US inflation ran hot, and the dollar fell anyway

Last week's note closed on a line: $4,200 on gold. A session close above it would mean the ceiling of the previous two weeks had given way; getting through the US inflation data and the rest of the week without one would mean it was still in charge. Gold traded as high as $4,216.98 in Asian hours on Monday and its high on Friday came within 90 cents of the line, but it closed all five sessions below it, its 15th close in a row under $4,200 on our feed. The ceiling is still in charge.

The rest of the week told a different story from the one its data promised. US consumer prices, producer prices, retail sales, import prices and industrial production all came in above forecast, and the dollar still finished the week lower against six of the seven majors on our feed, higher only against the Australian dollar. Investing.com said it snapped a four-week winning streak and let the euro halt a five-week slide. Treasury yields fell over the week, and by Friday markets saw December rather than October as the more likely timing for the next hike by the Federal Reserve, TD Economics said.

Monday and Tuesday: oil up, oil down

On Monday the dollar closed higher against all seven majors as oil turned back up on doubts over a Russia-Ukraine energy ceasefire and reports of renewed Houthi attacks on Saudi Arabia, and Cleveland Fed President Beth Hammack said interest rates need to be higher. EUR/USD closed at 1.1155, below the 1.1159 that Action Forex had said, in last week's note, would give the dollar another source of support if it broke. USD/CAD closed at 1.4281, its highest close on our feed since early April 2025.

Tuesday undid it. The dollar closed lower against all seven as Treasury yields and oil eased through the European morning, and it stayed down when yields turned back up later in the session. New York Fed President John Williams said one more hike this year was appropriate but saw none in 2027, which FXStreet read as dovish. EUR/USD closed back above 1.1159, at 1.1199.

Wednesday: consumer prices beat, and the dollar rose

US consumer prices rose 3.7% on the year in September against a 3.6% forecast, and core prices rose 0.3% on the month against 0.2%; last week's note had quoted TD Securities expecting 0.20%. Action Forex said the core beat pushed the odds of an October hike above 40%, with the Dollar Index breaking above 102.60 and the 10-year Treasury yield rebounding above 5.30%. On Wednesday the dollar closed higher against six of the seven majors and level with the yen.

EUR/USD fell to 1.1113 on our feed, its low of the week, and closed below 1.1159 again, at 1.1157. The pound dropped to 1.3137, which ended a run in which every session's low since 24 September had stayed within half a cent of 1.3200. Gold fell 1.49% to $4,101, its lowest close of the week.

Thursday: producer prices beat by more, and the dollar fell

The producer price index rose 1.3% in September against a 0.6% forecast, the largest monthly jump since March 2022 according to Action Forex, and retail sales rose 0.8% against 0.3%, though Action Forex said gasoline did the heavy lifting. Yields fell anyway. FXStreet tied the bond rally to a rout in artificial intelligence (AI) stocks that pushed money into Treasuries, and said the Dollar Index gave back its gain from Wednesday, falling from just under 103.00, its highest in 18 months, to just under 101.90.

On Thursday the dollar closed lower against six of the seven majors. The exception was the Australian dollar, which fell after Australia reported 39,300 jobs lost in September. EUR/USD closed at 1.1220, its first close above 1.1215 since 6 October. Commerzbank said Wednesday's data had revived pricing for an October hike, though it still expected no move until December.

Friday: Warsh gave no guidance

Speaking at the IMF and World Bank meetings in Bangkok, Fed Chair Kevin Warsh declined to give guidance on the 27–28 October meeting and said the Fed would no longer routinely preview its rate moves, Action Forex reported. FXStreet called it his last word before the Fed's blackout period, and had the Dollar Index at its lowest since 1 October.

US import prices rose 1.1% in September and industrial production 0.7%, against calendar forecasts of 0.9% and 0.4%. US yields edged up after the week's bond rally, Investing.com said, and on Friday the dollar closed lower against six of the seven majors again, level with the yen. The pound closed at 1.3328, its highest close on our feed since 22 September, and FXStreet had the Canadian dollar heading for its first weekly gain in six weeks.

The week in our price feed

Last one-minute price before the Friday close in our own MT5 feed; changes are computed from unrounded prices. After a week higher against five majors, the dollar finished this one lower against six. The Canadian dollar gained the most against it, followed by the Swiss franc and the pound, and the Australian dollar was the only major to lose ground. Gold fell 0.63% on the week, from $4,195 to $4,169.

Both of the euro lines from last week's note were crossed: 1.1159 in both directions, 1.1215 upward. EUR/USD closed below 1.1159 on Monday and Wednesday and back above it on Tuesday and Thursday. It closed below 1.1215 for six sessions in a row, the run that began when it lost the line on 7 October, and above it on Thursday and Friday.

What our own gauges saw

Market Readiness Score (MRS), Carry Trade Score (CTS) and Forex Strength Index (FSI) readings at each session's close. The last two columns come from our strength table: the currency that spent the most minutes in first place, with its share, and the dollar's rank on that count. The MRS was recalibrated on 13 October, so Monday's 63 and Tuesday's 62 are on different scales. From Wednesday its volatility component read its full 30 at every session close, from 11 on Tuesday, and that is what lifted the score into the 80s; its news component read the full 20 at every close. The CTS read 54 in every session, and the FSI closed every session Neutral, between 54 and 58.

Over the 7,173 minutes our feed covered this week, the Australian dollar spent the most minutes at the top of the table, 1,260 of them, in a week it was the only major to lose ground against the US dollar. The yen was second, on 1,129, and the US dollar third, on 1,064. The table counts minutes in first place, not how far a currency moves.

What stays open

Canada goes first. Wells Fargo and TD Securities both expect September's consumer price index, due on Monday, to rise to 3.2% on the year on higher energy prices, with core measures close to 2%. The Bank of Canada's business outlook survey comes the same day, TD Economics said, ahead of its decision on 28 October. Scotiabank put fair value for USD/CAD around 1.4140, close to Friday's close of 1.4139, and Action Forex's weekly outlook still points lower, toward 1.4081.

Wells Fargo expects UK inflation, due on Wednesday, to rise to 3.5% from 3.1%, with core up to 2.8% from 2.6%, and says a rise in core would reinforce its expectation of a 25 basis-point hike by the Bank of England in November. It expects Japan's inflation, due on Friday, to rise to 2.3%, and another hike by the Bank of Japan in December. On the pound, Action Forex says a sustained break of 1.3341 would raise the chance of a bullish reversal; Friday's high was above it and the close below.

The Fed meets on 27–28 October, with the midterms a week later, on 3 November. TD Economics wrote that, given recent Fed comments downplaying the urgency of back-to-back hikes, the Fed seems more likely to skip October and hike again in December.

The tell to watch. 1.1276 on EUR/USD. Action Forex's weekly outlook has the pair's rebounds capped there and still favours further losses, while a firm break above it would point to a short-term bottom. On our feed Friday's high was 1.1270, six pips short, and the close 1.1240. The other side is 1.1111, the level Action Forex says would extend the larger fall; our feed's low this week was 1.1113, on Wednesday. By Action Forex's own levels, a session close above 1.1276 would suggest the euro's slide has at least paused, and a close below 1.1111 that it has resumed.