This week promises to be a highly dynamic period for traders, with four prominent central banks—the Bank of Canada (BoC), the U.S. Federal Reserve (Fed), the Bank of Japan (BoJ), and the European Central Bank (ECB)—scheduled to deliver their verdicts on interest rates within a tight window of under 72 hours, spanning Wednesday and Thursday. Their policy statements and accompanying commentary will catch the attention of the global financial community. With relative monetary policy being a primary driver of currency valuations, any shift in a central bank’s stance—or even a subtle change in its forward guidance—can trigger significant market movements across major currency pairs.
Octa Broker offers a concise overview of the anticipated outcomes, potential market implications, and critical levels for traders to monitor. Policy shifts could amplify volatility in currency pairs such as USDCAD, EURUSD, USDJPY, and XAUUSD (gold), with key support and resistance levels potentially being tested. Understanding these dynamics is essential, as relative interest rate differentials often drive Forex movements, and any surprises could lead to sharp reactions in equities, bonds, and commodities.
Bank of Canada
The BoC is due to announce its monetary policy decision on Wednesday, 29 October, at 9:45 a.m. ET (1:45 p.m. UTC), followed by the release of its quarterly Monetary Policy Report (MPR).
The market is heavily positioned for a second consecutive 25-basis-point (bps) rate cut, which would bring the overnight rate down to 2.25%. According to Refinitiv, interest rate swap markets are pricing in a 91% probability of this move. The rationale for easing policy stems from persistently high unemployment rate and subdued aggregate demand outlook, as highlighted in a recent BoC survey that showed that businesses were facing weak order volumes and restrained hiring plans. Although early indicators suggest that the Canadian economy may avoid another quarterly contraction, risks remain elevated, especially after the suspension of U.S.–Canada trade negotiations. BoC Governor Tiff Macklem stated in September that the bank was ready to cut again if risks to the economy materialised, and the data since then suggests they have.
However, not all economists agree with a rate cut. The BoC’s mandate is to keep inflation anchored at the 1% to 3% target midpoint. However, the Consumer Price Index (CPI) unexpectedly rose to 2.4% in September, and key core inflation measures continue to stay above 3%. This has prompted some analysts to argue that holding rates steady would be a prudent move.
Key levels to watch (USD/CAD)
Because a 25-bp rate cut is largely priced in, the immediate market reaction will hinge on the accompanying statement and the forward guidance in the MPR. A cut accompanied by a dovish statement suggesting an open door for further easing would weaken the loonie and exert upward pressure on USDCAD. Conversely, a decision to hold rates unchanged, or a cut with a more hawkish tone focusing on elevated core inflation, would likely trigger a sharp sell-off in USDCAD. The key levels to watch are 1.39500 on the downside and 1.4050 on the upside.
Federal Reserve
The Federal Reserve’s Federal Open Market Committee (FOMC) will conclude its two-day policy meeting on Wednesday, 29 October, with a decision on interest rates expected at 2:00 p.m. ET (6:00 p.m UTC) and the press conference scheduled for 2:30 p.m. ET (6:30 p.m. UTC).
Financial markets are broadly expecting the U.S. central bank to lower its benchmark interest rate by a quarter of a percentage point to the 3.75%–4.00% range, marking the second cut this year. According to Refinitiv, interest rate swap markets are pricing in a 97% probability for a 25-bps rate cut. However, policymakers are divided: hawks like Kansas City Fed President Jeffrey Schmid worry about inflation, while new Governor Stephen Miran has argued for a much larger 50 bps cut. The rift within the FOMC is exacerbated by the U.S. government shutdown, which has halted key data releases like employment figures, leaving policymakers navigating partial information from private surveys and regional reports. However, available indicators show that job growth averaged just 29,000 per month from June to August, far below pre-pandemic norms. Furthermore, the recent milder-than-expected inflation readings have eased near-term concerns about tariff-driven price pressures. Taken together, the data strongly suggest a rate cut and a dovish statement. However, this outlook is significantly complicated by external pressures, such as renewed U.S.–China trade tensions, which still carry the risk of future price hikes.
Beyond the interest rate decision, a major focus for Wall Street is whether the Fed will signal or announce the end of its balance sheet reduction program, known as quantitative tightening (QT), at this upcoming meeting. This speculation follows recent turbulence in overnight lending markets, which saw key borrowing rates spike and forced firms to tap the Fed’s Standing Repo Facility (SRF). This is an unwelcome development as it threatens the Fed’s control over its main policy rate.
Key Levels to Watch (XAUUSD)
This time, the market’s focus is threefold: traders will scrutinise the FOMC statement for any hints on the future rate path, analyse Jerome Powell’s press conference, and look for news regarding the future of QT. A cut accompanied by a dovish commitment to more easing and an immediate end to QT would put downward pressure on the U.S. Dollar Index (DXY) and provide a boost to gold (XAUUSD). Conversely, a cut with a more cautious, hawkish-sounding forward guidance could lead to a muted DXY reaction. The key levels to watch are 3,900and 3,825 on the downside and 4,050–4,100 on the upside.
Bank of Japan
The BoJ will announce its policy decision on Thursday, 30 October, between approximately 02:45 to 04:00 UTC.
This event is the ‘wild card’ of the week. Expectations lean toward holding short-term rates at 0.5% (82% probability, according to Refinitiv), but the decision is far from certain due to political influences from new Prime Minister Sanae Takaichi, who emphasises wage-driven inflation, supports continued monetary easing and is preparing a new fiscal stimulus package. Furthermore, external developments, such as U.S. tariffs and a weakening yen, complicate the outlook for interest rate changes.
At the same time, the recent economic data justifies a hike. Core inflation hit 2.9% in September, the yen remains weak, and inflationary pressures are building. At the last meeting, two board members dissented, voting for an immediate rate hike. Thus, the key focus for markets will be the vote split: if those two hawkish dissenters are joined by another member, or even if they just remain, it will signal that a hike in December is highly likely.
Key levels to watch (USDJPY)
Traders should watch USDJPY, where a decision to hold rates could pull it above the 153.90 resistance level, while hawkish signals might push the pair towards support at 151.00.
European Central Bank
The ECB is scheduled to announce its monetary policy decision on Thursday at 1:15 p.m. UTC.
Policymakers are likely to view this as an ‘interim meeting’, with the more significant one slated for mid-December, as they await the full impact of global trade developments. Thus, financial markets widely expect the central bank to keep rates on hold at 2% for the third consecutive meeting. According to Refinitiv, interest rate swap markets are pricing in a 100% probability of the ECB rate remaining flat. Since September, when policymakers described the economy as being in a ‘good place’, not much has changed. While headline inflation ticked up to 2.2% in September (just above the 2% target), this was expected, and the bank’s own forecasts see it falling back to 1.7% next year.
For markets, the key focus is the timing of a future rate cut. ECB Chief Economist Philip Lane has noted that downside risks could warrant slight easing, while upside factors like German stimulus might support a more hawkish view. Broader uncertainties, including political instability in France and debates over frozen Russian assets, reinforce the need for a cautious policy stance.
Key levels to watch (EURUSD)
A decision to hold the rate unchanged could strengthen EURUSD toward 1.17200 resistance level, especially if the preceding Fed’s decision delivers a dovish message. Alternatively, a decidedly dovish ECB might push EURUSD below the 1.15700 mark.
Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk—Octa does not accept any liability for any resulting losses or consequences.
Octais an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services used by clients from 180 countries who have opened more than 61 million trading accounts. To help its clients reach their investment goals, Octa offers free educational webinars, articles, and analytical tools.
The company is involved in a comprehensive network of charitable and humanitarian initiatives, including improving educational infrastructure and funding short-notice relief projects to support local communities.
Since its foundation, Octa has won more than 100 awards, including the ‘Most Reliable Broker Global 2024’ award from Global Forex Awards and the ‘Best Mobile Trading Platform 2024’ award from Global Brand Magazine.
This week promises to be a highly dynamic period for traders, with four prominent central banks—the Bank of Canada (BoC), the U.S. Federal Reserve (Fed), the Bank of Japan (BoJ), and the European Central Bank (ECB)—scheduled to deliver their verdicts on interest rates within a tight window of under 72 hours, spanning Wednesday and Thursday. Their policy statements and accompanying commentary will catch the attention of the global financial community. With relative monetary policy being a primary driver of currency valuations, any shift in a central bank’s stance—or even a subtle change in its forward guidance—can trigger significant market movements across major currency pairs.
Octa Broker offers a concise overview of the anticipated outcomes, potential market implications, and critical levels for traders to monitor. Policy shifts could amplify volatility in currency pairs such as USDCAD, EURUSD, USDJPY, and XAUUSD (gold), with key support and resistance levels potentially being tested. Understanding these dynamics is essential, as relative interest rate differentials often drive Forex movements, and any surprises could lead to sharp reactions in equities, bonds, and commodities.
Bank of Canada
The BoC is due to announce its monetary policy decision on Wednesday, 29 October, at 9:45 a.m. ET (1:45 p.m. UTC), followed by the release of its quarterly Monetary Policy Report (MPR).
The market is heavily positioned for a second consecutive 25-basis-point (bps) rate cut, which would bring the overnight rate down to 2.25%. According to Refinitiv, interest rate swap markets are pricing in a 91% probability of this move. The rationale for easing policy stems from persistently high unemployment rate and subdued aggregate demand outlook, as highlighted in a recent BoC survey that showed that businesses were facing weak order volumes and restrained hiring plans. Although early indicators suggest that the Canadian economy may avoid another quarterly contraction, risks remain elevated, especially after the suspension of U.S.–Canada trade negotiations. BoC Governor Tiff Macklem stated in September that the bank was ready to cut again if risks to the economy materialised, and the data since then suggests they have.
However, not all economists agree with a rate cut. The BoC’s mandate is to keep inflation anchored at the 1% to 3% target midpoint. However, the Consumer Price Index (CPI) unexpectedly rose to 2.4% in September, and key core inflation measures continue to stay above 3%. This has prompted some analysts to argue that holding rates steady would be a prudent move.
Key levels to watch (USD/CAD)
Because a 25-bp rate cut is largely priced in, the immediate market reaction will hinge on the accompanying statement and the forward guidance in the MPR. A cut accompanied by a dovish statement suggesting an open door for further easing would weaken the loonie and exert upward pressure on USDCAD. Conversely, a decision to hold rates unchanged, or a cut with a more hawkish tone focusing on elevated core inflation, would likely trigger a sharp sell-off in USDCAD. The key levels to watch are 1.39500 on the downside and 1.4050 on the upside.
Federal Reserve
The Federal Reserve’s Federal Open Market Committee (FOMC) will conclude its two-day policy meeting on Wednesday, 29 October, with a decision on interest rates expected at 2:00 p.m. ET (6:00 p.m UTC) and the press conference scheduled for 2:30 p.m. ET (6:30 p.m. UTC).
Financial markets are broadly expecting the U.S. central bank to lower its benchmark interest rate by a quarter of a percentage point to the 3.75%–4.00% range, marking the second cut this year. According to Refinitiv, interest rate swap markets are pricing in a 97% probability for a 25-bps rate cut. However, policymakers are divided: hawks like Kansas City Fed President Jeffrey Schmid worry about inflation, while new Governor Stephen Miran has argued for a much larger 50 bps cut. The rift within the FOMC is exacerbated by the U.S. government shutdown, which has halted key data releases like employment figures, leaving policymakers navigating partial information from private surveys and regional reports. However, available indicators show that job growth averaged just 29,000 per month from June to August, far below pre-pandemic norms. Furthermore, the recent milder-than-expected inflation readings have eased near-term concerns about tariff-driven price pressures. Taken together, the data strongly suggest a rate cut and a dovish statement. However, this outlook is significantly complicated by external pressures, such as renewed U.S.–China trade tensions, which still carry the risk of future price hikes.
Beyond the interest rate decision, a major focus for Wall Street is whether the Fed will signal or announce the end of its balance sheet reduction program, known as quantitative tightening (QT), at this upcoming meeting. This speculation follows recent turbulence in overnight lending markets, which saw key borrowing rates spike and forced firms to tap the Fed’s Standing Repo Facility (SRF). This is an unwelcome development as it threatens the Fed’s control over its main policy rate.
Key Levels to Watch (XAUUSD)
This time, the market’s focus is threefold: traders will scrutinise the FOMC statement for any hints on the future rate path, analyse Jerome Powell’s press conference, and look for news regarding the future of QT. A cut accompanied by a dovish commitment to more easing and an immediate end to QT would put downward pressure on the U.S. Dollar Index (DXY) and provide a boost to gold (XAUUSD). Conversely, a cut with a more cautious, hawkish-sounding forward guidance could lead to a muted DXY reaction. The key levels to watch are 3,900and 3,825 on the downside and 4,050–4,100 on the upside.
Bank of Japan
The BoJ will announce its policy decision on Thursday, 30 October, between approximately 02:45 to 04:00 UTC.
This event is the ‘wild card’ of the week. Expectations lean toward holding short-term rates at 0.5% (82% probability, according to Refinitiv), but the decision is far from certain due to political influences from new Prime Minister Sanae Takaichi, who emphasises wage-driven inflation, supports continued monetary easing and is preparing a new fiscal stimulus package. Furthermore, external developments, such as U.S. tariffs and a weakening yen, complicate the outlook for interest rate changes.
At the same time, the recent economic data justifies a hike. Core inflation hit 2.9% in September, the yen remains weak, and inflationary pressures are building. At the last meeting, two board members dissented, voting for an immediate rate hike. Thus, the key focus for markets will be the vote split: if those two hawkish dissenters are joined by another member, or even if they just remain, it will signal that a hike in December is highly likely.
Key levels to watch (USDJPY)
Traders should watch USDJPY, where a decision to hold rates could pull it above the 153.90 resistance level, while hawkish signals might push the pair towards support at 151.00.
European Central Bank
The ECB is scheduled to announce its monetary policy decision on Thursday at 1:15 p.m. UTC.
Policymakers are likely to view this as an ‘interim meeting’, with the more significant one slated for mid-December, as they await the full impact of global trade developments. Thus, financial markets widely expect the central bank to keep rates on hold at 2% for the third consecutive meeting. According to Refinitiv, interest rate swap markets are pricing in a 100% probability of the ECB rate remaining flat. Since September, when policymakers described the economy as being in a ‘good place’, not much has changed. While headline inflation ticked up to 2.2% in September (just above the 2% target), this was expected, and the bank’s own forecasts see it falling back to 1.7% next year.
For markets, the key focus is the timing of a future rate cut. ECB Chief Economist Philip Lane has noted that downside risks could warrant slight easing, while upside factors like German stimulus might support a more hawkish view. Broader uncertainties, including political instability in France and debates over frozen Russian assets, reinforce the need for a cautious policy stance.
Key levels to watch (EURUSD)
A decision to hold the rate unchanged could strengthen EURUSD toward 1.17200 resistance level, especially if the preceding Fed’s decision delivers a dovish message. Alternatively, a decidedly dovish ECB might push EURUSD below the 1.15700 mark.
Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk—Octa does not accept any liability for any resulting losses or consequences.
Octais an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services used by clients from 180 countries who have opened more than 61 million trading accounts. To help its clients reach their investment goals, Octa offers free educational webinars, articles, and analytical tools.
The company is involved in a comprehensive network of charitable and humanitarian initiatives, including improving educational infrastructure and funding short-notice relief projects to support local communities.
Since its foundation, Octa has won more than 100 awards, including the ‘Most Reliable Broker Global 2024’ award from Global Forex Awards and the ‘Best Mobile Trading Platform 2024’ award from Global Brand Magazine.
