Warsh's 'tightening is working' line softens USD after a hawkish Fed hold; PCE next

Daily Wrap, Wednesday, 28 October 2026. Published 21:15 UTC.

Mixed: There was no haven bid, with JPY at -0.17 and CHF at 0 on the strength board, but indices averaged only +0.05% over 24h while oil gained 1.72% and gold 0.2%, so there was no clean risk-on signal either.

In short

• The Fed held at 4% in a 10-2 vote, with Cook and Hammack favouring a 25bp hike. Warsh's line that tightening is working was read as less hawkish than feared, and USD sits at -0.08 on the strength board.
• The BoC hiked to 2.5% as forecast, its first hike since July 2023, but CAD made little of it until the Warsh presser. USDCAD is at 1.39946, down 0.4% over 24h. The UK Budget, missing from our feed at the last note, was judged broadly neutral.
• Thursday's 12:30 UTC cluster decides whether the USD dip extends: core PCE (0.3% m/m, 3.1% y/y) and Q3 GDP (3.2%). The ECB follows at 13:15 GMT, per our desk.

Themes

Hawkish hold, softer presser: USD gives ground

The Fed held at 3.75–4.00% with two hike dissents and a hawkish-leaning statement, but Warsh's 'tightening is working' was taken as less hawkish than feared. EURUSD bounced off 17-month lows to 1.11541, GBPUSD recovered to 1.33276 from its 1.3272 Fed-day low, and USDCHF eased to 0.82798. Our desk reads near-term risk as skewed to USD downside if core PCE is soft, given how crowded the USD-bullish consensus is.

AUD tops the board, NZD at the bottom

AUD leads the strength board at 0.51 on hot CPI and Warsh's presser, while NZD trails at -1.19 after the RBNZ's surprise hold. AUDNZD is up 1.41% over 24h after spiking to 13-year highs above 1.2600, and sits at 1.25378. AUDUSD is now pressing the 0.7050–0.7080 resistance cluster our desk flags.

Oil premium firms; metals split

WTI rose 2.03% on the day to 102.67 after touching 104.24, on Middle East headlines and a bigger-than-expected crude draw. Silver fell 0.9% after another rejection near $55. Gold dipped to about $4,039 on the Fed hold, then rebounded, with a +1.04% hourly move flagged at 20:01 UTC, to 4067.9.

Big tech splits after the close

GOOGL dropped 7.74% on the day and MSFT rose 3.61%, both flagged at 20:06 UTC, and there is no driver for either in our feed. USTEC closed the day down 0.25% while US30 gained 0.34%, so the index picture is split rather than broadly risk-off.

What moved

• GOOGL −7.74% The platform flagged a -7.98% 15-minute drop at 20:06 UTC on a range 5.72 times typical; there is no single clear driver in our news feed.
• MSFT +3.61% A +4.33% 15-minute jump was flagged at the same 20:06 UTC timestamp as GOOGL's drop; there is no single clear driver in our news feed.
• XTI/USD +2.03% WTI snapped a two-day slide on the Houthi missile claim against Saudi Arabia's Ras Tanura refinery, US/Israeli signals of possible renewed action against Iran, and an EIA crude draw of -1.462M versus -0.3M forecast.
• XAG/USD −0.90% Silver failed to reclaim $55.00 and gave back Tuesday's rebound as higher oil revived inflation and hike fears, per our desk.
• NZD/USD −0.97% The RBNZ's surprise 4-3 hold at 2.75%, against a consensus hike, flushed crowded pre-meeting longs.
• AUD/USD +0.50% Hot monthly CPI (4.3% y/y vs 4.2% forecast) lifted RBNZ-contrasting RBA hike odds to about 78%, then Warsh's presser softened the USD and took the pair to its highest since 23 Sep.

Releases

• CAD BoC Interest Rate Decision 2.5%. The hike was about 80% priced, so USDCAD whipsawed through 1.4050 without CAD gaining traction; the pair only slipped later, with a -0.24% 15-minute drop flagged during the FOMC presser, and it now stands at 1.39946.
• USD Fed Interest Rate Decision 4%. The hold itself barely moved prices, but the presser sold the dollar: alerts flagged EURUSD +0.22% and GBPUSD +0.21% in 15 minutes at 18:46 UTC, and USDCHF -0.32% over the hour.

Levels to watch

• AUD/USD 0.7054 This is the top of the 0.7040–0.7054 H4 compression zone, and price is sitting right on it after the post-Warsh rally.
• XAU/USD 4,070.75 This H4 resistance is where the two-day rebound stalled before the Fed, and price is just beneath it after the late recovery.
• USD/CAD 1.4000 This is the round-number H4 resistance and former range floor, and price slipped just below it after the presser.
• EUR/USD 1.1113 This D1 support marks the equal lows at the base of the three-week 1.1113–1.1270 range, tested early Wednesday.
• NZD/USD 0.5635 This is the top of the prior 0.5583–0.5635 H4 range that price has fallen back into, with H4 RSI at 29.

Ahead

• 10:00 UTC EUR Economic Sentiment Indicator It is forecast at 97.5 versus 97.9 previously and lands hours before the ECB decision, keeping EURUSD's bounce off yearly lows in focus.
• 12:30 UTC USD Core Personal Consumption Expenditures - Price Index (MoM) It is forecast at 0.3% versus 0.2%. With about one full December hike already in OIS, our desk sees a hot print mostly confirming pricing, while a soft one could trim it; USD pairs, XAUUSD and US indices are exposed.
• 12:30 UTC USD Core Personal Consumption Expenditures - Price Index (YoY) It is forecast at 3.1% versus 3%, and is the Fed's preferred gauge, read against Warsh's claim that tightening is working.
• 12:30 UTC USD Gross Domestic Product Annualized Q3 growth is forecast at 3.2% versus 2.2%. That would test the Fed statement's 'strong pace' description of activity, with USD and US indices most exposed.
• 12:30 UTC USD Gross Domestic Product Price Index It is forecast at 3.5% versus 6.1%, an inflation read alongside PCE that feeds December hike pricing.
• 12:30 UTC USD Initial Jobless Claims Claims are forecast at 199K versus 194K. They are part of the 12:30 UTC cluster, adding labour-market colour to the USD reaction.

Into 12:30 UTC Thursday, the open question is whether the post-Warsh USD dip survives core PCE and Q3 GDP, with the ECB at 13:15 GMT right behind.