Dollar Rises Amid Absence of Fresh Themes – Currency Thoughts

Dollar Rises Amid Absence of Fresh Themes

October 7, 2025

The U.S. dollar strengthened overnight by 0.6% against the kiwi and sterling, 0.5% relative to the euro, Aussie dollar and Swiss franc, and 0.4% versus the Japanese yen. U.S. stock futures are holding buy not extending Monday’s gains.

Major European stock markets show modest 0.2-0.4% advances. Equities climbed 1.7% in Taiwan and 1.1% in Singapore but closed unchanged in Japan and fell 0.7% in Hong Kong and 0.3% in Australia.

Ten-year sovereign debt yields have risen three basis points in Italy and two basis points in the United States, Great Britain, Germany, France and Spain.

Bitcoin’s price is little changed, hovering just a tad south of the $125k milestone that was visited briefly yesterday. The price of gold has firmed 0.3%, while oil is 0.2% softer.

Unlike some previous U.S. federal government shutdowns, markets thus far are taking the current one very lightly. Today marks the second anniversary of the Hamas massacre of Israelis, an act repaid subsequently with far more than triple indemnity. President Trump will be holding talks today with Canadian Prime Minister Carney. French politics is in upheaval after the resignation of the prime minister and as everyone awaits news on whether snap parliamentary elections will soon follow.

Central banking items of interest today include

• An expected New Zealand interest rate cut tomorrow. Economic activity remains unexpectedly weak there.
• Renewed criticism by Hungarian Prime Minister Orban that monetary policy there is too high. This is not the first time in the post-covid era when he has argued that Hungary’s central bank interest rate should be lowered. Earlier efforts did not end well, as CPI inflation in Hungary spiked as high as 25.7% in early 2023 and has accelerated since touching a low of 3.0% last September. The experiences of Hungary and Turkey are but two examples why it is so important to keep politics as far away from monetary policy as possible.
• FOMC minutes to be published tomorrow are eagerly awaited. The dot-plot diagram of favored future interest rate levels show a very wide dispersion of views among the members of the U.S. monetary policymaking committee.
• A number of Fed officials are slated to speak publicly today, including Fed District Presidents Kashkari, Bowman, and Bostic today, Governor Miran also today, and Chairman Powell on Thursday.

Released economic data today has been comparatively light. Highlights include

• A much weaker-than-forecast 0.8% monthly drop in German factory orders during August. Defying expectations of a rise of more than 1%, this was the fourth drop in a row. Orders during the three months through August averaged 2.3% less than in the prior 3-month period and 0.2% below their year-earlier level. Weakness in August was concentrated in export demand.
• Japan’s index of leading economic indicators rose to a 5-month high, but the index of coincident economic indicators alternatively fell to an 18-month low and elicited another weak trend assessment by officials.
• Japanese household spending rose 0.6% on month and 2.3% on year in August, exceeding analyst forecasts.
• Japanese and Chinese international reserves went up by similar amounts in September — respectively $17.1 billion and $16.5 billion. Chinese reserves of $3.339 trillion now stand at a near-decade high.
• The British Halifax house price index dipped 0.3% in September, trimming its 12-month rate of increase to a 17-month low of 1.3%.
• Filipino consumer price inflation of 1.7% last month was up from a 69-month low of 0.9% in July but down from a 2022 peak of 6.1%. Also in September, Estonian CPI inflation fell back to a 3-month low of 5.2%, and Austrian wholesale price inflation, which crested at 26.5% in 2022, rose a full percentage point to 1.2%.
• The French current account swung from a EUR 1.946 billion surplus in the first eight months of 2024 to a deficit of EUR 2.971 billion in January-August of this year.

Canada, which bluntly rejected America’s invitation to become the 51st state, has been a particular object President Trump’s tariff war. One would imagine that Canada runs a chronically substantial current account surplus. In fact, the trade position has been in deficit for ten of the past dozen reported months including each of the seven most recent ones such as August’s of C$ 6.3 billion, which was reported this morning. That 4-month high shortfall was larger than expected and resulted from the juxtaposition of a 3.0% monthly decline in exports and a 0.9% rise in imports.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Canadian trade balancve, German factory orders, Hungarian Prime Minister Orban, Japanese index of coincident economic indicators

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on Tuesday, October 7th, 2025 at 6:26 am and is filed under New Overnight Developments Abroad – Daily Update.
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