Global FX Market Summary: Purchasing Managers Index PMI, Japans Persistent Inflation and UK Economic Resilience 24 October 2025

Eurozone PMI hits 17-month high, led by German strength; ECB likely done easing despite market bets on another small cut.

Eurozone Economic Strength Surpasses Forecasts and Impacts ECB Policy

The Eurozone demonstrated unexpected economic resilience in October a development primarily driven by the services sector The composite Purchasing Managers Index PMI surged to 522 marking a 17month high and notably exceeding the consensus forecast of 511 This upside surprise was largely attributed to the services PMI which also hit a 14month high at 526 Furthermore the manufacturing PMI rose to the neutral level of 500 a twomonth high Regionally this positive momentum was led by Germany where the composite PMI reached a 29month high at 538 yet contrasted sharply with Frances composite PMI which plunged to an 8month low at 468 This robust economic data influences the monetary policy outlook with analysts at BBH believing the European Central Bank ECB is finished with easing This stance contrasts with the swaps market which still prices in roughly 50 odds of one more 25 basis points bps rate cut over the next year setting the policy rate bottom at 175

Japans Persistent Inflation and BOJs Impending Policy Normalization

Japan faces a scenario where inflation remains stubbornly high pressuring the Bank of Japan BOJ to normalize policy despite some mixed economic signals The nationwide Consumer Price Index CPI figures for September showed both the headline and core ex fresh food CPI at 29 yearoveryear yy matching consensus and continuing to track above the BOJs 2 target The core ex fresh food and energy CPI a key underlying measure was 30 yy Despite this price pressure other data was fragileer with the flash composite PMI falling to a fivemonth low at 509 in October Given that core inflation remains well above the BOJs projections analysts anticipate the central bank will likely resume raising rates or deliver a hawkish hold at their next meeting However the markets pricing remains cautious with only 12 odds of a 25 bps hike at the upcoming October 30 meeting and a full 25 bps rate increase is not fully priced in until Q1 2026 Separately the governments fiscal stance is to ramp up support with the Finance Minister signaling the potential for more bond issuance to fund a new extra budget expected to exceed last years 139 trillion

UK Economic Resilience Fails to Lift the Pound Amid Easing Expectations

Despite encouraging domestic data the British Pound GBP is struggling to gain ground due to market expectations of future monetary easing by the Bank of England BOE UK retail sales volumes showed unexpected strength in September rising 05 monthovermonth mm significantly better than the expected 04 decline and boosted by online demand for Gold Over the third quarter Q3 sales volumes increased by 09 suggesting that UK real GDP growth will likely overshoot the BOEs 03 qq projection Business activity also surprised to the upside in October with the composite PMI improving to a 2month high at 511 This economic strength is overshadowed by the interest rate outlook as the swaps market is pricing in expectations for 50 bps of easing over the next 12 months which would view the policy rate bottom at 350 This expected easing is partly attributed to an anticipated fiscal drag from the upcoming UK budget with analysts predicting GBP underperformance against the Euro EUR because the ECB is deemed to be done with easing

Top upcoming economic events:

Monday, October 27, 2025 · RBA Governor Bullock speech for Australia

• Dates: October 27, 2025 at 08:15:00 AEDT (Local Time)
• Importance: Speeches by the head of the Reserve Bank of Australia (RBA) are highly impactful. They offer direct insight into the central bank’s current economic outlook, assessment of inflation risks, and potential forward guidance on future interest rate policy, which is a primary driver of the Australian Dollar (AUD). Markets will scrutinize the comments for any shift in the RBA’s reaction function.

Monday, October 27, 2025 · IFO – Business Climate for Eurozone

• Dates: October 27, 2025 at 09:00:00 CET (Local Time)
• Importance: The IFO Business Climate index is a highly respected and forward-looking barometer of the economic health of Germany, the Eurozone’s largest economy. It surveys businesses on their current assessment and expectations. Strong or fragile readings provide a clear leading indicator for broader Eurozone economic activity and influence the outlook for the Euro (EUR).

Tuesday, October 28, 2025 · ECB Bank Lending Survey for Eurozone

• Dates: October 28, 2025 at 09:00:00 CET (Local Time)
• Importance: This survey is a crucial tool for the European Central Bank (ECB), as it provides unobservable qualitative information on changes in banks’ lending standards and loan demand. Credit conditions are vital for monetary policy transmission; any significant tightening or loosening of standards directly impacts economic growth and, consequently, the Euro (EUR).

Tuesday, October 28, 2025 · Consumer Confidence for United States

• Dates: October 28, 2025 at 14:00:00 EDT (Local Time)
• Importance: Consumer spending is the largest component of U.S. GDP, making consumer confidence a major indicator of future economic activity. The report measures consumers’ optimism regarding the economy and their financial situation, which translates into spending plans and, therefore, influences the overall sentiment and valuation of the U.S. Dollar (USD).

Wednesday, October 29, 2025 · RBA Trimmed Mean CPI (YoY) / Monthly CPI for Australia

• Dates: October 29, 2025 at 00:30:00 AEDT (Local Time)
• Importance: This is the most critical monthly measure of inflation in Australia. The “Trimmed Mean” is the RBA’s preferred gauge of underlying price pressures, excluding volatile items. A surprise in this high-impact data is likely to cause significant volatility in the AUD as it directly impacts the central bank’s interest rate decision-making process.

Wednesday, October 29, 2025 · BoC Interest Rate Decision and Monetary Policy Statement for Canada

• Dates: October 29, 2025 at 13:45:00 EDT (Local Time)
• Importance: The Bank of Canada’s (BoC) decision on its key interest rate is the primary driver for the Canadian Dollar. The accompanying Monetary Policy Statement and subsequent Press Conference provide essential context on the bank’s assessment of inflation, economic growth, and its explicit forward guidance on the trajectory of Canadian interest rates.

Wednesday, October 29, 2025 · Fed Interest Rate Decision, Statement, and FOMC Press Conference for United States

• Dates: October 29, 2025 at 18:00:00 EDT (Decision) / 18:30:00 EDT (Conference)
• Importance: This is arguably the most significant scheduled economic event of the week, with global repercussions. The Federal Reserve’s decision on the Federal Funds Rate, communicated via the statement and the subsequent Press Conference, fundamentally dictates the cost of borrowing and the monetary policy path for the world’s largest economy, causing maximum volatility for the USD and global markets.

Thursday, October 30, 2025 · BoJ Interest Rate Decision, Statement, and Press Conference for Japan

• Dates: October 30, 2025 at 03:00:00 JST (Local Time)
• Importance: Given the Bank of Japan’s (BoJ) long-standing unconventional monetary policies (negative rates, yield curve control), any change or perceived hint of a change in its stance is considered extremely high-impact. A surprise adjustment or forward guidance on its ultra-loose policy would lead to major shifts in the Japanese Yen (JPY).

Thursday, October 30, 2025 · ECB Main Refinancing Operations Rate and Monetary Policy Statement for Eurozone

• Dates: October 30, 2025 at 13:15:00 CET (Decision) / 13:45:00 CET (Conference)
• Importance: The European Central Bank’s (ECB) decision on its key interest rates, especially the Main Refinancing Operations Rate and Rate on Deposit Facility, sets the cost of money for the entire Eurozone. The statement and Press Conference clarify the ECB’s inflation outlook and future policy direction, making it a critical market-moving event for the Euro (EUR).

Friday, October 31, 2025 · Core Personal Consumption Expenditures – Price Index (YoY) for United States

• Dates: October 31, 2025 at 12:30:00 EDT (Local Time)
• Importance: The Core PCE Price Index is the Federal Reserve’s preferred measure of inflation. By excluding volatile food and energy, it provides the cleanest view of underlying price pressures. Releasing the day later than the Fed meeting, this high-impact data provides the most relevant context for judging the Fed’s policy response and is a major driver of the U.S. Dollar (USD).

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