Witching Hour – Currency Thoughts
Witching Hour
October 31, 2025
Halloween 2025 finds the dollar in treat mode, with overnight gains of 0.4% against the kiwi, 0.3% versus sterling, 0.2% relative to the loonie, Aussie dollar and Swiss franc and 0.1% against the euro. While many stock markets are closing the week on a down note, U.S. stock futures an hour before the opening bell were higher led by a 1.4% advance in the Nasdaq and 0.8% in the S&P 500. The Japanese Nikkei ended October with a 2.1% advance to a new all-time high of 52,411, but equities elsewhere in the Pacific Rim fell 1.4% in Hong Kong, 0.8% in China, 0.6% in India, 0.3% in Indonesia and 0.2% in Taiwan. European stock exchanges have slipped slightly.
The price of Bitcoin jumped 1.8% overnight, but gold is 0.2% lower and likely heading for a second straight weekly drop. WTI oil’s price has also slipped a bit so far today.
The 10-year U.S. Treasury and JGB yields are up 1 and 2 basis points, whereas comparable yields are holding steady in Germany, the U.K., Italy and Spain.
Several Japanese economic indicators got released this Friday. Most impressively, industrial production leaped 2.2% in September, its biggest monthly rise in 7 months, and that swung the year-on-year change from -1.6% in August to +3.4%. Retail sales last month went up 0.3% from August and 0.5% compared to a year earlier. The jobless rate stayed at August’s 13-month high of 2.6%. Housing starts were 7.3% lower than in September 2024, but construction orders recorded a 34.7% on-year advance. Lastly, consumer prices in Tokyo, which get reported about three weeks ahead of the national CPI, posted a 2.8% year-on-year advance, up from 2.5%. That was true for both the total and when food and energy are excluded. Higher inflation encourages speculation that the Bank of Japan’s next interest rate hike may come sooner rather than later.
The preliminary consumer price figures in the euro area from October were announced today and showed total inflation dipping 0.1 percentage point back to August’s 2.1% figure but core inflation holding steady at September’s 5-month high of 2.4%. The service sector component accelerated 0.2 percentage points with a 6-month high price rise of 3.4%, offsetting lessening inflation in foods and non-energy industrial goods. On a monthly basis, Austria and Spain (+0.5%), Germany (+0.3%) and Belgium (+0.4%) recorded larger October price gains the the entire euro area’s 0.2% increase.
Italian consumer prices dropped 0.3% in October, trimming their 12-month increase to a one-year low of 1.2%.
German import prices, which hadn’t risen month-on-month since February, went up 0.2% in September, trimming the 12-month rate of decline to -1.0% from -1.5% in August, which had been the deepest deflationary reading in 16 months. German also reported a meager 0.2% volume rise in retail sales both monthly and yearly for September.
Swiss retail sales grew 0.6% on month and by a 3-month-high 1.5% year-on-year in September.
In addition to lower-than-expected French consumer price inflation in October, that economy experienced a 0.2% monthly drop in producer prices that left their 12-month rate of increase at August’s reading of 0.1%, which had been the lowest since May.
The government-compiled Chinese manufacturing and non-manufacturing purchasing manager indices for October respectively printed at a 6-month low of 49.0 and 50.1, which was a mere 0.1 point above September’s 10-month low. Taken together, the picture depicts an economy that appears weaker than the third-quarter GDP report of a 1.1% quarterly increase and year-on-year expansionof 4.8%.
GDP in Hong Kong rose 0.3% last quarter, lifting on-year growth to a 7-quarter high of 3.8%.
Between September 2024 and September 2025, industrial production in South Korea rose 11.6% (most in 20 months), but retail sales fell by 0.5%.
Producer prices in Australia during the third quarter rose 1.0%, more than the quarterly increases in the previous three quarters. On a year-on-year basis, PPI inflation slowed to 3.3% from 3.4% in the second quarter and 3.9% in the third quarter of 2024.
The long U.S. federal government shutdown hasn’t been much of a market factor until now, but tomorrow’s start of a new month is expected to see a sharp and broadening fallout of economic pain that will either launch greater market ramifications or result in a quick effort by officials to resolve the political impasse.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Australian PPI, Chinese purchasing manager surveys, Euroland CPI, Japanese industrial production and retail sales
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