Forex week in review 43/2026: Houthi attacks lift oil, the Aussie and sterling lead, gold breaks $4,000

The dollar index barely moved this week, finishing at 101.81 against 101.84. If you only looked at that number you would think it was quiet. It was not. Oil jumped more than 6% after a series of Houthi attacks on Saudi Arabia, gold broke below $4,000 for the first time since July, and the major currencies spread out according to a single question: which central bank is most likely to raise rates in response to the energy shock?

Weekly currency figures below compare the Friday 23 October close with the Friday 16 October close, as reported by RTTNews. Oil figures are from The National and CNBC; gold figures from CNBC and Reuters; UK data from the Office for National Statistics.

Where we left off

Last week the US produced a hot September CPI of 3.7%, the dollar briefly hit an 18-month high, and then the move reversed as Fed officials said they could wait and Treasury yields fell. CME FedWatch was pricing a hold at the 27–28 October meeting and a high chance of a December hike. On Friday 16 October, two tankers were attacked off Saudi Arabia. See last week’s recap.

Day by day

Monday 19 October: attacks on Saudi Arabia

The Iran-backed Houthis claimed attacks on King Khalid International Airport in Riyadh, Abha International Airport, Saudi Aramco facilities at Yanbu on the Red Sea coast, the Shaybah oilfield and Saudi naval forces, according to CNBC, which said it could not verify the claims. Saudi Arabia postponed its Future Investment Initiative conference until 2027. Brent touched $110.70 before settling 31 cents lower at $109.55, as traders also weighed possible extra Russian supply after US sanctions relief announced on Friday. WTI rose $2.25 to $103.66.

In Sydney, RBA Assistant Governor Christopher Kent said there were reasonable indications that neutral interest rates were rising both domestically and globally, according to FXStreet. The neutral rate is the level at which policy neither stimulates nor restrains the economy, so a higher neutral rate implies today’s 4.60% cash rate is less restrictive than it looks. Markets read that as a hint of more hikes.

Sterling reached 83.95 pence per euro, its strongest against the euro since May 2025, according to Reuters. Most of the week’s lows in EUR/USD, GBP/USD and AUD/USD were set on Monday, and the dollar index set its weekly high of 102.08, according to RTTNews.

Tuesday 20 October: UK jobs surprise

The ONS labour market release showed unemployment falling to 4.7% in the three months to August, the lowest since mid-2025, and regular pay growth of 3.7%, above expectations, according to Reuters. GBP/USD rose 0.3% to 1.3343. Brent was above $111, its highest since May. Tommy von Brömsen of Handelsbanken told Reuters that the UK economy was surprising on the upside and that rate differentials were likely to favour the pound. Money markets were almost fully pricing a quarter-point hike at the Bank of England’s 5 November meeting, and four hikes by the middle of next year.

USD/JPY made its weekly high of 158.61 on Tuesday, and EUR/USD its high of 1.1261.

Wednesday 21 October: UK CPI jumps

The ONS said consumer price inflation rose to 3.5% in the 12 months to September, from 3.1% in August. Core CPI rose to 2.8% from 2.6%, and services inflation to 3.7% from 3.4%. Motor fuels were the largest upward contributor: petrol averaged 169.5 pence a litre and diesel 192.5 pence, both the highest since mid-2022, and motor fuel prices were up 29.8% on the year.

That rise in core and services inflation is what matters for the Bank of England. A jump in fuel prices alone can be looked through. A rise in services inflation suggests the energy shock is starting to spread.

Thursday 22 October: RBA again, and the dollar dips

RBA Deputy Governor Andrew Hauser warned that third-quarter trimmed-mean inflation might run hotter than expected, according to FXStreet, keeping alive expectations of a hike at the 3 November meeting. AUD/USD hit a fresh monthly high and held above 0.70. FXStreet also cited better-than-expected Chinese third-quarter GDP, which matters for Australia because China is its largest export market. The dollar index made its weekly low of 101.45, and GBP/USD its high of 1.3421.

Friday 23 October: oil spikes, gold breaks $4,000

According to The National, over the previous 48 hours the Houthis had claimed attacks on the Saudi Defence Ministry headquarters in Riyadh, King Fahd International Airport in Dammam, the Aramco loading port at Yanbu and Abha airport. Two people died in the Dammam airport attacks, and Aramco evacuated its Dhahran headquarters, the first such evacuation since the Iran war began. Libyan output was also disrupted. Brent briefly traded above $117 and settled at $116.72, up 3.14% on the day and 6.24% on the week. WTI settled at $103.27.

Spot gold fell below $4,000 an ounce for the first time since mid-July, trading around $3,998 in the afternoon, and was on track for a fall of about 4% on the week, its worst since June, according to CNBC. Silver fell to its lowest since November 2025. CME FedWatch put the chance of a hold at the 27–28 October meeting at 92% and the chance of a December hike at about 78%.

RTTNews reported that renewed jitters over AI and technology stocks triggered a global selloff that boosted haven demand for the yen. USD/JPY made its weekly low of 156.07 on Friday.

Pair by pair

AUD/USD: up 1.28%, the best performer

The Australian dollar rose from 0.6947 to 0.7036, its best week in this run of recaps. Earlier in the month it had dipped below 0.69, its lowest since early July, according to FXStreet. This week two senior RBA officials sounded hawkish in the space of four days, Chinese growth data surprised to the upside, and the US dollar softened midweek. Compare that with three weeks ago, when the RBA actually raised rates and the Aussie fell almost 1%. The difference is that this week the market was learning something new about the RBA’s intentions, whereas the September hike had already been priced.

GBP/USD: up 0.33%

Sterling rose from 1.3329 to 1.3373, after reaching 1.3421 on Thursday. Strong jobs data and a jump in inflation made a Bank of England hike on 5 November look close to certain. The pound’s strength showed up most clearly against the euro, where it reached its strongest level since May 2025.

EUR/USD: down 0.33%

The euro slipped from 1.1240 to 1.1203. RTTNews cited political unrest in Europe and debt-market turmoil in France as weights on the single currency. The contrast with sterling is the point of the week: both the UK and the euro area face the same energy shock, but the UK is about to raise rates while the ECB was expected to pause at its 29 October meeting. Our guide on central banks and interest rates explains why the expected path of rates, rather than today’s level, drives currencies.

USD/JPY: down 0.72%

USD/JPY fell from 158.01 to 156.87, with Friday’s low of 156.07. The yen tends to strengthen when global stocks fall sharply, partly because Japanese investors bring money home and partly because traders unwind positions that borrowed in yen to buy higher-yielding assets. This week’s tech selloff was a textbook example. It is also a reminder that the yen’s haven behaviour can switch on quickly, even after months of weakness driven by rate differentials.

Gold: worst week since June

Gold’s fall of about 4% through the $4,000 level, during a week of missile and drone attacks on a major oil producer, looks counter-intuitive. The explanation is the same one we have seen all month. Higher oil means higher inflation, which means higher expected interest rates, which raises the cost of holding a metal that pays no income. According to CNBC, Jim Wyckoff of American Gold Exchange said all of it was working against gold and silver bulls. A round number like $4,000 also attracts orders; when it breaks, stop-loss selling can accelerate the move. See support and resistance.

Look at the crosses, not just the dollar pairs

When the dollar index ends a week unchanged, the dollar pairs can hide what is really going on. The crosses show it more directly. EUR/GBP fell to its lowest level since May 2025 on Monday, according to Reuters, which tells you the market was choosing the pound over the euro regardless of what the dollar did. AUD/JPY, which combines a currency that gained 1.28% against the dollar with one that gained 0.72%, would have moved less than either dollar pair, because both sides strengthened. A cross isolates the relationship between two economies and their central banks, with the Fed taken out of the picture. Our guide on currency pairs explains how crosses are priced from the two dollar pairs.

How an oil shock sorts currencies

The week shows a pattern worth learning. An oil price shock affects every economy, but currencies do not all move the same way. Roughly, the market asks three questions:

1. Is the country an energy exporter or importer? Exporters can benefit from higher prices; importers pay more.
2. How will the central bank respond? A bank that is expected to hike in response to higher inflation tends to see its currency supported. A bank expected to look through the shock, or pause, tends to see its currency lag.
3. What does it do to risk appetite? A shock that hits stock markets tends to help havens like the yen and hurt risk-sensitive currencies.

This week, the Bank of England and the RBA looked most likely to hike soon, and the pound and the Aussie led. The ECB looked likely to pause, and the euro lagged. The yen benefited from the stock market selloff. The dollar sat in the middle. Our guide to how economic data moves forex covers the data side of this; the central bank side is in central banks and interest rates.

Trading geopolitical headlines

Attacks like this week’s arrive without warning and can move oil, gold and currencies sharply in minutes. Some practical points:

• Headline risk is not on the economic calendar. Size positions on the assumption that something unexpected can happen at any time.
• Commodity-linked pairs and gold can gap on weekend news. See forex market hours and sessions.
• Gold CFDs carry higher margin requirements than major currency pairs. Under ESMA rules EU retail clients can use up to 20:1 on gold, compared with 30:1 on major pairs.
• Most retail CFD accounts lose money; brokers typically disclose between 61% and 89% of accounts. Read why most retail CFD traders lose.

Example: a trader buys a gold CFD position of 10 ounces at $4,175, close to the previous Friday’s level, using the maximum 20:1 retail leverage, so the margin posted is about $2,090. If gold trades down to $3,998 by Friday, the loss is $177 an ounce, or $1,770 on 10 ounces. That is about 85% of the margin posted, from a move of a little over 4%. The same arithmetic applies in reverse, but the point is how quickly leverage turns a modest move into a large share of an account. The numbers are illustrative; see leverage and margin.

What this week teaches

• An oil shock does not hit all currencies equally. The market sorts them by how their central banks are likely to respond.
• New information about a central bank’s intentions moves a currency more than a decision that was already priced. The RBA’s hawkish speeches this week did more for the Aussie than its September hike.
• Core and services inflation matter more to central banks than fuel prices alone. UK services inflation rising to 3.7% is why a hike looks close.
• The yen can switch back to haven behaviour quickly when stocks sell off.
• Gold can fall during geopolitical crises when the main effect of the crisis is higher interest rates.
• Round numbers like $4,000 and 0.70 are where orders cluster; breaks through them can accelerate.

Scheduled next week

These are the scheduled events for Monday 26 to Friday 30 October, a week with three major central bank decisions. This is a list of events, not a view on how markets will react.

• Tuesday 27 and Wednesday 28 October: Federal Reserve FOMC meeting, with the statement on Wednesday afternoon New York time.
• Thursday 29 October: European Central Bank monetary policy decision at 14:15 CET, followed by the press conference.
• Thursday 29 October: US third-quarter GDP (advance estimate) and September personal income and outlays, including the PCE price index, from the Bureau of Economic Analysis.
• During the week: Australian consumer price data for September and the third quarter.
• Friday 30 October: Bank of Japan monetary policy decision, followed by Governor Kazuo Ueda’s press conference; Tokyo consumer prices for October.

Sources

• RTTNews: Dollar index edged down last week
• CNBC: Brent oil tops $109 after Houthi militants claim attacks on Saudi airports and Aramco facilities
• The National: Oil hits six-month high at $117 after more Houthi attacks on Saudi Arabia
• Office for National Statistics: Consumer price inflation, UK, September 2026
• Reuters via Global Banking and Finance: Sterling rises as labour market data reinforces rate hike bets
• FXStreet: Australian dollar stalls pullback amid hawkish RBA and weak USD
• CNBC: Gold set for steep weekly loss as rising oil prices bolster Fed rate hike bets
• ING Think: Bank of England set for first rate hike as energy shock worsens