Global FX Market Summary: US Inflation Data, Market Sentiment, Trade Tariffs and Geopolitical Risks 26 September 2025

US PCE inflation steady at 2.9%, fueling dovish bets for Fed rate cut; markets rebound, gold surges, trade tensions rise.

US Inflation Data and Federal Reserve Monetary Policy:

The cornerstone of the news is the release of the US Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve’s (Fed) preferred measure of inflation. The report showed that Core PCE inflation held steady at 2.9% year-over-year, which was in line with market forecasts but still notably above the Fed’s 2% annual target. This “coolish print” has reinforced “dovish bets” and kept hopes for an October interest rate cut alive (specifically, a 25 basis point trim), with the CME FedWatch Tool showing very high probabilities (nahead 90%). The discussion also highlights the complication of a slumping labor market and rising personal income/spending metrics that could fuel future inflation.

Market Reactions, Sentiment, and Asset Price Movements:

The Dow Jones Industrial Average (DJIA) rebounded significantly (over 350 points), paring midweek losses as investors priced in the upcoming rate cut. Concurrently, Gold (XAU/USD) surged, consolidating around $3,780, as the dovish signals from the PCE data and renewed trade tensions increased demand for the secure-haven metal. In contrast, the US Dollar (Greenback) eased against a basket of currencies. Furthermore, the University of Michigan (UoM) Consumer Sentiment Index and inflation expectations eased slightly but remained at levels that suggest consumers are still concerned about prices, which could lead to a self-fulfilling prophecy of entrenched inflation.

Trade Tariffs and Geopolitical Risks:

There are fresh tariffs imposed by US President Donald Trump on a range of imported excellents, including pharmaceuticals, furniture, and heavy trucks, which is viewn as a source of trade-policy friction and market uncertainty. This renewed protectionism contributed to the risk-off sentiment that supported secure-haven demand for gold. Additionally, the broader geopolitical landscape was touched upon, with tensions between NATO and Russia (concerning airspace incursions) also adding a layer of risk for global markets and currency valuations, particularly pressuring the Euro.

Top upcoming economic events:

1. Date: 09/30/2025, Time: 01:30:00 (CST) Name: NBS Manufacturing PMI / NBS Non-Manufacturing PMI Currency: CNY Importance: HIGH Description: These are leading indicators of economic health for China, the world’s second-largest economy. A reading above 50 indicates expansion. The data significantly influences global market sentiment, commodities, and risk-sensitive currencies like the Australian Dollar (AUD).
2. Date: 09/30/2025, Time: 04:30:00 (AEST) Name: RBA Interest Rate Decision / Monetary Policy Statement / Rate Statement Currency: AUD Importance: HIGH Description: The Reserve Bank of Australia’s decision on the cash rate is the central tool of monetary policy. The accompanying statement provides critical forward guidance on inflation and economic growth, which directly dictates the direction of the AUD.
3. Date: 09/30/2025, Time: 06:00:00 (BST) Name: Gross Domestic Product (QoQ) / (YoY) Currency: GBP Importance: HIGH Description: GDP is the broadest measure of UK economic activity. This release is a primary input for the Bank of England’s (BoE) monetary policy decisions and is a major market-moving event for the GBP.
4. Date: 09/30/2025, Time: 12:00:00 (CEST) Name: Consumer Price Index (YoY) / Harmonized Index of Consumer Prices (YoY) Currency: EUR Importance: HIGH Description: As the headline inflation measure for the Eurozone, this is central to the European Central Bank’s (ECB) mandate for price stability. It strongly influences market expectations for future ECB interest rate adjustments and causes volatility for the EUR.
5. Date: 09/30/2025, Time: 23:50:00 (JST) Name: Tankan Large Manufacturing Index Currency: JPY Importance: HIGH Description: This is a key quarterly business sentiment survey from the Bank of Japan (BoJ). It reflects the health and outlook of the large manufacturing sector, which is a major component of Japan’s economy, guiding the BoJ’s policy outlook.
6. Date: 10/01/2025, Time: 09:00:00 (CEST) Name: Core Harmonized Index of Consumer Prices (YoY) Currency: EUR Importance: HIGH Description: The Core HICP, which excludes volatile energy and food prices, gives the clearest picture of underlying inflation trends. The ECB focuses heavily on this figure to determine whether price pressures are structural and require a policy response.
7. Date: 10/01/2025, Time: 12:15:00 (EDT) Name: ADP Employment Change Currency: USD Importance: HIGH Description: This private payrolls report is often treated as a highly watched leading indicator for the official Nonfarm Payrolls (NFP) report later in the week. A significant surprise can influence the USD and equity markets ahead of NFP.
8. Date: 10/01/2025, Time: 14:00:00 (EDT) Name: ISM Manufacturing PMI Currency: USD Importance: HIGH Description: This survey of purchasing managers is a critical, timely indicator of the health of the US manufacturing sector. The sub-components, especially new orders and employment, are closely watched for signs of economic expansion or contraction, heavily impacting the USD.
9. Date: 10/03/2025, Time: 01:05:00 (JST) Name: BoJ Governor Ueda speech Currency: JPY Importance: HIGH Description: As the head of the central bank, Governor Ueda’s speeches are parsed for any nuance or forward guidance on the Bank of Japan’s monetary policy, particularly regarding the path away from its ultra-accommodative stance.
10. Date: 10/03/2025, Time: 12:30:00 (EDT) Name: Nonfarm Payrolls / Average Hourly Earnings (MoM) / (YoY) Currency: USD Importance: HIGH Description: The Nonfarm Payrolls (NFP) report is arguably the most significant US economic release, providing an official measure of employment. Crucially, Average Hourly Earnings (wage inflation) is released simultaneously, which is a key measure of inflation pressure and highly influential on Federal Reserve interest rate policy. This event causes peak volatility for the USD.

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