Forex investors are watching September PMI data from Hamburg Commercial Bank (HCOB), released today in France: the manufacturing index dropped from 50.4 to 48.1 points versus expectations of 50.2, while the services index fell from 49.8 to 48.9 compared to forecasts of 49.6.
France is facing political and potentially economic uncertainty after former Prime Minister François Bayrou lost a no-confidence vote and was replaced by ex-defense minister Sébastien Lecornu, who must address the 2026 budget. Bayrou had proposed sharp spending cuts of €44 billion, including reducing benefits and abolishing several public holidays, sparking criticism in parliament. Meanwhile, eurozone PMI showed manufacturing activity slipping from 50.7 to 49.5 versus forecasts of 50.9, while services rose from 50.5 to 51.4. Similar U.S. data will be published at 15:45 (GMT+2), with expectations of the manufacturing index easing from 53.0 to 52.0 and services from 54.5 to 53.9.
GBP/USD
The pound is trading flat against the U.S. dollar in the morning session, attempting to break above 1.3515 as investors await UK PMI data at 10:30 (GMT+2). Forecasts suggest the manufacturing index will remain at 47.0, services will decline from 54.2 to 53.5, and the composite from 53.5 to 52.7. Weak data could push the Bank of England toward policy easing at its next meeting despite inflation staying well above target. Last week, officials left rates unchanged, acknowledging some progress on inflation but warning of renewed pressures in September and October. Annual CPI held at 3.8% in August, the highest since January 2024. Retail sales data also surprised on the upside, with core sales rising 1.2% y/y versus forecasts of 0.8%.
AUD/USD
The Australian dollar is weakening against the U.S. dollar in the Asian session, retesting September 8 lows after a brief rebound yesterday. The People’s Bank of China left its loan prime rate at 3.00%, unchanged since the last 10bps cut in May. Analysts expect more monetary easing in the coming months amid China’s sluggish economy, which is projected to grow 4.5% in 2025. In Australia, September PMI from S&P Global showed manufacturing falling from 53.0 to 51.6, services from 55.8 to 52.0, and the composite from 55.5 to 52.1. In the U.S., PMI data is due at 15:45 (GMT+2), with projections for manufacturing at 52.0 and services at 53.9. Later today, Fed Chair Jerome Powell is scheduled to speak at 18:35 (GMT+2), potentially outlining the outlook for further policy easing. On Friday, PCE data will be released, with core inflation expected at 2.9% y/y and 0.2% m/m.
USD/JPY
The U.S. dollar is edging higher against the yen in Asia, testing 147.75 after the Fed’s September 17 decision to cut rates by 25bps to 4.25%. The move had limited impact since it was already priced in, while upgraded growth forecasts for 2025–2026 reduced expectations of aggressive easing, supporting the dollar relative to dovish peers. The Bank of Japan kept its key rate at 0.50% on September 19, though analysts expect a 25bps hike before year-end, with further adjustments possible if inflation accelerates. August CPI fell sharply from 3.1% to 2.7%, with core inflation easing to 3.3% from 3.4%. Tokyo CPI data will be released Friday at 01:30 (GMT+2), with forecasts of an increase from 2.5% to 2.8%.
XAU/USD
Gold is posting modest gains in Asia, extending last week’s bullish momentum as XAU/USD tests 3750.00. Investor demand for safe havens remains supported by geopolitical uncertainty. The conflict in Eastern Europe continues, while Gaza tensions escalated after several EU states recognized Palestine, drawing criticism from Israel and skepticism from Washington. Seasonal demand is also rising, with the Bank of England increasing its gold holdings to 63 tons. Additional support comes from the Fed and Bank of Canada, both of which cut rates by 25bps last week, signaling potential further easing. Meanwhile, the Bank of England and Bank of Japan left rates unchanged. Later today, U.S. PMI data is expected at 15:45 (GMT+2), followed by Powell’s remarks at 18:35 (GMT+2).