As of October 22, several European nations are collaborating with Ukraine to draft a 12-point peace proposal aimed at ending the Russia-Ukraine conflict based on the current front lines. This move is a direct response to President Putin's renewed demands for Kyiv to cede territory in exchange for a peace agreement. According to informed sources, the proposed plan will be monitored by a peace committee led by U.S. President Trump. The proposal envisions arrangements for the return of all displaced children to Ukraine and the implementation of prisoner exchanges once Russia agrees to a ceasefire along with Ukraine and both parties commit to halting territorial advances. Ukraine would receive security guarantees, funding for war damages, and a fast-track process for joining the European Union. Sanctions against Russia would be gradually lifted; however, around $300 billion of frozen central bank reserves would only be returned after Moscow agrees to bear the costs of Ukraine's post-war reconstruction. If Russia launches new attacks on neighboring countries, sanctions would be reinstated immediately.
Additionally, market expectations for a rate hike by the Bank of Japan during its policy meeting on October 30 have significantly cooled. Bank of Japan officials stated that even if the economy makes progress toward the price target, there is no urgent need to raise interest rates next week. Media reports reveal that Bank of Japan officials believe economic and inflation developments are largely in line with expectations, with the likelihood of achieving outlook forecasts gradually increasing. While they do not rule out the possibility of another rate hike within the year, there are currently no decisive factors compelling them to raise the benchmark rate in the upcoming policy meeting. This stance is echoed by the monetary easing approach of the incoming Prime Minister, Ms. Nishimura, who is recognized for advocating a loose monetary policy. Following her election as the president of the Liberal Democratic Party, the yen depreciated and the stock market rose, reflecting market expectations for stimulating policies and the central bank delaying interest rate hikes.
Key data to watch today includes: the UK September CPI year-on-year, the UK September Retail Price Index year-on-year, the US September Building Permits month-on-month preliminary value, the US September Import Price Index month-on-month, the US September Housing Starts annualized month-on-month rate, and the US September Industrial Production month-on-month rate.
Gold/USD Gold prices sharply plummeted yesterday, barely holding the 4100 level and hitting a fresh six-day low, with current trading around 4143. Besides profit-taking exerting some downward pressure on gold, the primary reason for the drop was the continued rebound of the dollar index, bolstered by expectations that the U.S. government might end its shutdown. Additionally, the easing geopolitical tensions also reduced the safe-haven demand for gold, significantly impacting its decline. Today, attention should be on the resistance around 4200, with support near 4100.
USD/JPY The USD/JPY pair experienced a volatile upward movement yesterday, reaching the 152.00 mark, a five-day high, with current trading around 151.80. The continued rebound of the dollar index, supported by easing trade tensions and expectations that the U.S. government may soon end its shutdown, was the main reason behind the rise in exchange rate. Moreover, the cooling expectations surrounding a rate hike from the Bank of Japan also provided some support to the exchange rate. Today, watch for resistance around 152.50, with support near 151.00.
USD/CAD The USD/CAD pair had a turbulent downward trend yesterday, finishing slightly lower, with current trading around 1.4010. Profit-taking contributed to the downward pressure on the rate, while strong CPI data from Canada during the period significantly affected the exchange rate's decline. Additionally, the rebound of oil prices capped the exchange rate's movement. However, the continued rebound of the dollar index limited the downside potential of the exchange rate. Today, focus on resistance around 1.4100, with support near 1.3900.