A Very Busy Three Days Ahead – Currency Thoughts
A Very Busy Three Days Ahead
October 29, 2025
The final three days of October are full of events that financial markets are following closely:
- A slew of companies are reporting 3Q earnings, including META, Alphabet, Microsoft, Caterpillar, UBS, CVS, Starbucks, ADP and Verizon. Nvidia beat expectations, sending its stock up 5% overnight thus far.
- Ahead of the FOMC interest rate announcement today, President Trump has predictably criticized Fed Chairman Powell as being too late, even though a 25-basis point interest rate cut is widely expected. Interest rate announcements today are also due from central banks in Canada and Brazil. Announcements by the Bank of Japan and European Central Bank will follow tomorrow.
- President Trump’s Asian tour that will take in the APEC summit continues to generate plenty of news, with trade deals worked out. Deals have been struck with Japan, South Korea, Cambodia, and Malaysia. The most eagerly awaited event will be tomorrow’s meeting with Chinese President Xi, where it is hoped that a broad framework will be finalized and perhaps lead to a cutback in the U.S. tariff to 10% on imports from China.
- Economic pain from the U.S. federal government shutdown is about to get a whole lot greater in the likely event that it extends beyond Friday.
- An estimate of GDP growth in the euro area last quarter will be reported tomorrow, and many Japanese monthly releases arrive on Friday.
The dollar rose by 0.4% overnight against the Swiss franc and sterling and 0.1% versus the yen and euro but also fell 0.7% against the Korean won and 0.2% relative to the Australian dollar. Ahead of the expected 25-basis point cut in the federal funds target, the U.S. 10-year Treasury yield has risen two basis points. Comparable 10-year sovereign debt yields are a basis point lower in France and Italy, unchanged in Germany, Spain and the U.K. and a basis point firmer in Japan. U.S. equity indices prior to the open are higher, led by Nvdia and other tech stocks. Equities in the Pacific Rim closed up 2.2% in Japan, 1.8% in South Korea, 1.2% in Taiwan, 0.9% in Indonesia and 0.7% in China but down 1.0% in Australia. While the German DAX is merely steady, markets in the U.K., Spain and Italy are each around 0.5% stronger. The price of gold has rebounded 1.4%, while those of oil and Bitcoin are just marginally up.
The most eye-catching data release overnight involved unexpectedly high Australian consumer price inflation last quarter. The CPI jumped 1.3% on quarter — most in ten quarters — and lifted the 12-month rate of increase to a 5-quarter high of 3.2% from 2.1% in the prior second quarter. The widely watched trimmed mean measure of underlying inflation advanced 0.3 percentage points to 3.0% last quarter, further dampening the near-term likelihood of a further Reserve Bank of Australia interest rate cut.
As widely expected, the Central Bank of Chile’s 4.75% policy interest rate was not changed. The unanimous vote for keeping the status quo was announced after markets closed yesterday. A rate reduction in July of 25 basis points to the current level was the only change done this year but followed 325 basis points of easing in 2024 after a drop of 300 bps in the second half of 2023. Chilean inflation accelerated 0.4 percentage points to a 4-month high of 4.4% in September, exceeding the 2-4% medium-term target. A released statement explains that while economic trends have lately evolved as anticipated, risks persist for the future inflation trajectory that “warrant awaiting to gather more information before continuing the process of leading the MPR to converge to its neutral range of values.”
Japan’s leading and coincident indicators of economic activity and August have both been revised lower. While the leading measure printed at a 5-month high, the coincident index of 112.8 returned to the 21-month low touched in February 2024. A separate Japanese data point out today was for consumer confidence, which although at a 10-month high remained quite depressed at 35.8. The index had been as low as 28.6 in November 2022 and has not been has high as 40 since May 2019.
South Korean business confidence dipped two points to 68 in October. Such has traced a pretty level path since back-to-back readings of 68 last March and April.
Producer price inflation in Singapore more than tripled to a 6-month high of 3.7% last month. In Malaysia, producer price inflation stayed negative in September but, at -0.8%, was less so than readings of -2.8% in August and -4.2% at midyear.
Turning to Europe, investor sentiment toward Switzerland improved sharply to a 3-month high of -7.7 following extremely depressed readings of -54.8 in August and -46.4 in September.
Spanish GDP posted an as-expected slightly slower quarterly advance of 0.6% in 3Q 2025, resulting in a 2.8% increase compared to a year earlier. 2.8% matches average growth in 2024, maintaining Spain’s growth leadership compared to Germany, France and Italy. Spanish retail sales over the first nine months of 2025 have been 4.3% greater than a year earlier on average.
Belgian GDP grew 0.3% in 3Q 2025. Average GDP in the first three quarters was 1.0% above a year before, matching the average pace in all of 2024.
A 1.1% jump in Swedish GDP last quarter after just 0.1% growth during the second quarter was the best pace in ten quarters and resulted in 2.4% of on-year expansion, the largest such increase since the spring of 2021.
Italian producer price inflation rose to a 2-month high in September of 1.1%.
British mortgage approvals totaled 65.9k in September, the most in nine months and more than had been predicted.
A streak of four consecutive declines in U.S. mortgage applications was stopped last week, as the 30-year fixed mortgage rate, which had been as elevated as 7.09% in the second week of 2025, fell another seven basis points to 6.30%, its lowest weekly level in 13 months.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Australia CPI, Central Bank of Chile, Japanese consumer confidence, Swiss ZEW index of investor sentiment
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