Euro rose in European trade against a basket of major rivals, extending gains for the second straight session against yen and trading above the psychological barrier of 160 yen for the first time in 15 years.

Such aggressive gains came after inflation data showed core prices were still naggingly  high, even as they slowed down slightly. 

Such data shows the European Central Bank's fight with inflation is far from over, and it'll likely need to maintain interest rates high for an extended duration.

Conversely, Bank of Japan recently asserted its commitment to the ultra-easy monetary policies to support the world's third largest economy. 

EUR/JPY

EUR/JPY rose 1.7% to 160.85 yen, the highest since August 2008, with a session-low at 158.10.

EUR/USD rose 0.1% yesterday, the second profit in three days following upbeat German GDP data.

European Inflation 

Euro zone consumer prices rose 2.9% y/y in October, the slowest pace since July 2021, and below estimates of 3.1%. 

However, core prices rose 4.2% in October, same as expected. 

Such data showcases the resistance of core prices to slow down compared to overall prices, as core prices remain nearly double the normal range. 

Deutsche Bank analysts noted the need to control wages inflation in the euro zone, which could take six more months from the ECB. 

Analysts believe the solid core inflation rates in the euro zone will provide support to euro zone treasury yields, in turn underscoring euro. 

Bank of Japan 

As expected, Bank of Japan voted to maintain interest rates unchanged this week at minus 0.1%.

The BoJ also maintained its target 10-year treasury yield at 0%, while allowing an upper limit of 1%. 

The BoJ asserted it'll give treasury yields more leeway to move freely up and down flexible ranges. . 

The BOJ said it's still appropriate for current monetary policies to remain unchanged to support economic recovery, while continuing to aggressively purchase government bonds. 

Gold prices rose in European trade, resuming gains after a hiatus and on track for trading above $2000 once more as the dollar loses ground against major rivals.

The precious metal is heading for the biggest monthly profit in 2023 on haven demand due to the ongoing war in the Middle East between Hamas and Israel. 

Gold Prices Today

Gold prices rose 0.2% to $1,999 an ounce, with a session-low at $1,990, after losing 0.5% yesterday, the first loss in four days on profit-taking off five-month highs at $2,009. 

The Dollar

The dollar index fell over 0.1% on Tuesday, extending losses for the third straight session against a basket of major rivals.

Such a decline comes ahead of the Federal Reserve's policy meeting this week, expected to end with no change to interest rates. 

US Interest Rates

Current pricing for interest rates stands at no change at the November meeting, with a 26% chance of an interest rate hike at the Federal Reserve's December meeting. 

The Federal Reserve

Later today, the Federal Reserve will start its two-day policy meeting, expected to maintain interest rates unchanged at 5.5%, already the highest in 22 years. 

Fed Chair Jerome Powell's subsequent press conference is expected to provide important clues on the likely policy decisions ahead in December.

Monthly Trading 

Gold prices are up 8% so far this month on track for the first monthly profit in three months, and the largest monthly profit in 2023. 

The yellow metal was boosted this month following the attack launched by Gazan Islamic group Hamas on Israel, leading to retribution from the Israeli army, with an aggressive airstrike campaign that left over 8 thousand dead in its wake so far.  

The Israeli army is preparing for a potential ground attack while urging Gazan citizens in the northern regions to move south. 

The SPDR

Gold holdings a the SPDR Gold Trust fell 2.31 tonnes yesterday to a total of 859.49 tonnes, the lowest since October 18. 

In a step the White House said it's aimed at protecting the privacy of Americans while promoting competitiveness and innovation, and boosting the pioneering status of the US in the tech sector, US President Joe Biden signed an executive order that affects the future of AI.

Biden said the order is the most important one ever taken worldwide about the safety of AI usage. 

As laws are lagging behind the incredible technological advances in the US, the White House considers the new order an important step to regulate the new industry.

The Order

The White House said on X, the order contains a batch of rules and principles to guarantee US leadership in AI regulations. 

The steps would protect privacy and guarantee equality and promote competitiveness. 

The order would force AI developers to shake their private testing results with the federal governments. 

The order will impact Microsoft, Google, and Amazon to regulations and oversight by several government entities. 

Washington Post said the measure is an ambitious attempt by the US government to boost innovation while assuaging fears about privacy and job losses. 

Safety Tests

A crucial item in the executive order would force AI developers to share their safety tests with the government to make sure the new products won't represent threats for users and the public. 

In case threats were detected, the government would force the developer to conduct improvements and give up the product completely. 

Water Marks 

According to media outlets, a new standard proposed by the executive order would regulate the usage of water marks to let consumers know they're dealing with an AI product, which would protect against fabrication.

Algorithmic Differentiation 

The order also includes a process that's described as algorithmic differentiation, which would allow authorities to prosecute unlawful behavior effectively. 

Congressional Limits

The new order is a crucial test for President Joe Biden's administration, which is striving to carry out its promises of crafting strong and precise protection regulations for silicon valley companies. 

However, the Washington Post noted there are limits to what the administration can do without a Congressional law regulating AI.

Euro fell in European trade on Tuesday against a basket of major rivals, resuming losses against the dollar ahead of major European inflation data for October.

Such data will shed light on the level of inflationary pressures on the European Central Bank's policymakers. 

EUR/USD

EUR/USD fell 0.25% to 1.0590, with a session-high at 1.0617, after rising 0.55% yesterday, the first profit in five days, marking a one-week high at 1.0625, following strong German data.

German's GDP numbers were modified positively to show that the slowdown in the third quarter wasn't as steep as feared. 

The data showed the German GDP down 0.1% in the third quarter, while second quarter GDP growth was modified to show a 0..1% growth rate.

Core Inflation Data

Now inflation await crucial inflation data for the euro zone for October later today.

European consumer prices are expected up 3.1% in October, slowing down from 4.3% in September. 

Core prices are expected up 4.2% last month, slowing down from 4.5%

Such data would certainly reduce the pressure on the ECB, and pretty much rule out any chanced of an interest rate hike.