Dollar slides as Warsh offers no guidance; gold's $4,200 ceiling holds

Fed Chair Kevin Warsh declined to give guidance on the 27–28 October meeting, and the dollar closed lower against six of the seven majors on our feed and level with the yen, its second session of losses in a row. Gold came within $1 of $4,200 and closed below it for a 15th session in a row, so the ceiling our weekly wrap flagged held through the week.

Warsh, yields and the dollar

• Speaking in Bangkok during Asian hours, Warsh also said the Fed would no longer routinely preview its rate moves, Action Forex reported. FXStreet had the Dollar Index falling toward 101.80 after his remarks and later at its lowest since 1 October, and Investing.com said the dollar snapped a four-week winning streak.

• MUFG said Warsh's lack of fresh guidance reinforced market pricing for a low chance of an October Federal Reserve hike, and FXStreet said investors had trimmed their hawkish October bets despite the week's hotter-than-expected inflation data.

• The data kept running hot: US import prices rose 1.1% in September and industrial production 0.7%, lifted by utilities, investingLive reported. Our calendar had forecast 0.9% and 0.4%. On Thursday the dollar had fallen with yields; on Friday US yields edged up after the week's bond rally, Investing.com said, and the dollar fell anyway. After the close the same source said US yields fell over the week as worries over artificial intelligence (AI) debt drove traders into safe-haven bonds.

• Oil stayed high: FXStreet had WTI holding its weekly gains near $96 in European trading, ING said Brent traded comfortably above $100 a barrel, and investingLive's Americas wrap had oil jumping.

The euro, the pound and the loonie

• EUR/USD traded below 1.1215 in every hour from 22:00 to 03:00 UTC, with a low of 1.1208 at 01:46, and dipped under it again briefly in the 16:00 hour. It climbed from Warsh's remarks to 1.12696 at 10:34 UTC and closed at 1.12396, up 0.18%: a second close in a row above 1.1215, the line our weekly wrap tracked. Its high stayed below 1.1276, the resistance Action Forex said keeps its call for further decline in place.

• The pound broke above 1.3350 as Warsh stayed vague and bets on a November Bank of England hike built, FXStreet said. On our feed it peaked at 1.33717 at 14:30 UTC, never traded below 1.3250, and closed at 1.3328, up 0.39%, its highest close since at least 2 October. Governor Andrew Bailey said second-round inflation effects had been limited so far, Action Forex reported, and Scotiabank said markets still priced a 25 basis-point hike next month.

• USD/CAD fell 0.32% to close at 1.41389, after a low of 1.41343 at 14:32 UTC: its lowest close on our feed since at least 2 October, and further from the 1.43 Rabobank level our weekly wrap cited. Scotiabank put fair value close to spot, around 1.4140.

Gold, the yen, the kiwi and the Aussie

• Gold neared $4,200 as the dollar struggled, FXStreet said, and on our feed it rose to $4,199.10 at 14:27 UTC, 90 cents short. It then slipped and closed at $4,168.77, down 0.16% on the day and 0.63% on the week, as rising US yields outweighed fading bets on an October Fed hike, according to the same source.

• USD/JPY closed at 157.989, level on the day: the yen was the only major the dollar did not lose ground against. Bank of Japan Governor Kazuo Ueda said the bank would keep raising rates as underlying inflation nears 2%, yet FXStreet said the yen found only limited support.

• The New Zealand dollar gained the most against the US dollar: NZD/USD rose 0.53% to 0.56524, after a high of 0.5675 at 10:33 UTC, and FXStreet had it at three-week highs in the European morning. AUD/USD rose 0.36% to 0.6946, a day after the Australian dollar was the only major to fall, and pared its gains later as the US dollar steadied and bets on a Reserve Bank of Australia hike eased, FXStreet said.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 81, level with Thursday, with its news component at its full 20. A CTS of 54 with its carry backdrop at 60 out of 100, and an FSI of 58, Neutral, from 56.

• Top of our strength table: no clear leader; the top two were within the noise margin.

• Bottom: no currency clearly trailed.

• Last week's test: gold never traded above $4,200 during the session and closed below it for a 15th session in a row on our feed. It got through the US inflation data and the rest of the week our weekly wrap set for the test without a close above it, so by the wrap's own terms the ceiling is still in charge.

Next week: Canada's September consumer price index and the Bank of Canada's business outlook survey come on Monday, ahead of its 28 October decision, and the Fed meets the week after, on 27–28 October. Before that, Bailey is scheduled to speak again on Saturday 17 October at 06:45 UTC.