The dollar found haven support on Friday as oil prices rose and equities slipped ahead of the weekend, with escalating US-Iran tensions and deteriorating consumer sentiment weighing on risk appetite.

President Donald Trump said the US could quickly end Iran war, but questioned whether to pursue a rapid resolution or let the conflict ease gradually.

Iran has prepared plans to target Gulf undersea communications cables if the US and Israel launch new attacks, Reuters reported.

In data, S&P Global's flash PMI showed US business activity cooled in October and the University of Michigan consumer sentiment index edged down to near a record low.

The WSJ reported that the US expected to lift 50% tariffs on some Canadian agriculture and forestry products to aid northern-state Republicans ahead of the midterms.

The dollar index rose above its 5-DMA in moderate FX turnover, but remained capped below the 101.89 21-DMA that has limited gains throughout the week.

EUR/USD gave up an early rally and slipped below 1.12 as higher Treasury yields and oil prices reinforced bearish momentum, with the pair remaining bearish while below the 10- and 21-DMAs.

GBP/USD slipped ahead of the UK budget and FOMC next week, but stays constructive above 1.3355 support, with resistance near its 1.3413 55-DMA and 1.3433.

USD/JPY steadied below its 156.90 lower Bollinger after rebounding from 156.08, retaining a mildly bearish bias in the middle of a 156.06-158.44 daily cloud ahead of next week's central bank meetings.

AUD/USD rose above its 100-DMA at 0.7032, supported by CNH strength despite firmer US yields and the dollar, keeping the near-term bias bullish while above 0.7005.

Treasury yields rose 3 to 4 basis points, leaving the 2s-10s curve steady at 30.9bp.

The S&P 500 slipped 0.43% amid weakness in consumer shares.

WTI oil rose about 4%, filling an outstanding price gap near $101/bbl.

Gold fell 0.75% while copper gained 1.6%.

Heading toward the close: EUR/USD -0.19%, USD/JPY +0.05%, GBP/USD -0.22%, AUD/USD +0.24%, DXY +0.19%, EUR/JPY -0.11%, GBP/JPY -0.15%, AUD/JPY +0.31%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• NY opened near 1.1190, the pair rallied early on early NY USD selling

• USD buying them emerged however and US yields moved upward

• Gold, silver and equities moved down to reinforce the USD buying

• Significant gains in oil helped to weigh down the euro

• EUR/USD slid and sat near 1.1190 late in the day, it traded down -0.21%

• Falling RSIs and EUR/USD's hold below 10- & 21-DMAs are bearish tech signs
eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Goldman Sachs Research previews next week's October RBNZ meeting.

"In New Zealand, the focus will be on the October Monetary Policy Review. We expect the RBNZ to increase the Official Cash Rate by 25bp to 3.00%," GS notes.

"In terms of the decision statement itself, we expect the statement to maintain an overall hawkish bias in October, emphasising the pick-up in core inflation, elevated oil prices and a weaker currency. At the same time, we expect these remarks to be balanced out by commentary noting the unevenness in the economic recovery and a still-soft labour market...Further out, we forecast one final 25bp rate hike in December to a terminal rate of 3.25%," GS adds.

• NY opened near 0.7015 after 0.7005 traded overnight, rally extended in NY

• The pair rallied despite the USD and US yields trading up

• Drops in gold, silver, stocks and oil gains didn't deter AUD/USD bulls

• 0.7036 traded, the pair sat near 0.7030 late in the day & traded up +0.12%

• USD/CNH drop and rally in AUD/JPY helped to drive AUD/USD higher

• Techs are bullish; RSIs rising, consolidation of gains from Oct. 15 low persists

• Monthly bull hammer, 10-DMA crossing above 21-DMA add to bull signals
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Credit Agricole CIB Research previews next week's UK Autumn Statement.

Ahead of the Autumn statement on 28 October, we expect Chancellor John Healey to focus on measures to meet some immediate fiscal demands and boost the government’s fiscal headroom, which has been eroded recently by higher borrowing costs and weaker property market. According to our estimates, the shortfall could amount to c.GBP10bn and include outlays related to cost-of-living support, the funding shortfall in the Defence investment plan and the policy package announced by PM Andy Burnham after assuming office, among others. We believe that the funding gap could be filled with both higher taxes and some increase in net borrowing," CACIB notes.

"The Chancellor may thus delay tackling the UK’s long-term fiscal challenges to the March 2027 budget. Among these would be government outlays related to Burnham’s policy agenda as well as measures to deliver the planned real spending squeeze and boost its defence budget to 3% of GDP, announced by the previous government. These possible policy choices are estimated to cost the government more than GBP60bn by 2029-30. Given the scale of the public spending plans, gilt and GBP investors should remain wary about any further rise of state borrowing and any fiscal austerity measures needed to mitigate it," CACIB adds.

AUD/USD rose on Friday and looked set to close the week higher. That matters because risk sentiment has been weak lately, so the gain should encourage investors who are long the pair.

Riskier assets struggled this week as rising European bond yields unsettled investors. Money moved into the US dollar and US Treasuries as a flight to safety. Investors also sold equities, gold, silver and copper, and AUD/USD is correlated with the last three. Risk-off conditions like these have historically pushed the pair lower. This time, AUD/USD climbed above last week's high and the psychological 0.7000 level, gaining as much as 1.3% on the week.

The technical picture appears to be building confidence among bulls. The pair is consolidating the rally from the October 15 daily low. The 10-day moving average has crossed above the 21-day, which usually reinforces signals for a bullish trend. The daily and monthly RSIs are rising but not overbought, which suggests upward momentum remains. October's monthly candle is a bull hammer, and the monthly charts also show a bull pennant continuation pattern.

Next week's focus turns to Australia's Q3 CPI report and the Fed's policy decision. If CPI shows inflation running hot and the Fed leans less hawkish, AUD/USD bulls are likely to push higher. In that case, the pair could test the 0.7150 area and September's monthly high.
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research on the USD outlook into next week's FOMC meeting.

"There is downside risk to our YE forecast of 1.15 for EUR/USD, given the worsening backdrop for France. As a reminder, our estimates imply every 10bp wider in OAT-Bund spreads is associated with 0.4% weaker EUR/USD (conditioned upon large moves)," BofA notes.

However, we do not see USD as the best risk-reward EUR short: 1) US data is very resilient but better priced – we think the Fed should hike next week but if it doesn’t, credibility concerns could resurface and restrain USD upside; 2) the intense focus on AI risks clouds the outlook for USD – equity sell-offs should be USD positive but less so if narrowly driven by technology stocks 3) USD longs must consider impending negative seasonality in December," BofA adds.

ANZ Research previews next week's October FOMC meeting.

"The bigger event risk is the FOMC meeting. We see two broad scenarios:

"Hawkish hold: Rates are left unchanged, but Chair Warsh emphasises that inflation remains too high and a rate hike in December is live. OIS is largely reflecting this outcome (20bp priced) so it would be unlikely to shift the DXY meaningfully. Any dissents will indicate how hawkish the FOMC is tilting," ANZ notes.

25bp hike: The Fed responds to recent firm inflation data with a rate rise. Because markets are pricing this as only a modest probability (6%), the USD would likely rally sharply as investors adjust expectations for the timing of further hikes. However, we do not expect such a rally would last. With OIS reflecting a total of two or three hikes to September 2027, it is difficult to see much room for additional hikes to be priced in," ANZ adds.

• EUR/USD rallied to 1.1228 overnight, sellers then emerged and the pair turned lower

• The pair fell despite French 10-year OAT yields

moving lower

• Upward moves in USD, US yields weighed down EUR/USD

• Oil gains and drops in gold and equities added weight on EUR/USD

• 1.1185 traded in Europe, NY opened near 1.1200, pair was down -0.16%

• RSIs are falling and the pair trades below the 10- & 21-DMAs

• Consolidation of gains off the Oct. 14 low gives bulls some encouragement though
eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• 0.7025-0.7005 traded overnight, NY opened near 0.7020, close to flat

• Pair's drop was aided by firm USD, US yields & stocks drop

• Bounce off the overnight low aided by gold, silver rallies off their lows

• A daily doji candle formed & pair traded within Thursday's daily range

• Consolidation of gains off the October 15 low appears to be in place

• Monthly bull hammer, rising monthly RSI highlight upside risks

• October S&P Global PMIs are data risks in NY's morning
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• Cable has held below 1.34 since the London open, as oil prices rise again

• Brent crude climbs to $114.72/barrel, its highest level since May 4

• US is net energy exporter; Britain is net energy importer

• 1.3372 is intra-day low, after worse than expected UK retail sales data

• Asian session base was 1.3388 (before UK retail sales data)

• Pound rises to new 17-month high vs euro on UK PMI data beats

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Yen set for weekly gain as AI jitters spur safe-haven rush

• USD/JPY fell deeper into the daily cloud, that currently spans 156.06-158.44 region

• Spot has since recovered from Asia's 156.08 low, to hit 157.19 in London, EBS data shows

• Yen options poised for more volatility and losses

• EUR/JPY up from 175.25 to 176.20, Friday, upside may be limited by EU political-fiscal problems

Daily Chart

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Continued risk aversion saw USD/JPY extend Thursday's 158.25-156.69 drop to 156.08 Friday

• Its since recovered 157.00, where $1.5 billion option strike expiries/hedging may help contain for now

• FX options have ramped the cost of volatility protection and the premium for downside over upside strikes

• 1-week implied volatility at 9.0 is almost 4.0 above this weeks low - with additional risk premium from Wed's Fed

• Benchmark 1-month expiry implied vol was 7.1 mid week and has since traded 8.0

• 1-month 25 delta risk reversals have increased the volatility premium for JPY calls over puts to 2.151-week and 1-month expiry USD/JPY FXO implied volatility Click here
USD/JPY 25 delta risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Cable dips to 1.3385 on worse than expected UK retail sales data

• Down 0.4% in Sept vs minus 0.1% forecast. 1.3385 is intra-day low

• Asian session range was 1.3388-1.3407 (pre-UK data)

• There is a big 1.3400 option expiry for the 10am ET New York cut

• 1.3355-1.3418 was Thursday range: 1.3418 is five-week high

• UK Oct flash PMI data due at 0830 GMT; services PMI forecast at 51.8

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/CHF up from early Asia low but still heavy, range 0.8194-0.8218 EBS

• Holds above 0.8193 low yesterday, 0.8184 trough on September 22

• Well above ascending daily Ichimoku cloud between 0.8106-36, 0.8137 100-DMA

• Below 0.8241 100-HMA, descending hourly Ichimoku cloud between 0.8246-47

• Spot also below massive $1.45 bln option expiries today at 0.8245 strike

• EUR/CHF also on heavy side though up from 0.9199 low to 0.9214

• Low yesterday 0.9198, on July 6 0.9191, July 2 trough 0.9178

• Renewed moves to downside possible on renewed EU political-fiscal concerns

• More haven flows into CHF seen possible too on AI stock jitters

• NASDAQ plunged in New York overnight, most Asia bourses off today
USD/CHF:


EUR/CHF:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Australian silver stocks decline on the day, while the broader mining sub-index drops 3.9%

• Silver prices fall in line with gold and palladium prices as surging oil prices and resilient US economic data fuelled expectations that the Federal Reserve would keep interest rates higher for longer [GOL/]

• Sun Silver shares slip as much as 6.4% to A$0.735, their lowest since July 1

• Silver Mines shares decline as much as 4.8% to A$0.1 in their third straight session of losses

• Diversified miner South32 , the owner of the Cannington silver mine, dips as much as 6.4% to A$4.08, its lowest since July 20

(Reporting by Nikita Maria Jino in Bengaluru)

• Shares of Australian miners fall as much as 4.6%, their lowest level since March 25

• Sub-index posts its biggest intraday pct fall since September 11; down 8.4% in the week so far

• Copper prices fell to their lowest in more than five weeks on Thursday as further inflows into London Metal Exchange warehouses eased some supply fears [MET/L]

• Shares of mining behemoths BHP , Rio Tinto , and Fortescue down between 1.6% and 3.9%

• Sub-index down 0.6% YTD, including session's moves

(Reporting by Roshan Thomas in Bengaluru)

Oct 23 (Reuters) - A mini perfect storm of a Nikkei selloff, option expiries, exporter sales and BOJ expectations sent USD/JPY down three big figures Thursday - from 158.25 early to 156.69 on EBS by the New York close.

USD/JPY is weakening further in early-Asia trading Friday, falling from 156.82 to 156.08 before steadying. The drop stopped just shy of the base of the 156.05-158.44 daily Ichimoku cloud and 156.00 big figure. No doubt a break below both will cue more downside.

Helping to fuel the decline into Friday has been growing concerns with AI-related stocks. Thursday's 2.6% collapse of NASDAQ reflects this. With Japanese equities also feeling the heat, foreign investors are paring some of their holdings, and unwinding related currency hedges, leading to yen buys.

Also accelerating the USD/JPY slide was paring of positions and gamma-related plays linked to massive option expiries. A total of $3.1 bln between 156.70-97, $9.1 bln on the 157 handle, $8.3 bln between 158.00-75 and $3.3 bln between 159.00-40 expired yesterday.

Holders of yen calls/US dollar puts reaped enormous gains whilst sellers were forced into massive yen purchases. Large option expiries are slated for Friday too, including $2.1 bln between 154.95-155.00 below and $1.5 bln at 157.00 above.

Japanese exporters, for their part, will continue to sell into any USD/JPY rallies to hedge forward receivables as has been the case since the summer .

Expectations are also high for a hawkish hold at the Bank of Japan's October 29-30 meetings . The government will likely argue for no action at this meeting . That said, higher inflation down the line should would make such a move inevitable . Related , also ..

USD/JPY:


Nikkei 225:


BOJ policy rate:

(Haruya Ida is a Reuters market analyst. The views expressed are his own. Editing by Ewen Chew)

• AUD/USD flat Fri, but remains 1.0% wtd on firming RBA rate hike bets

• Broad risk sentiment under extreme pressure amid rising AI trade worries

• RBA Governor Bullock speech Fri, Assistant Governor Hunter interview Sun

• Futures pricing implies 59.8% chance of Nov 3 RBA hike, up from 29% Tue

• Brent crude -0.2% to $112.96 a barrel, Gold -0.1% to $4,019 per ounce

• AUD needs clean break above 0.7033 100-DMA, next target 0.7075 55-DMA

• Range Asia 0.7012-20 support 0.6865 0.6834, resistance 0.7282
AUD Daily 21/55/100-DMA


Gold & Brent Crude Oil

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY off 3 big figures yesterday, towards Ichimoku cloud base

• Low yesterday 156.69, more weakness early Asia, 156.82 to 156.11 EBS

• Ichimoku cloud 156.05-158.44 today, base of cloud in spec sights

• 200-DMA left in dust up at 158.55

• USD/JPY now lowest since 155.88 on September 18, some support 156.00 ahead

• With USD/JPY now lower, Japanese exporter likely more active on rallies

• Japanese importers, for their part, could bid their time, buy on at fixes

• Option expiries today 154.95-155.00 $2.1 bln, 156.00 $539 mln

• Above between 156.80-85 $580 mln, 157.00 $1.5 bln, more trail above

• With US yields, JGB-US Treasury rate differentials may have peaked for now

• Related comments , , also ,

• US markets , , ,
USD/JPY:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD slips from highs but remains +0.5% wtd with RBNZ hike looming Wed

• Futures pricing implies 94.9% probability of 25 bps Oct 28 RBNZ hike

• Risk sentiment ebbed Thur: Nasdaq -2.6%, Gold -2.8%, UST yields broadly down

• Brent crude +3.8% to $113 a barrel on lingering Middle East supply concerns

• NZD still clear of 0.5636 21-DMA, extension towards 0.5770 zone seems likely

• Range NZ 0.56825-86, support 0.5566 0.5485, resistance 0.5995 0.6012
NZD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

MUFG Research discusses its systematic signals framework.

"The current systematic landscape presents a clear directional message - winning strategies retain a broadly bearish G10 bias vs. USD, and that bias is not evenly distributed.

JPY is the standout expression of the view where bearish conviction is unanimous across our strategy families and persistent across all three holding horizons, reflecting a macro environment where the rate differential, valuation gap and risk are all reinforcing the same signal simultaneously," MUFG notes.

"CAD attracts the next broadest bearish conviction, where weak growth, tariff headwinds and an inflation-constrained central bank have created conditions favourable for systematic strategies," MUFG adds.

• AUD/USD +0.3% from Thur 0.69945 low despite broad souring of risk sentiment

• Nasdaq -2.6% amid AI trade concern, Gold -2.8%, UST prices sharply higher

• Brent crude +3.8% to $113 a barrel on Middle East instability risks

• RBA Governor Bullock speech Fri, Assistant Governor Hunter interview Sun

• Futures pricing implies 63.9% chance of Nov 3 RBA hike, up from 29% Tue

• Move driven by RBA Hauser comments that inflation outlook materially worse

• AUD needs clean break above 0.7033 100-DMA, next target 0.7075 55-DMA

• Overnight range 0.69945-0.70235 support 0.6865 0.6834, resistance 0.7282
AUD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

The dollar fell against haven currencies on Thursday as concerns over AI sustainability and rising oil prices pressured equities, driving Treasury yields lower on growth fears, while worries over French debt weighed on the euro.

Oil rose as persistent Houthi attacks on Saudi Arabia heightened supply concerns, while President Donald Trump said Iran was doing all it could to drive oil prices higher ahead of the US midterm elections.

Ukraine President Volodymyr Zelenskiy said Starlink speeds have yet to be restored in Ukraine and expressed hope for talks with US Secretary of State Marco Rubio in coming days.

SNB minutes signaled less need for FX intervention to restrain Swiss franc strength.

In an effort to quell unrest, French President Emmanuel Macron said that "illegitimate" protests would be banned in coming days.

In North American data, US weekly jobless claims held near a 57-year low, while Canada PPI rose 1.4% annualized in September, highest reading on over 4 years. A number of October PMIs are due on Friday.

The dollar index eased after failing to clear its 21-DMA at 101.85, while implied vols rose across the curve and one-month risk reversals continued to favor USD calls ahead of key central bank meetings and U.S. elections.

EUR/USD pared losses as softer US yields eroded earlier dollar strength, though the outlook remains mixed while holding above 1.1200 but below the 21-DMA at 1.1251.

EUR/CHF fell amid wider French-German yield spreads and after SNB minutes signaled less need for FX intervention to restrain Swiss franc strength.

GBP/USD hit a five-week high at 1.3418 as sharply lower Treasury yields offset early haven-driven dollar demand, while EUR/GBP remained on track for its weakest monthly performance of the year.

AUD/USD rebounded to 0.7020 as softer US yields checked risk-off USD demand, with the pair maintaining a constructive bias above its 10- and 21-DMAs.

USD/JPY remained under pressure below 157 on haven-driven yen demand and sharply lower Treasury yields, with bearish momentum potentially targeting the Sept. 28 and 30 lows at 156.51/38.

Treasury yields tumbled 15-20 basis points. The 2s-10s curve was little changed at +30.1bp.

The S&P 500 slid 1.39%, fueled by weakness in tech shares.

WTI oil rose 2.3% but remained below the $100/bbl mark.

Gold dropped 2.7%, silver hit a new YDT low and copper fell 2.7%.

Heading toward the close: EUR/USD -0.12%, USD/JPY -0.84%, GBP/USD +0.04%, AUD/USD -0.14%, DXY -0.16%, EUR/JPY -0.94%, GBP/JPY -0.78%, AUD/JPY -0.99%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)