At 20:00 (GMT+2) today, the Federal Reserve will release the results of its monetary policy meeting. Since both headline and core consumer price indices stood at 3.0% in September—below forecasts—the interest rate is expected to be cut by 25 basis points, from 4.25% to 4.00%, to support the cooling labor market (unemployment rose to 4.3% in August, with employment up by only 22,000). Traders will also watch Jerome Powell’s press conference at 20:30 (GMT+2) for clues on future moves. Most analysts expect another rate cut of 50 basis points later this year. However, Fed officials might take a cautious stance given the lack of fresh inflation and employment data amid the ongoing government shutdown, as noted by regional Fed presidents Beth Hammack (Cleveland), Lorie Logan (Dallas), and Jeffrey Schmid (St. Louis). Meanwhile, President Donald Trump confirmed the completion of a trade agreement with South Korea involving $350 billion in investments into the U.S. economy and expressed optimism about upcoming talks with Chinese President Xi Jinping.

Eurozone

The euro is weakening against the yen and the U.S. dollar but gaining against the pound.

Investors are digesting Spain’s Q3 GDP data, which slowed from 0.8% to 0.6%, though it remains stronger than in most euro area economies thanks to a rebound in tourism and a resilient labor market supported by immigration and lower energy costs. Meanwhile, Germany’s Mechanical Engineering Association (VDMA), representing 3,600 companies, warned that expanded U.S. tariffs on steel and aluminum in December could affect 56% of national exports versus 40% currently, putting additional pressure on the economy. Tomorrow at 15:15 (GMT+2), the European Central Bank will announce its monetary policy decision. The key rate is expected to remain at 2.15%, with the deposit rate at 2.00% and the marginal lending rate at 2.40%. The subsequent press conference may provide hints about future policy actions.

United Kingdom

The British pound is declining against the euro, yen, and U.S. dollar.

Traders are assessing September’s macroeconomic data: the number of approved mortgages rose from 64.96K to a December high of 65.95K (forecast: 64K), while net lending to individuals increased from £6.0 billion to £7.0 billion, beating expectations of £5.6 billion. These figures point to growing consumer activity and spending. However, analysts warn that higher taxes under the new state budget could weigh on this positive momentum.

Japan

The yen is strengthening against the euro, pound, and U.S. dollar.

October household confidence data showed an increase from 35.3 to 35.8 (forecast: 35.5), confirming improving consumer sentiment. Meanwhile, President Donald Trump and Prime Minister Sanae Takaichi signed a framework agreement yesterday under which both countries will use economic policy tools and coordinated investments to develop diversified and liquid markets for minerals and rare earths, as well as provide financial support for selected projects over the next six months.

Australia

The Australian dollar is strengthening against the yen, pound, euro, and U.S. dollar.

Markets are focused on inflation data: in Q3, the consumer price index rose from 0.7% to 1.3% QoQ (forecast: 1.1%) and from 3.0% to 3.2% YoY. Inflation now exceeds the upper limit of the Reserve Bank of Australia’s (RBA) target range (2.0–3.0%), reducing the probability of policy easing to 8.0% in October and 25.0% in December.

Oil

Oil prices are trading in narrow sideways ranges amid mixed factors. Prices remain under pressure from potential OPEC+ output increases, though smaller than before. On the other hand, optimism about possible trade agreements between President Trump and President Xi is supporting prices, as such deals could lower global recession risks and sustain energy demand. Additional support comes from the latest API report showing a draw of 4.0 million barrels versus expectations of a 2.9 million-barrel decline.