While Awaiting Several U.S. Data Releases, Investors Hear Range of Fed Official Comments – Currency Thoughts
While Awaiting Several U.S. Data Releases, Investors Hear Range of Fed Official Comments
September 25, 2025
Thursday’s menu of U.S. data reports includes revised GDP and PCE price deflator, existing home sales, durable goods orders, an early bird estimate of the U.S. merchandise trade deficit, the Kansas City Fed manufacturing survey, and weekly jobless insurance claims. The wide range of views depicted in the FOMC dot-plot diagram of favored interest rates continues to be echoed in a variety of comments from Fed officials on that policy-making committee. Most recently, San Francisco District President Mary Daly said that additional rate cuts to prevent a weakening U.S. labor market would be likely needed, while Chicago District President Austan Goolsbee warned against an excessive series of rate cuts with inflation above target and the full impact of higher tariffs still unclear.
Financial market action around the world has been inconsequential prior to the spate of Thursday U.S. data releases. Compared to closing levels yesterday, the dollar is unchanged against the British, Euroland, Japanese, Canadian and New Zealand currencies, up 0.1% relative to the Mexican peso and Swiss franc and and 0.1% softer vis-a-vis the Australian dollar. U.S. stock futures have lost modest ground. In Europe, equities are down 0.7% in Germany, 0.5% in France, 0.3% in Italy and 0.2% in Great Britain. In Asia, share prices closed down 1.1% in Indonesia and 0.7% in Taiwan and India but little changed elsewhere.
A five-basis point rise in the British ten-year gilt yield leads increases in Germany, France, Italy and Spain. The 10-year U.S. Treasury yield has ticked up a basis point, while its Japanese comparable yield held at yesterday’s level. Bitcoin’s price stumbled 1.4% in contrast to rises of 0.4% and 0.5% in the costs of oil and gold.
The low pulse of Euroland’s economic recovery is mirrored in the bloc’s growth of money and credit. On-year expansion in the M3 stock of money dipped below 3.0% in August and to 3.2% for June-August. Credit growth slowed to 1.9%.
Consumer confidence in France remained weak but stable, printing at 87 or 88 for a fifth straight month in September in a data series calibrated so that a reading of 100 represents the long-term average. German consumer sentiment has likewise been stable but weak, ranging between -20.0 and -24.1 over the past dozen months including -22.3 currently.
Consumer confidence in South Africa softened three index points last quarter to its second lowest reading in six quarters.
The British CBI monthly survey of distributive trades rose three points in September to a 4-month high of -29, having bottomed in June at -46.
Icelandic consumer price inflation of 4.1% in September constituted a 3-month high following a reading of 3.8% in August that had matched the lowest point since December 2020. Producer price inflation in Iceland rose to a 4-month high of 1.4%.
Swedish PPI inflation became more negative in August at -0.7% as a 10.9% jump in the energy component was offset by a colective 2.2% price decline in all other items in the index.
A 2.1% producer price inflation reading in South Africa last month was its highest in a year and up from -0.7% at the end of 2024.
As analysts were expecting, the Swiss National Bank’s quarterly review of monetary policy resulted in no change to the central bank’s policy interest rate of zero percent. That ended a sequence of declines totaling 175 basis points since March 2024. A statement explaining today’s decision projects growth of no more than 1.5% this year and below 1.0% in 2026, retains excessively low inflation forecasts of 0.2% this year followed by 0.5% in 2025 and 0.7% in 2027, and reserves the prerogative to intervened as needed directly in foreign exchange markets to counter an excessively overvalued franc. Being the target of America’s highest tariff against any European country, monetary officials blame Switzerland’s worsening economic outlook on U.S. trade policy. “The tariffs are likely to dampen exports and investment especially. Companies in the machinery and watchmaking industries are particularly affected.”
Just in: For a third revised estimate, a half-percentage point upward revision of U.S. GDP growth to 3.8% at an annualized rate was greater than usual. 3.8% represents the fastest pace in seven quarters. A 2.6% pace of consumer spending on services was more than double the prior estimate. 2.7 percentage points of the 3.8% total growth rate came from personal consumption and non-residential investment. Another 1.4 percentage points of the growth rate stemmed from the difference between the boost from net exports minus the drag fro a runoff of inventories. Government expenditures and residential investment each declined for a second straight quarter. Real GDP was 2.1% higher than in the second quarter of 2024, and year-on-year inflation in the first half of 2025 measured by the personal consumption price deflator was 2.5% overall and 2.75% when excluding food and energy.
Three other U.S. indicators reported at 08:30 EDT also reflected more resilience than analysts were expecting, which casts doubt on the wisdom of Fed Governor Miran’s wish for 50-basis point interest rate cuts at each of the two FOMC meetings scheduled for next quarter.
- Durable goods orders in August rose 2.9%, completely reversing the 2.7% decline in the prior month. Forecasts had projected a 0.5% drop instead.
- A leap in new jobless insurance claims to 264k in the first week of September was one of several data points feeding worries about the labor market. New claims subsequently dropped back to 232k in the following week and to a 9-week low of 218k last week.
- The preliminary estimate of the U.S. trade deficits involving goods fell to $85.5 billion in August from $102.8 billion in July. To be fair in this indicator’s case, tariff policy flip-flops have created an extreme see-saw pattern from month-to-month that makes efforts to find a forward-looking trade deficit narrative very hard to identify. Prior to July, the goods deficit evolved from $162 billion in March to $86 billion in April, $96 billion in May and $84 billion in June.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German and French consumer confidence, Swiss National Bank, U.S. durable goods orders and jobless insurance claims, U.S. GDP and trade deficit
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