Xe Morning Update - Your daily market wrap

Tuesday, October 27, 2026

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TUESDAY, OCTOBER 27

Developments in markets for Monday, 26 October

??Snapshot: S&P 500, Nasdaq, Dow?• yields?• crude?• gold?• Dollar Index?

??AUD/USD:?resistance near 0.7040 continues to hold; starts day around 0.7020

??Markets trade on a more stable footing to start the week; energy prices lower

?? Tech stocks recover, following a bruising week for the AI trade

??Week ahead could prove pivotal amidst central bank meetings; data, tech earnings

Each morning we bring you up to speed with the latest market news, including the events and themes that are impacting currencies and other related asset classes.

The new week has begun on a steadier footing, with U.S. equities advancing as technology stocks rebound. Energy prices have eased amid renewed diplomatic hopes, while the U.S. dollar is firmer, benefiting from an improvement in sentiment towards the AI sector.

Global markets endured a sharp reset last week, as geopolitical risk collided with growing concerns around the AI investment boom. Brent crude surged around 6% through US$117 a barrel, while technology stocks were hit by a sharp rotation out of the AI trade. Thursday's session was particularly brutal, with the Nasdaq falling around 2.6% and the Philadelphia Semiconductor Index plunging 6.7%.

The flight to safety drove a powerful Treasury rally, briefly pulling the US 10-year yield below 5%. Notably, the US dollar failed to benefit from the risk-off environment, with defensive flows favouring the yen and Swiss franc instead.

In short: oil surged, tech cracked, bond yields plunged and the dollar lost its shine. What began as another geopolitical shock quickly morphed into something broader: a sudden reassessment of the AI trade, global risk appetite and where investors actually want to hide when markets turn ugly.

The key question heading into the new week is whether last week's turmoil marked the beginning of a more meaningful shift in market dynamics, or simply a temporary disruption to the prevailing playbook. Surging oil prices, falling Treasury yields, a sharp rotation out of AI and technology stocks and a softer US dollar challenged several of the correlations that have defined markets this year.

This week should provide an important stress test.

US equity markets as at time of morning update release and may not represent session closing prices

A packed central-bank calendar, featuring the Fed, RBNZ, ECB, BoC and BoJ, sits alongside key US GDP and inflation data, while earnings from Microsoft, Alphabet and Amazon will put the durability of the AI investment story firmly back under the microscope.

The Australian dollar begins the week in the middle of the G10 pack, down around a quarter of a percent. Having opened Monday's Asian session in the 0.7030's, the Aussie once again ascended to within a pip or two of 0.7040, but ultimately AUD bulls proved unwilling to push the pair beyond a level that has provided stout resistance over the past four trading days.

Following a second unsuccessful attempt to peak beyond 0.7040, AUD/USD was offered through the London afternoon and New York morning before locating support a couple of pips north of 0.7010.

In addition to 0.7040, the 100-day moving average presents resistance. A decisive break higher would also clear the 200-day moving average near 0.7050, reinforcing the bullish technical outlook.

With major event risk spanning central bank meetings, key economic data and megacap tech earnings, this week has the potential to deliver a decisive directional move for the Australian dollar and broader financial markets.

The calendar remains relatively quiet over the next 24 hours before event risk ramps up on Wednesday. The RBNZ is widely expected to deliver a 25-basis-point hike, while locally the September CPI report takes center stage. Across the Tasman, the key focus will be less on the rate hike itself and more on the accompanying guidance. Markets will be looking for signs that the RBNZ remains open to further tightening. Any reluctance to signal additional hikes could weigh on the NZD, even as the OCR is lifted to 3.00%.

After forming a double top near 1.2490 at the late-September and mid-November swing highs, AUD/NZD appears to have peaked for now. However, a dovish RBNZ hike, accompanied by signals from Governor Breman and the board that further tightening is unlikely, would challenge that view.

As for the day ahead - expect more of the same, AUD/USD to sustain trade in the low 0.7000's.

Have a good day.

Stuart Talman

stuart.talman@xe.com

Xe Corporate

Any questions or if you require account support call 1800 006 592

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