EUROPEAN FX UPDATE: USD slightly firmer into CPI, EUR boosted on German PMIs but now pared

DXY: +0.1%, 99.04

• USD is marginally firmer today, as traders digest a slew of trade-related updates and ahead of the much-awaited delayed US CPI report for September. DXY is currently in a 98.89-99.10 range.


• In brief, consensus looks for headline CPI to rise +0.4% M/M (prev. 0.4%), with the annual rate seen rising to 3.1% Y/Y (prev. 2.9%). The core rate is expected to rise by +0.3% M/M (prev. 0.3%), with the annual rate of core inflation seen unchanged at 3.1%. This will give Fed members an opportunity to digest some Tier 1 data ahead of next week’s release. ING opines that an in-line figure “will fail to materially move the dollar”, given the Fed’s current focus on the employment mandate.


• On the trade front, the White House confirmed that the POTUS will meet a number of Asian leaders next week, namely Chinese President Xi on Thursday. It was also reported that Trump said he thinks he will come out well from the meeting with Xi.


• Up the northern border, Trump cancelled all trade negotiations with Canada, due to anti-tariff ads. In an immediate reaction, USD/CAD moved higher by 25 pips to 1.4030 from 1.4005 over two minutes; currently trading around 1.4018. ING suggests that the BoC would be more likely to deliver a 25bps cut at next week’s meeting, given how much trade uncertainty/existing tariffs are weighing on Canadian businesses.

EUR: -0.1%, 1.1610

• EUR is essentially flat/modestly lower vs the Dollar. Focus today has been on a slew of PMIs. Starting by way of release order; France’s metrics saw Services missed whilst Manufacturing ticked higher; “sentiment deteriorated. The release suggested that “this is largely attributable to the weak global economic environment and domestic political uncertainty". German figures saw a tick higher in Manufacturing, whilst Services jumped above the most optimistic of analyst expectations. Finally, the EZ-wide figure saw Manufacturing surprisingly tick into expansionary territory, with Services also strong; the accompanying release noted that the ECB will see the data as confirmation to avoid further cuts.


• Delving into price action in detail, a slight tick lower in the Single-Currency on the downbeat French metrics, but then jumped higher and made fresh highs on the German figures, rising from 1.1607 to 1.1628. The pair has gradually cooled from those highs since.


• Also in focus for the EUR and broader FX space, is the recent US oil-related sanctions on Russia – a move which has seen India and China both reportedly halt imports of Russian oil.

USD/JPY: +0.2%, 152.97

• JPY is the marginal G10 underperformer today, continuing the pressure seen in the APAC session. USD/JPY is currently trading at the upper end of a 152.47-153.06 range; peak marks a fresh WTD high and now approaching last week’s best at 153.27.


• Focus for the region has been on inflation, whereby Japan’s National CPI Y/Y rose from the prior (in-line with expectations); the core figure also rose (as expected), whilst the super-core metric fell more-than-expected. From a policy perspective, the elevated inflation figures play in favour of a hike for the BoJ; ING opines that the ongoing US-China trade spat will keep the BoJ wary of hiking rates in October, and instead favour December.


• Earlier there was some commentary from the Japanese PM, who provided some details on some fiscal-related policy. She said that they “will not implement cash handout which was pledged during the upper house election due to lack of public understanding”; as a reminder the previous LDP plan was to provide a JPY 20k cash handout to counter rising prices.

GBP: -0.1%, 1.3318

• GBP is modestly lower vs the Dollar. Focus for the UK today was on Retail Sales, which topped analyst expectations; headline M/M +0.5% (exp. -0.2%), the Ex-Fuel figure cooled from the prior but not as much as expected. Thereafter, Cable slipped from those levels heading into the PMI metrics, which were overall resilient; Services ticked a little higher, whilst Manufacturing topped the most optimistic of analyst expectations. The accompanying report suggested that “Companies are clearly treading cautiously in terms of spending, investment and hiring ahead of the upcoming Budget”. Overall, Cable lifted from 1.3302 to 1.3321; the midpoint of the day’s range.


• Overall, a stronger-than-expected series that adds to the narrative that the BoE has sufficient breathing room to leave the policy rate at the current 4% figure in November before potentially easing in December. As a reminder, pricing for a December cut increased significantly following the September inflation series. We now await the November Budget.


• On that, it was reported recently that Chancellor Reeves is mulling raising income tax at next month's budget, according to The Guardian – a move which would break promises made in her manifesto. Most recently, the UK Labour Minister Thomas-Symonds said the party stands by its manifesto pledges including on income tax.

Antipodeans: AUD -0.3%, NZD -0.2%

• Antipodeans are modestly lower vs USD, after trading with modest gains overnight, which was facilitated by the generally positive risk tone. However, this has subsided a touch in recent trade. AUD/USD trades in a 0.6641-0.6707 range, and within the confines of this week’s range; NZD/USD trades in a 0.5743-0.5759 range, the high for the day just shy of the WTD best at 0.5761 and then the 21 DMA at 0.5763 thereafter.


• In Australia, PMI metrics were mixed; Services was a touch above the prior, whilst the Manufacturing metrics cooled, and fell into contractionary territory.

24 Oct 2025 - 10:20- ForexData- Source: Newsquawk