This update was written automatically with AI from market data and news wire reports, and published without review by a person.
Key Takeaways
- The New Zealand Dollar (NZD) advanced toward 0.5700 as markets price in a 98% probability of a 25 basis point rate hike by the Reserve Bank of New Zealand (RBNZ) this Wednesday.
- The Canadian Dollar (CAD) strengthened against the US Dollar, with the USD/CAD pair trading near 1.4000, despite a decline in crude oil prices following eased Middle East tensions.
- Jordanian authorities have taken the perpetrators of the Kerak village attack into custody following a Friday assault that left eight people dead and dozens injured.
- US President Donald Trump’s decision to rule out immediate military strikes against Iran has dampened safe-haven demand for the US Dollar, providing a tailwind for commodity-linked currencies.
- New Zealand's inflation remains a "major headache" for policymakers, with analysts forecasting it will stay above the 1-3% target band through late 2027.
Currency Markets: NZD and CAD Defy Headwinds
The New Zealand Dollar (NZDUSD) gathered strength during Monday's early Asian session, trading near the 0.5700 level. This advance is driven by heightened expectations that the Reserve Bank of New Zealand (RBNZ) will raise the Official Cash Rate (OCR) by 25 basis points to 3.00% at its policy meeting on October 28. Despite a slight cooling in third-quarter CPI to 3.7%, inflation remains stubbornly above the central bank's target, prompting economists at ASB Bank and Westpac to forecast a "higher for longer" interest rate environment.
Simultaneously, the Canadian Dollar (USDCAD) appreciated even as its primary export, crude oil, faced downward pressure. The US Dollar (DXY) slipped after US President Donald Trump stated "there will not be a strike today" regarding Iran, which reduced the geopolitical risk premium in energy markets. While WTI crude hovered near $99.50, the loonie found support from domestic rate hike bets, with swap markets pricing an 80% chance that the Bank of Canada (BoC) will lift its benchmark rate to 2.50% next week.
Geopolitical Update: Security Forces Restore Order in Jordan
In Jordan, security forces have successfully detained the individuals responsible for a deadly attack in the village of Hamud, located in the southern province of Karak. The attack, which occurred last Friday, resulted in eight fatalities and left dozens of others wounded. King Abdullah II has vowed that justice will reach every terrorist involved, describing the security of Jordanian citizens as a "red line" that cannot be crossed.
The perpetrators were reportedly identified through video footage showing three armed men opening fire on civilians near a church. Interior Minister Mazen Al-Faraya has dismissed rumors regarding the prior release of the attackers, confirming that a comprehensive investigation is underway. The incident has sparked a wave of national unity, with both Muslim and Christian communities in Kerak holding joint mourning gatherings to denounce the extremist violence.
Central Bank Outlook: Fed and RBNZ in Focus
Global investors are now pivoting toward a heavy week of central bank activity. The US Federal Reserve is widely expected to hold interest rates steady at its October 27–28 meeting, with the CME FedWatch Tool indicating a 90.6% probability of a pause. This divergence—with the RBNZ and BoC leaning hawkish while the Fed remains cautious—has narrowed interest rate differentials, further supporting the Kiwi and Loonie against the greenback.
However, analysts at Royal Bank of Canada warn that Canada's growth may cool in the third quarter as housing market weakness persists. While the currency currently benefits from monetary policy expectations, a sustained drop in oil prices or a shift in the Fed's tone could cap the Canadian Dollar's upside in the coming weeks.
Automated market updates written with AI from market data and news wire reports, published without human review.