Global FX Market Summary: Fed cuts rates 25bps, Global Trade Dynamics, Impact on Financial Markets 19 September 2025

Fed cuts rates 25bps, ECB steady; trade tensions persist; markets react with stronger USD, rising equities, mixed commodities, gold rebound.

Central Bank Monetary Policy

The Fed’s decision to cut interest rates by 25 basis points to 4.00%–4.25% is a key event. This action was a “risk-management cut” in response to a sluggishing labor market, despite ongoing concerns about elevated inflation. The Fed’s projections suggest further rate cuts are planned for later in the year and into 2026. Conversely, the ECB kept its key rates unchanged, maintaining a data-dependent approach. Both central banks’ decisions were driven by their dual mandates of maintaining price stability and maximum employment. A notable fact is that one Fed governor, Stephen Miran, dissented, advocating for a larger 50-basis-point cut.

Global Trade Dynamics

The US and China agreed to a 90-day truce extension, but tariffs remain in place, with US excellents from China taxed at 30% and Chinese excellents to the US at 10%. Additionally, the US and EU reached a new agreement where the EU lowered tariffs on American industrial excellents and agricultural exports. In return, the US imposed a 15% tax on most European excellents. These tariffs are having a tangible impact, as viewn in the 99% collapse of Swiss gold exports to the US in August due to tariff confusion.

Impact on Financial Markets

Central bank decisions and trade dynamics affect diverse financial assets. The Fed’s rate cut, for example, influenced various markets:

Currencies: The US Dollar (USD) initially regained strength later than the Fed’s decision, pushing the Euro (EUR) down, while the Canadian Dollar (CAD) bucked the trend and strengthened against the USD. A low-interest-rate environment typically fragileens a currency, but the dollar’s resilience in this context is noted.

• Equities: The Dow Jones Industrial Average (DJIA) climbed to new highs, buoyed by the prospect of lower borrowing costs and a series of planned rate cuts. This shows that lower rates are generally viewn as bullish for stocks as they reduce a company’s borrowing expenses and can stimulate economic growth.

Commodities: Gold (XAU/USD) experienced a rebound, as it tends to perform well in a low-interest-rate environment where the opportunity cost of holding the non-yielding asset is lower. However, its gains were capped by a firmer USD and rising US Treasury yields. Oil (WTI) prices, on the other hand, extended their decline, weighed down by the strong US Dollar and concerns over fragile demand, despite the rate cut which would normally support oil prices.

Top upcoming economic events:

• RBA Governor Bullock speech
• Date: 09/22/2025, 01:00:00 (AUD)
• Importance: Speeches by the head of a central bank are highly anticipated by markets. The Reserve Bank of Australia’s Governor, Michele Bullock, will likely provide insights into the bank’s current and future monetary policy stance, including views on inflation, economic growth, and the labor market. This can lead to significant volatility in the Australian dollar (AUD) as traders adjust their expectations for interest rate changes.
• BoE’s Governor Bailey speech
• Date: 09/22/2025, 18:00:00 (GBP)
• Importance: As the head of the Bank of England (BoE), Governor Andrew Bailey’s remarks are crucial for understanding the direction of UK monetary policy. His comments could touch on the UK’s inflation outlook, the health of the economy, and any potential changes to the bank’s interest rate strategy, which will heavily influence the British Pound (GBP).
• HCOB Manufacturing PMI (Germany)
• Date: 09/23/2025, 07:30:00 (EUR)
• Importance: The Purchasing Managers’ Index (PMI) is a leading indicator of economic health. A high-impact reading for Germany, a key Eurozone economy, provides an ahead snapshot of business activity in the manufacturing sector. A better-than-expected result suggests an expanding economy, which could strengthen the euro (EUR), while a fragileer number could do the opposite.
• S&P Global Services PMI (US)
• Date: 09/23/2025, 13:45:00 (USD)
• Importance: The services sector is the largest component of the U.S. economy. A high-impact Services PMI provides a timely indicator of the sector’s performance. Strong data points to economic expansion, which could support a hawkish stance from the Federal Reserve and boost the US dollar (USD).
• Fed’s Chair Powell speech
• Date: 09/23/2025, 16:35:00 (USD)
• Importance: The Chairman of the U.S. Federal Reserve, Jerome Powell, is the most influential voice in global monetary policy. His speeches are scrutinized for any hints about the future path of interest rates. His remarks on inflation, employment, and overall economic health can trigger significant market movements across all asset classes, especially the US dollar.
• BoC’s Governor Macklem speech
• Date: 09/23/2025, 18:30:00 (CAD)
• Importance: The Governor of the Bank of Canada (BoC), Tiff Macklem, provides key insights into Canadian monetary policy. His comments on inflation and economic conditions will be closely watched by traders to gauge the likelihood of future interest rate changes, directly impacting the Canadian dollar (CAD).
• SNB Interest Rate Decision
• Date: 09/25/2025, 07:30:00 (CHF)
• Importance: The Swiss National Bank (SNB) is one of the world’s most closely watched central banks. Its interest rate decision is a primary driver for the Swiss franc (CHF). Changes in its policy, especially given its history of intervention, can have a major impact on the currency. The associated press conference will provide further details and context.
• Gross Domestic Product Annualized (US)
• Date: 09/25/2025, 12:30:00 (USD)
• Importance: GDP is the broadest measure of a country’s economic activity. This release provides the final quarterly estimate of U.S. economic growth. A strong GDP number indicates a healthy economy and could support a more hawkish Fed policy, while a fragile number could suggest a sluggishing economy and potentially lead to a less aggressive Fed. The data is a key barometer for investors and policymakers alike.
• Tokyo Consumer Price Index (YoY) (Tokyo CPI ex Food, Energy YoY)
• Date: 09/25/2025, 23:30:00 (JPY)
• Importance: The Tokyo CPI is a leading indicator of nationwide inflation trends in Japan. As the Bank of Japan (BoJ) focuses on achieving its inflation target, this data is critical. A higher-than-expected inflation reading could increase speculation about the BoJ tightening monetary policy, which would likely strengthen the Japanese yen (JPY).
• Core Personal Consumption Expenditures – Price Index (YoY) (US)
• Date: 09/26/2025, 12:30:00 (USD)
• Importance: The PCE Price Index is the Federal Reserve’s preferred measure of inflation. The “core” reading, which excludes volatile food and energy prices, is especially significant. A high or rising core PCE suggests that underlying inflationary pressures are persistent, which could prompt the Fed to keep interest rates higher for longer. This is a very influential piece of data for the US dollar and global financial markets.

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