Global FX Market Summary: Central Bank Monetary Policy, Optimism for a US-China Trade Deal, Sanctions against Russia’s oil companies, Lukoil and Rosneft, 25 October 2025
Markets await key central bank decisions; Fed likely to cut rates, ECB and BoJ hold steady. Optimism boosts stocks, fragileens Gold.
Central Bank Monetary Policy Decisions are Imminent and Highly Anticipated
Multiple major central banks, including the US Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BoJ), have scheduled interest rate decisions this week. Markets are nahead certain the Fed will cut its benchmark interest rate by 25 basis points (bps) for the second time this year at its upcoming meeting, an expectation strengthened by recent softer-than-expected US inflation data. In contrast, both the ECB and the BoJ are widely expected to keep their benchmark rates unchanged at 2.00% and 0.50%, respectively. The ECB is assessing stabilizing Eurozone inflation, while the BoJ is considering the impact of a proposed fiscal stimulus package in Japan.
Optimism for a US-China Trade Deal is Driving Market Sentiment
There is widespread market optimism regarding a potential trade agreement between the US and China, which is contributing to a “risk-on” sentiment in global markets. This optimism resulted in a surge in the Dow Jones Industrial Average (DJIA), which climbed to a fresh record high (poking through 47,500) in ahead trading. Conversely, the positive sentiment is negatively impacting secure-haven assets: Gold sank to three-week lows near $3,970 per troy ounce, and Silver collapsed to four-week lows near the $46.00 mark, indicating reduced demand for these assets when risk appetite improves.
Currencies and Commodities are Reacting to Central Bank Divergence and Geopolitics
The US Dollar (USD) is trading with modest losses overall, reflecting investor hopes for a trade deal and near-certain expectations for an upcoming Fed rate cut. The Japanese Yen (JPY) is the worst-performing G10 currency this month against the USD, with USD/JPY reaching near four-week highs north of 153.00, largely due to the BoJ’s expected cautious stance amid domestic fiscal expansion. In the commodities market, West Texas Intermediate (WTI) Crude Oil is trading with modest gains (around $61.70 per barrel). This is supported by the US-China trade truce prospects, which are assisting to offset concerns about potential oversupply following record crude exports from Iraq and the introduction of sweeping US sanctions against Russia’s leading oil companies (Lukoil and Rosneft).
Top upcoming economic events:
October 27, 2025: RBA Governor Bullock speech (High Impact, AUD). The week begins with this crucial address at 08:15:00. Speeches from central bank heads are vital for providing forward guidance on monetary policy. Governor Bullock’s remarks will be closely scrutinized for any hints regarding the future path of Australian interest rates, particularly in the context of recent global economic developments and domestic inflation concerns.
October 28, 2025: ECB Bank Lending Survey (High Impact, EUR). Released at 09:00:00, this report offers key insights into euro area credit conditions by surveying banks on their lending practices, including credit standards and loan demand. Its high impact stems from its ability to foreshadow shifts in economic activity and monetary policy transmission, as tighter or looser credit conditions significantly affect business and household borrowing.
October 29, 2025: RBA Trimmed Mean CPI (QoQ) (High Impact, AUD). Released at 00:30:00, this is one of the most critical inflation measures for Australia. It is the Reserve Bank of Australia’s preferred gauge of underlying inflation, and its reading will be a major determinant of interest rate policy, which in turn significantly impacts the Australian Dollar.
October 29, 2025: BoC Interest Rate Decision (High Impact, CAD). This decision is announced at 13:45:00, alongside the Monetary Policy Statement, followed by the Press Conference at 14:30:00. The Bank of Canada’s rate decision and outlook are crucial for the CAD and will reflect the central bank’s assessment of Canada’s economic health, inflation, and how it is balancing global trade risks and domestic economic slack.
October 29, 2025: Fed Interest Rate Decision (High Impact, USD). Released at 18:00:00, along with the Fed Monetary Policy Statement, and followed by the FOMC Press Conference at 18:30:00. This is arguably the most significant global economic event of the week. The decision on the Fed Funds Rate and the forward guidance provided by the Federal Open Market Committee are paramount, influencing global financial markets, US borrowing costs, and the direction of the USD.
October 30, 2025: BoJ Interest Rate Decision (High Impact, JPY). This is announced at 03:00:00, alongside the Monetary Policy Statement, with the Press Conference following at 06:30:00. The Bank of Japan’s policy announcement is highly influential, as the market constantly looks for signs of a shift away from ultra-loose monetary policy, which has broad implications for the Japanese Yen and global markets.
October 30, 2025: Gross Domestic Product Annualized (High Impact, USD). The US GDP figure is released at 12:30:00. This is the primary gauge of American economic growth. Its outcome is crucial for setting the tone in financial markets, as it provides essential context for the Federal Reserve’s recent monetary policy actions and overall economic assessment.
October 30, 2025: ECB Main Refinancing Operations Rate (High Impact, EUR). The European Central Bank’s decision on its key interest rates is announced at 13:15:00, along with the ECB Monetary Policy Statement and followed by the Press Conference at 13:45:00. This is a major determinant of Euro area bond yields and the Euro’s value, as it sets the cost of borrowing for commercial banks in the Eurozone.
October 31, 2025: Core Harmonized Index of Consumer Prices (YoY) (High Impact, EUR). This key inflation figure, released at 10:00:00, is particularly significant in the Eurozone. HICP is the European Central Bank’s preferred measure of inflation for the Euro area, making this a pivotal release that directly influences market expectations for future ECB policy actions.
October 31, 2025: Core Personal Consumption Expenditures – Price Index (YoY) (High Impact, USD). The week’s final high-impact data is released at 12:30:00. Core PCE is the Federal Reserve’s preferred measure of inflation. The year-over-year figure is critical for assessing the underlying inflation trend and will heavily influence market perceptions of the Fed’s success in achieving its price stability mandate.
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