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Monday, October 19, 2026
What’s happening: The euro fell versus the US dollar this morning as escalating social and geopolitical friction unsettled European financial markets.
What happened: Violent clashes breaking out between the police and protesters across France and other European nations over the weekend weighed on the euro.
Rising energy costs sustained inflationary concerns, while investors awaited some key economic reports this week.
Why it matters: High cost of living and student-led grievances led to a nationwide protest in France. Anti-government demonstrations spilled over into Belgium, Italy and Portugal.
Russia and Ukraine continuing to attack critical infrastructure fuelled concerns around energy supply disruptions and rising fuel costs.
The EUR/USD forex pair continued its broader downward trend that began in September, due to mounting concerns over France’s fiscal outlook and the European Central Bank’s (ECB) cautious stance on interest rates.
Data released on Friday showed that the Eurozone’s annual inflation rate accelerated for the third straight month to 3.8% in September, from 3.2% in August. This marked the highest reading since September 2023.
The Eurozone reported a trade deficit of €16.1 billion in August, versus a year-ago surplus of €502 million. This was the largest trade deficit since January 2023. Imports jumped 16.7% year-over-year to €243.8 billion, logging the second-highest August figure on record. The rise was driven by higher prices of petroleum and petroleum products.
Weakness in the US dollar lent some support to the EUR/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 101.82 this morning.
The EUR/USD forex pair fell more than 0.1% to 1.1228 this morning, after dipping as much as 0.5% earlier in the session.
What to watch: Investors will keep an eye on the US-Iran conflict and ongoing protests in Europe.
Data on current account, ZEW economic sentiment index and construction output will be released on Tuesday. The Eurozone’s current account surplus, which widened to €36.5 billion in July from €29.7 billion in the year-ago period, is expected to contract to €16.9 billion in August. Analysts expect the ZEW indicator of economic sentiment for the Eurozone to decline to 24.2 in October from 25.8 in September, while construction output is projected to contract by 2.3% year-over-year in August following a 2% decline in July.
Context: Gold prices extended gains this morning amid easing expectations of an interest rate hike by the Federal Reserve.
Details: Dovish comments from Fed chief Kevin Warsh sparked speculations of the central bank keeping its benchmark interest rates unchanged at its meeting later this month.
During IMF’s annual meetings in Bangkok, Warsh signalled that the latest hotter-than-expected reading on inflation had not changed his outlook on the US economy.
Warsh’s comments come as the Fed begins its traditional blackout period ahead of the October 27–28 policy meeting.
Gold also benefited from safe-haven demand as growing concerns over AI-related investments triggered an equity selloff and pushed bond yields lower.
Meanwhile, rising geopolitical concerns in the Middle East and Europe kept oil prices elevated.
Weakness in the US dollar also lent support to gold prices as a softer greenback makes metals cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 101.82 this morning.
Spot price for gold rose 0.2% to $4,173.40 an ounce this morning.
In other metals trading, spot silver jumped 0.8% to trade at $57.4730 an ounce, platinum jumped 1% to $1,650.73 and palladium climbed 1.3% to $1,130.65.
What to watch: Data on S&P Global manufacturing PMI, S&P Global services PMI and Michigan consumer sentiment will be released by the US this week. Analysts expect the S&P Global US manufacturing PMI to decline to 55.6 in October from 55.9 in September, while the services PMI is projected to ease to 57.9 in October from 58.8 in the previous month. The University of Michigan’s consumer sentiment index is expected to decline to 46.3 in October, hitting its lowest reading since May’s record low.
Other Markets: US trading indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.34%, 1.09% and 2.50%, respectively.
US President Donald Trump blamed Ukraine’s President Volodymyr Zelenskyy for not wanting to end the ongoing conflict, while defending his decision to waive sanctions on Russia. The news sent the USD/RUB forex pair lower in forex trading this morning.
China’s retail sales grew 1.1% year-over-year in September, accelerating from 0.4% in August. The latest reading topping market estimates of 0.5% growth exerted pressure on the USD/CNY forex pair.
New Zealand’s BusinessNZ performance of composite index rose to 53.4 in September from 52.4 in the previous month. This being the highest reading since June sent the NZD/USD pair higher in forex trading this morning.
Canada’s housing starts surged 3% to an annual rate of 248,896 units in September, compared to 242,223 units in August. The latest reading coming above market estimates of 232,500 units exerted pressure on the USD/CAD forex pair.
Hong Kong’s business confidence climbed to 5 in the fourth quarter from -4 in the previous quarter. Despite this being the strongest reading since the fourth quarter of 2023, the USD/HKD pair rose in forex trading this morning.
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