USD slipped for a third straight session, pressured by weak regional Fed data and dovish commentary from policymakers. Fed Governor Waller struck a careful tone, balancing his concerns about lowering rates prematurely with an openness to gradual 25bp reductions; at the same time, Governor Miran reinforced his support for a 50bp cut this month. Regional data disappointed – the Philly Fed index dropped to -12.8 (vs +10 expected), and the NY Fed’s services gauge tumbled to -23.8, painting a softer picture of US activity.
EUR gained as French PM Lecornu comfortably survived two no-confidence votes, easing immediate political risk and helping EURUSD touch its highest level since 7th Oct. Meanwhile, the Australian dollar weakened as new employment data revealed the country’s jobless rate has climbed to its highest level in four years, intensifying speculation around imminent policy easing from the RBA.
*Daily move - against G10 rates as of 06:00 BST, 17.10.25
** Indicative rates - interbank rates as of 06:00 BST, 17.10.25
Market sentiment is a bit off this morning with fresh worries about bad loans amongst some US regional banks. Overnight, USD fell further but losses have eased this morning, with the greenback set to have its biggest weekly drop in three months with markets adding to Fed rate cut bets over the next 12 months. The EUR is getting some attention on French political relief as well as potential progress on the Russia-Ukraine conflict with Trump and Putin set to meet within the next two weeks to discuss the end to the war.
Focus today will be on whether this risk-off mood continues and whether we continue to see flows into the safety of JPY and CHF. Final EU inflation numbers are out this morning as well as remarks from BoE and Fed members.
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