Forex Today: US Dollar extends rebound, Gold surpasses $4,000

Here is what you need to know on Wednesday, October 8:

The US Dollar (USD) continues to gather strength against its rivals midweek, with the USD Index climbing to its highest level since early August near 99.00. Investors will continue to pay close attention to comments from central bank officials in the absence of high-impact data releases. Later in the American session, the Federal Reserve (Fed) will publish the minutes of the September policy meeting.

US lawmakers failed to resolve their disputes over the funding legislation on Tuesday, and the government shutdown passed the one-week mark. The Senate will vote again on Wednesday, and Senate Majority Leader John Thune said that the chamber will be voting on the same competing bills over and over. Meanwhile, the White House's Office of Management and Budget reportedly sent a memo, noting that the 750,000 furloughed workers are not guaranteed back pay. US stock index futures trade mixed in the European morning on Wednesday after Wall Street's main indexes closed in negative territory on Tuesday.

Gold's record-setting rally continues without losing any steam midweek. XAU/USD was last trading at a new all-time high above $4,030, gaining more than 1% on the day. Gold is already up nearly 5% since the beginning of October.

In the early hours of the Asian session, the Reserve Bank of New Zealand (RBNZ) announced that it cut the policy rate by 50 basis-points to 2.5% from 3%, against the market expectation for a 25 bps rate cut. In its policy statement, the RBNZ noted that the Committee remains open to further reductions in interest rates as required for inflation to settle sustainably near the 2% target mid-point in the medium term. NZD/USD stays under heavy bearish pressure and trades at its lowest level in six months near 0.5750, losing about 0.9% on a daily basis.

USD/JPY extends its weekly uptrend and trades at its highest level since February above 152.00. Japan's ruling Liberal Democratic Party (LDP) decided to postpone the start of an extraordinary Diet session to October 20 or later after talks between new LDP leader Sanae Takaichi and Komeito chief Tetsuo Saito failed on maintaining their long-standing governing partnership.

Outgoing French Prime Minister Sébastien Lecornu said on Wednesday that they must get a budget approved by the end of the year and noted that talks so far show a willingness to do that. Lecornu will meet with President Emmanuel Macron later in the day. Nevertheless, EUR/USD struggles to hold its ground and declines toward 1.1600 in the European morning on Wednesday.

After losing about 0.5% on Tuesday, GBP/USD edges lower and trades near 1.3400 to start the European session.