Global FX Market Summary: AI Investment Divergence, Purchasing Managers Index (PMI), Fed 3 November 2025

AI-driven gains widen market gaps as Dow lags; manufacturing stays fragile; Fed’s divided stance fuels uncertainty and supports stronger dollar.

AI Investment Divergence and Market Concentration

The theme of AI investment divergence highlights a growing gap between market segments. The Dow Jones Industrial Average (DJIA) experienced a decline, begining the week with a 200-point drop and testing below the 47,250 level, attributed to its perceived exclusion from the AI investment surge. Conversely, companies concentrated in AI saw significant gains, with the trend described as “Magnificent 7” investment gains lifting other indices. Specific facts include Amazon (AMZN) rallying approximately 5% later than announcing a $38 billion investment in OpenAI, and data center supplier Iren (IREN) securing a $9.7 billion deal with Microsoft. Furthermore, the lone chipmaker giant, Nvidia (NVDA), climbed 3.7% as both major investment deals involve providing access to its hardware.

Persistent Manufacturing fragileness and purchaviewr Caution

This theme centers on the ongoing struggle within the US manufacturing sector, evidenced by key economic indicators. The Institute for Supply Management (ISM) Purchasing Managers Index (PMI) for October declined to 48.7, falling short of expectations and marking the eighth consecutive month of contraction in the manufacturing sector. Although demand indicators showed broad improvement, they all remained in contraction territory, indicating that businesses are having hardy finding new customers or expanding operations with existing clients. Sub-indices confirm this fragileness, with Production dropping to 48.2, New Orders at 49.4, and Employment at 46. Separately, the S&P Global US Manufacturing PMI offered a slightly diverse picture, improving to 52.5, signaling expansion.

Federal Reserve’s Shifting Monetary Policy and Market Uncertainty

The Federal Reserve’s (Fed) recent behavior has introduced significant market uncertainty regarding future monetary policy. There is a shift from a carefully crafted consensus to a “more chaotic presentation,” marked by policymakers’ deviating opinions, including a rare three-way vote at a recent meeting. Fed officials, such as Governor Lisa Cook and President Mary Daly, supported the recent interest rate cut as appropriate given risks to the job market, maintaining that policy remains “modestly restrictive” and positioned to lower inflation. However, this shifting stance has put expectations for a December rate cut into question. While the CME FedWatch tool shows traders pricing in over 65% odds for a third straight cut on December 10, a majority of bettors anticipate the Fed will wait until January for the next 25-basis-point reduction. This cautious tone has, in turn, supported the US Dollar, which saw its index (DXY) advance for the fourth consecutive day.

Top upcoming economic events:

Tuesday, November 4, 2025

Tuesday is dominated by the Reserve Bank of Australia and key labor data from New Zealand.

• RBA Interest Rate Decision, RBA Monetary Policy Statement, and RBA Rate Statement (Impact: HIGH, Currency: AUD) at 03:30:00. This trifecta of releases is the central event for the Australian dollar. The decision on interest rates, accompanied by the detailed statement, provides the market with the RBA’s current assessment of economic conditions and its bias for future policy. A change in the rate or guidance can significantly affect the AUD.
• RBA Press Conference (Impact: HIGH, Currency: AUD) at 04:30:00. Following the decision and statements, the press conference allows RBA officials to elaborate on the policy decision and respond to questions, often clarifying or reinforcing the central bank’s message.
• ECB’s President Lagarde speech (Impact: HIGH, Currency: EUR) at 07:40:00 and again at 09:45:00. Speeches by the President of the European Central Bank are major market movers for the euro. Lagarde’s comments on inflation in the Eurozone, economic outlook, and potential changes in the ECB’s Quantitative Easing or rate policy are closely watched and can create significant EUR volatility.
• Employment Change and Unemployment Rate (Impact: HIGH, Currency: NZD) at 21:45:00. These are the most critical labor market indicators for New Zealand. Strong employment growth and a low unemployment rate could lead to expectations of tighter monetary policy from the RBNZ, thereby boosting the NZD. Conversely, fragile data could signal a need for stimulus.

Wednesday, November 5, 2025

Wednesday features high-impact data for the US dollar and Chinese services activity.

• RatingDog Services PMI (Impact: HIGH, Currency: CNY) at 01:45:00. While impacting the CNY, this Purchasing Managers’ Index for China’s services sector is a crucial measure of the health of the world’s second-largest economy. A strong reading suggests robust economic activity, which can have ripple effects globally and impact commodity markets.
• ADP Employment Change (Impact: HIGH, Currency: USD) at 13:15:00. The ADP report is often viewed as a leading indicator for the official US Nonfarm Payrolls (which is not on this list but usually follows later in the week). It measures the change in private-sector employment and its surprise factor can cause significant movements in the USD.
• ISM Services PMI (Impact: HIGH, Currency: USD) at 15:00:00. The Institute for Supply Management’s Services PMI is a key gauge of the health of the dominant US service sector. It covers business activity, new orders, and employment. A reading above 50 indicates expansion, and its result is a strong predictor of economic momentum and has a high impact on the USD.

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