As October draws to a close, market participants are closely watching key inflation data from both sides of the Atlantic. The Eurozone is set to release its Harmonized Index of Consumer Prices (HICP), while the U.S. will reveal the Personal Consumption Expenditures (PCE) Price Index, a key gauge for inflation tracked by the Federal Reserve. Additionally, the U.S. economic docket will feature the weekly Initial Jobless Claims data, adding further insights into the health of the labor market.

U.S. Dollar (USD) Under Pressure Amid Mixed Economic Signals

The U.S. Dollar (USD) faced modest selling pressure on Wednesday as mixed economic data left investors weighing the currency’s outlook. The Automatic Data Processing (ADP) report showed an unexpectedly strong gain in private-sector employment, with payrolls rising by 233,000 in October, significantly above the anticipated 115,000 and building on the 159,000 increase in September. However, this strong job data was tempered by a disappointing GDP growth report. The Bureau of Labor Statistics revealed that the U.S. economy expanded at an annualized rate of 2.8% in the third quarter, missing analysts’ expectations of 3%.

The USD Index, which tracks the greenback’s value against a basket of six major currencies, closed Wednesday in the red. On Thursday, it steadied slightly above 104.00 as traders assess the potential for future moves based on further economic indicators.

Bank of Japan Holds Steady on Rates, USD/JPY Reacts

In Asia, the Bank of Japan (BoJ) concluded its two-day monetary policy meeting early Thursday, opting to keep its short-term interest rate target unchanged at 0.25%. During the post-meeting press conference, BoJ Governor Kazuo Ueda highlighted that the impact of foreign exchange rates on domestic prices has become more pronounced, with firms now more inclined to raise wages and prices. Governor Ueda reiterated the central bank’s intention to adjust its degree of easing if economic and price targets necessitate such a move.

Following this announcement, the USD/JPY pair shifted lower, trading deep in negative territory around 152.00 as traders digested the BoJ’s cautious stance and Ueda’s remarks.

Australia and China Data Points Lend Little Support to AUD/USD

During Asian trading hours, economic data from Australia revealed that Retail Sales rose by 0.5% quarter-over-quarter in the third quarter. Meanwhile, China’s National Bureau of Statistics reported a slight improvement in manufacturing activity, with the Purchasing Managers’ Index (PMI) edging up to 50.1 in October from 49.8 in September. However, despite these relatively upbeat indicators, the AUD/USD pair remained largely unresponsive, continuing to trade sideways below 0.6600.

Euro and British Pound Overview

The Euro received a boost on Wednesday, with EUR/USD climbing over 0.3%, bolstered by stronger-than-expected GDP data and robust inflation readings from Germany. Early on Thursday, the pair held steady around 1.0850 as traders anticipated additional inflation data from the Eurozone.

In the UK, GBP/USD lost ground on Wednesday as investors digested details of the Autumn Budget. Despite Wednesday’s dip, the pair found some support early Thursday, trading with slight recovery gains above 1.2950.

Gold Enters Consolidation Phase After Record High

Gold prices appear to have entered a consolidation phase after reaching a record high of $2,790. XAU/USD was last seen down 0.3% on the day, trading around $2,780. The precious metal’s recent rally reflects a complex mix of safe-haven demand and inflation concerns, with investors continuing to monitor economic signals and potential shifts in central bank policies.

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As markets close out October, attention remains fixed on key inflation readings and economic releases. Investors will be looking for indications of future policy direction from both the Fed and the European Central Bank, while developments in Japan, China, and Australia also play a role in shaping sentiment in global markets. For currency traders and analysts, this last wave of October data could set the stage for November’s market dynamics.