FOREX TODAY: THE US DOLLAR DECLINES DESPITE MIDDLE EAST TENSIONS

Middle East continues to be under focus. The Australian Westpac Consumer Confidence Index and the NAB Business Conditions survey are due during the Asian session. The US CPI on Thursday will be the most important report of the week.

A combination of the phrases foreign [currency] and exchange, forex (FX) is a portmanteau. FX is the conversion of one currency into another for a variety of purposes, trade, or travel. The daily worldwide volume of FX trading reached $7.5 trillion in 2022, according to a triennial report from the Bank for International Settlements (a global bank for national central banks).

What you should be aware of on Tuesday, October 10 is as follows:

On Monday, the US Dollar Index briefly fell below the 106.00 mark after spending the day trading in the green. Due to Middle East developments that affected market mood, the DXY initially started the week on a high note. Later in the day, though, when the market calmed and US rates kept falling, the US dollar lost ground.

There won't be any significant US reports released on Tuesday. With the Producer Price Index (PPI) on Wednesday and the Consumer Price Index (CPI) on Thursday, the week's economic statistics will be mostly focused on inflation rates.

ANZ analysts discuss the US CPI:

The excessive payroll number increases the possibility that the Fed will hike again, but it is not decisive. This week's release of the September Consumer Price Index data should be more informative. We anticipate a 0.2% m/m increase in core inflation, which the Fed should welcome.

Markets could be impacted by the Middle East scenario; further escalation could harm investor confidence and raise demand for safe-haven assets like gold and oil. The course of events could take a “Black Swan” turn that fundamentally changes the picture.

The drop in global bond yields helped the Japanese Yen to perform among the best among the major currencies. German 10-year rates decreased to 2.76%, a decrease of roughly 5%. USD/JPY dropped to 148.35 from under 149.00.

During the American session, the EUR/USD pared some of its losses and climbed above 1.0560. The pair continues to have a slight short-term bullish tilt, although it is still constrained below 1.0600. On Monday, the Euro underperformed and was the weakest of the G10 currencies. German industrial production fell 0.2% in August, while investor confidence in the Eurozone fell to -21.9 from an anticipated -24.

GBP/USD finished in a flat range while stabilizing near the 1.2240 level, helped by some US Dollar weakness. The price of the pair is still below but close to the 20-day SMA at 1.2270.

Late on Monday, the AUD/USD currency pair gained momentum, crossing the 20-day SMA and topping 0.6400. The National Australian Bank's Business survey and the October Westpac Consumer Confidence report are both planned for release on Tuesday.

The Canadian Dollar gained due to the increase in crude oil prices. For the third day in a row, USD/CAD fell, hitting a one-week low around 1.3600.

With a daily closing above 0.6000, NZD/USD saw its best day since almost two months ago. The rise of the pair on Monday was aided by the declining US Dollar and an uptick in risk sentiment.