Bank of Japan (BoJ) Governor Kazuo Ueda spoke on Saturday at the annual meeting of the Japan Society of Monetary Economics. He said that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy.

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Market reaction

The pair trades firmer in the early Asian session on Monday. As of writing, the USD/JPY pair was up 0.13% on the day at 149.56.

• Gold price loses traction below the $1,850 mark as the US Dollar (USD) resumes its upward path.
• The annual Core PCE Price Index grew 3.9% vs. 4.3% prior.
• The US passed bills to prevent a government shutdown following Friday's session.
• Traders will focus on the US ISM Manufacturing PMI, the Fed Chair Powell’s speech.

Gold price (XAU/USD) extends its downside and trades in negative territory for the sixth consecutive day during the early Asian trading hours on Monday. The renewed US Dollar (USD) demand exerts some selling pressure on USD-denominated Gold price. The precious metal currently trades near $1,846, losing 0.12% on the day. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, holds above 106.25 after retracing the low of 105.65 on Friday.

The US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. The annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, grew 3.9% from 4.3% in July, in line with the estimation. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market expectations.

On the weekend, China’s manufacturing activity grew into positive territory. The Chinese Caixin/S&P Global Manufacturing Purchasing Managers' Index (PMI) dropped to 50.6 in September from the previous reading of 51.0, below the market consensus of 51.2. However, this figure failed to boost gold price.

Furthermore, the US passed bills to prevent a government shutdown following Friday's session, extending funding until November 17. This, in turn, lifts the US Dollar and drags XAU/USD lower.

Gold traders will monitor the US ISM Manufacturing PMI for September due on Monday. Also, Fed Chair Powell’s speech could offer hints about potential interest rate hikes. Traders will take cues from these events and find trading opportunities around the gold price.

Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank may be done raising interest rates since inflationary pressures are going back towards the 2% target, although still elevated.

Key quotes

• AUD/USD remains confined near 0.6430 amid the USD demand.
• The annual Core PCE Price Index rose 3.9% vs. 4.3% prior, the monthly figure grew 0.1% vs. 0.2% prior.
• China’s manufacturing PMI grew into positive territory.
• Traders await the US ISM Manufacturing PMI ahead of the Reserve Bank of Australia (RBA) rate decision on Tuesday.

The AUD/USD pair trades sideways below the mid-0.6400s during the early Asian session on Monday. The Australian Dollar (AUD) sell-off pauses due to the upbeat Chinese PMI data. However, the stronger UD Dollar (USD) might cap the upside of the pair. AUD/USD currently trades around 0.6430, losing 0.05% on the day.

On Friday, the US Bureau of Economic Analysis revealed that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. Meanwhile, the annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, rose 3.9% from 4.3% in July, in line with expectations. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures fell short of experts' expectations.

Following Friday's session, the US passed bills to prevent a government shutdown, extending funding until November 17th. The US Dollar Index (USD) resumes its upward path and holds above 106.25 on Monday.

Chicago Federal Reserve (Fed) President Austan Goolsbee said on Thursday that the Fed will return inflation to target and has a chance to do something rare by accomplishing that without a recession. Richmond Fed President Thomas Barkin remarked that the past five months of inflation data have been upbeat but that it is too early to determine what monetary policy would be next. Traders will monitor the Fed’s Chair Jerome Powell's speech later in the American session on Monday for fresh impetus.

On the Aussie front, market players expect another interest rate pause at the Reserve Bank of Australia (RBA) October RBA meeting on Tuesday. These events could trigger the volatility in the market.

Data release on the weekend showed that China’s Manufacturing PMI grew into positive territory. The Chinese Caixin/S&P Global Manufacturing Purchasing Managers' Index (PMI) fell to 50.6 in September from 51.0 in the previous month, below the market consensus of 51.2. However, this figure failed to lift the Aussie against the US Dollar.

Looking ahead, market players will keep an eye on the US ISM Manufacturing PMI for September ahead of the Fed’s Chair Jerome Powell's speech on Monday. The attention will shift to the RBA interest rate decision on Tuesday. These events could give a clear direction to the AUD/USD pair.