To watch on Tuesday, October 18:

The US dollar was lower at the start of the week as news from the UK weighed on government bonds and demand for dollars. GBP/USD hit 1.1439, ending the day around 1.1350

The new Minister of Finance, Jeremy Hunt, announced that the government would abandon most of the fiscal measures announced on September 23, aimed at stabilizing the financial system. Prime Minister Liz Truss was planning to cut taxes and cap energy prices before her election, but the pound fell after revealing her plan. The mini-budget to secure peace created chaos amid black hole funding and ended with the removal of Kwasi Kwarteng, the former Minister Trésor, after only a few weeks in power. Markets have reduced their bets on future rate hikes, now expecting them to add 175 basis points by the end of the year.

AUD/USD is trading around 0.6280 after failing to sustain gains above 0.6300, while USD/CAD slips to 1.3720 despite disappointing Canadian data. The Bank of Canada’s business climate survey showed its worst decline since 2022.

USD/JPY extended its rally, now hovering around 149.00 even though Suzuki, Japanese Finance Ministerannounced that they would react to speculative movements, while warning that they were monitoring currency “movements”.

Gold flirted with $1,670 per troy ounce, but ended the day around $1,647, easing ahead of the Wall Street close. Crude oil prices were under slight pressure, with WTI now trading around $84.85 a barrel.

Yields on US government bonds rallied before the close, ending the day virtually unchanged, despite strong gains among US indexes.