Dollar rebounds as oil eases and traders brace for Fed and BoJ decisions

The dollar opened the week on a firmer footing as oil eased and traders squared positions ahead of a week packed with central bank decisions. Investing.com reports the dollar rebounded while the euro slipped, with the Federal Reserve decision the main focus.

What moved and why

The weekend passed without a US strike on Iran. According to investingLive's European session wrap, oil retreated as Trump refrained from striking, though the risk of attacks kept the market supported. Stocks rebounded and French bonds found some relief. The same wrap said gold was testing $4,000 support.

That calmer tone cut into the haven bid that lifted the yen last week. In the ECB reference rates for 26 October, USD/JPY fixed at 157.45, up 0.41% from 156.80 on 23 October. EUR/USD fixed at 1.1188, down 0.04%. GBP/USD fixed at 1.3348, down 0.15%. USD/CHF rose 0.22% to 0.8262.

USD/CAD gave back part of Friday's drop, fixing at 1.4028 against 1.3995. That earlier move below 1.40 on oil and tariff-relief hopes is covered in online-forex.com's explainer on the loonie fixing and tariffs. Easing oil prices fit with a softer Canadian dollar today.

Treasury yields stayed low. Investing.com reports that US yields hovered near three-week lows ahead of the Fed decision.

You can follow the yen move on the USD/JPY chart.

Emerging markets: Brazil's real slides

The biggest currency move came from Latin America. Investing.com reports that Brazil's real weakened 12% after Lula won reelection. Earlier, investingLive said a Brazil ETF tumbled nearly 15% in Tokyo trade, calling it an early, thin-volume signal before Brazilian markets opened. The Mexican peso held up. USD/MXN fixed at 18.616, down 0.89% from the previous fixing.

In Asia, investingLive's Asia-Pacific wrap said the PBOC set the USD/CNY reference rate at 6.7162 against an estimate of 6.6691. The ECB fixing for USD/CNY was 6.668.

Central banks and data

• Bank of Japan: a headline in investingLive's Asia-Pacific wrap said the BOJ will hold at 1.25%, with Governor Ueda signalling further hikes toward neutral.
• Bank of England: investingLive says traders price roughly 99% odds of a 25 bp hike at the November meeting next week, and the UK autumn budget on 28 October could shape those bets. Investing.com reports the pound slipped as the dollar held firm.
• ECB: the central bank's access-to-finance survey found lending conditions tightened for firms.
• Germany: the October Ifo business climate rose to 90.2 against 90.0 expected, according to investingLive. Expectations jumped to 91.6 against 90.0, while current conditions fell to 88.8 against 89.9 expected.
• US: investingLive reports the Dallas Fed manufacturing index rose to 13.4 from 9.8. New orders dropped to 9.3 from 30.7, a signal investingLive said conflicts with a stronger future index of 38.1.

A timing note: investingLive reminds traders that European daylight saving time ended on 25 October, so the UK is back on GMT and European sessions open an hour later relative to the US for now.

What to watch next

1. Fed decision: the main event of the week in every dollar headline. Yields near three-week lows show where expectations sit going in.
2. BoJ decision: watch whether Ueda's guidance on further hikes matches the reported signal.
3. ECB: Investing.com flags the ECB as in focus this week.
4. UK budget, 28 October: a test for BoE hike pricing ahead of next week's meeting.
5. Brazil: how the real and local rates settle after the election shock.
6. Oil and Iran: investingLive notes attack risk is still keeping crude supported.

The broad dollar picture is on the DXY chart.