Sterling and the franc retain the strongest broader performance, the yen is gaining ground, and the Aussie remains the weakest major. The dollar is also struggling despite falling equity futures. Meanwhile, stronger euro-area growth and hotter inflation have improved the ECB’s case for further tightening—without giving the euro convincing strength across its peers.
USD — the defensive bid is going elsewhere. At 10:30, DXY was around 101.66, while Nasdaq 100 futures were down 2.4% and S&P 500 futures 1.1%. Disappointing Amazon and Intel results are weighing on technology, but the dollar has yet to benefit from that deterioration in sentiment.
Today’s Employment Cost Index tests whether wage pressure can restore US rate support. Yesterday’s strong GDP release failed to produce lasting dollar strength. Another firm number needs a sustained response in interest-rate expectations to change that pattern. Cook and Hammack’s explanations of their FOMC dissents also deserve attention; their reasoning matters more than the dissent count alone.
EUR — better economic support, limited currency conviction. Euro-area GDP grew 0.4% quarter-on-quarter, beating expectations of 0.2%, although slowing from 0.6%. Germany expanded 0.2%, while France contracted and Italy stagnated. The regional picture is more resilient than the French release alone suggested earlier this morning.
French harmonised inflation rose to 3.8%, while Italy’s 5.6% reading substantially exceeded expectations. German state inflation cooled, leaving a mixed picture ahead of the national release. Together with continued hawkish ECB commentary, these figures keep December tightening credible.
Yet EUR/USD’s recovery towards 1.1200 still benefits from dollar weakness. The euro continues to lag sterling, the franc and the yen. Its improving fundamental support makes fresh EUR shorts more demanding: the opposing currency needs a convincing advantage.
GBP and CHF — the stronger currencies are holding their ground. Sterling leads the recent moves and remains strong across the broader session. GBP/USD was around 1.3428 at 10:30, while EUR/GBP reached a fresh yearly low. Business confidence has improved, but subdued housing data provide little justification for calling this a domestic growth boom.
The franc retains the strongest broader performance and is firm again more recently. Its strength alongside weakness in technology and the Aussie supports defensive relative trades. Gold’s decline below $4,000 also shows why a defensive session need not lift every traditionally defensive asset.
JPY — firmer after the initial retracement. The yen has strengthened again since Ueda’s press conference. The BoJ’s hold at 1.25% leaves further increases conditional, but its greater confidence in underlying inflation provides support. USD/JPY was around 157.27 at 10:30, moving back towards the earlier low near 157.12. The renewed strength improves the market response beyond the substantial retracement seen immediately after the conference.
AUD, NZD and CAD — three different stories. AUD weakness has resumed despite overnight producer-price inflation remaining elevated. The RBA tightening argument survives, but it is offering little immediate protection against the currency’s poor performance.
NZD is recovering and outperforming AUD. That does not resolve the RBNZ’s divided December outlook, but it weakens the immediate case for buying AUD/NZD.
CAD is also struggling despite oil’s rebound. Brent was up approximately 2.4% at 10:30, with European gas prices rising more sharply. That failure to benefit makes oil an insufficient reason to favour CAD before Canadian GDP.
Trade Implications
| Idea | Our current assessment |
|---|---|
| GBP/AUD higher | The clearest current strength contrast. Sterling holds its gains while AUD weakness resumes. |
| AUD/CHF lower | Strong current alignment, although the existing move argues for patience over chasing. |
| GBP/USD higher | Supported by relative performance, but the US wage release could materially change dollar conditions. |
| EUR/GBP lower | Still supported by currency performance; stronger euro-area growth and inflation temper conviction. |
| CAD longs / AUD/NZD higher | Previous priorities remain suspended. CAD lacks confirmation despite firmer oil, while AUD is losing ground to NZD. |
What Invalidates This Thesis
A sustained recovery in AUD strength would weaken the GBP/AUD and AUD/CHF cases. Firmer US wage data accompanied by renewed relative US rate support would challenge dollar weakness. Stronger ECB repricing that broadens euro strength would undermine EUR/GBP downside. Canadian GDP could restore CAD leadership, but the subsequent currency response needs to confirm it.
Upcoming Risk Events (UTC)
- 12:30: US Employment Cost Index and Canadian GDP. The simultaneous releases make relative surprises particularly important for USD/CAD.
- 13:00: German preliminary CPI.
- 13:30: Fed’s Barkin radio appearance.
- 13:45: Chicago PMI.
- 16:10: ECB’s Lane; further Fed appearances include Daly, Musalem, Hammack and Cook.
- Throughout the session: Iran–Hormuz developments and month-end flows. Mediation continues, but no agreement is established.
- Sunday, 1 November: OPEC+ meeting, adding weekend risk for oil-sensitive currencies.