USD buying picked up in the afternoon as the US shutdown keeps data light. The USD Index rose by 0.4%, eyeing its longest streak since late July – seeing both GBPUSD and EURUSD hit two-month lows and breach previous support levels.
JPY selling continued despite supportive comments from Japan’s ruling party leader. Macquarie Bank flagged that the market’s near-certain Fed cut pricing of 100 bp over the next year may be overdone, with inflation signals still sticky. Hedge funds are leaning into the greenbank as JPY and EUR weakness is making USD more attractive.
*Daily move - against G10 rates as of 06:00 BST, 10.10.25
** Indicative rates - interbank rates as of 06:00 BST, 10.10.25
USD is marginally weaker this morning but remains up 1.2% for the week – its strongest performance since November – as investors avoided major peers amid political uncertainty abroad.
The EUR found modest support this morning, rebounding from a two-month low against the US dollar as markets welcomed President Macron’s decision to forgo snap elections while preparing to appoint a new prime minister. However, analysts caution that the currency remains vulnerable, with potential for renewed selling should the forthcoming appointment intensify political divisions across the eurozone.
Meanwhile, JPY has recovered a bit after Japan’s finance minister issued stronger verbal warnings on yen weakness, with domestic political tensions adding to market jitters.
GBP is also weaker this morning after wage growth in the UK slowed in September, with the S&P Global, KPMG, and REC UK report showing a drop to 50.2 from 50.6 in August – the slowest pace since March 2021. Part-time pay growth also fell to an eight-month low. (Readings above 50 still indicate salary growth.)
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