations, traders are bracing for another wave of volatility heading into November.