The dollar stayed underpinned after the September FOMC minutes indicated policymakers still expect at least one further rise, with markets pencilling in a 25bp move to 4.25% in December and, beyond that, another 50bp of tightening next year. Treasury yields remain elevated and volatility has pulled funds from carry trades, weighing on several Latam currencies, while demand for US debt was reinforced by a strong 10-year auction. Attention turns to a speech by Chris Waller at 1030CET, and DXY is eyed towards 102.85. In Europe, French bonds remain unsettled after discussion that the Treasury could shorten issuance duration, leaving EUR/USD sensitive to OAT moves and skewed towards 1.1100/1120, while the euro also carries a rising risk premium versus sterling.
Eurozone And Sterling Developments
EUR/GBP has slipped as France-related concerns persist, with 0.8455/65 seen as near-term support and 0.8400 a downside risk if Bank of England centrists lean towards a November hike.
Central And Eastern Europe Policy
In central and eastern Europe, the National Bank of Poland held at 3.75% as expected; markets price just under two hikes by year-end and 110bp overall, while EUR/PLN has held 4.360-4.380 but is seen drifting to 4.380-4.400. Romania’s central bank is expected to keep rates at 6.50%; EUR/RON has tested highs just below 5.355, and direction is tied to coalition talks despite easing implied volatility.
