The business climate index is expected to adjust slightly from 87.7 to 87.8 points, while the current conditions index may decline from 85.7 to 85.5 points. Traders will also monitor September’s eurozone consumer lending data, which is forecast to increase from 2.5% to 2.6%. Meanwhile, last week’s business activity reports indicated improvement in Germany’s manufacturing PMI from 49.5 to 49.6 and in services from 51.5 to 54.5 (above the preliminary estimate of 51.1). Across the eurozone, composite indicators also strengthened from 49.8 to 50.0 and from 51.3 to 52.6. The acceleration in business activity supports the European economy, which has endured a prolonged period of high interest rates and inflation. Investors expect that infrastructure modernization and increased defense spending will further improve conditions, though export risks remain elevated. Regional carmakers, in particular, face pressure from higher tariffs in the U.S. and intense competition from Chinese automakers in Asia. In the U.S., the federal government has been shut down since early October, and risks remain that it could continue through late November, despite growing pressure from the White House on Democratic lawmakers.
GBP/USD
The pound is declining against the U.S. dollar, attempting to hold below 1.3300 as traders await new market catalysts. Several U.S. macroeconomic reports remain unpublished due to the ongoing government shutdown, caused by Congress’s failure to pass the 2026 fiscal budget. Democrats continue to block the temporary funding bill approved earlier by the House of Representatives, which would have extended government operations until late November.
The shutdown could last into next month, though a resolution within the next two weeks remains possible, based on Senate voting dynamics—54 senators supported the bill last time, short of the required 60 votes. Meanwhile, the pound found support from Friday’s retail sales data, which rose from 0.7% to 1.5% year-over-year (versus forecasts of 0.6%) and eased slightly month-over-month from 0.6% to 0.5% (compared to a projected –0.2%). Excluding fuel, sales climbed from 1.3% to 2.3%. Additionally, October’s manufacturing PMI improved from 46.2 to 49.6 (above the expected 46.6), and services PMI increased from 50.8 to 51.1 (matching preliminary estimates). In the U.S., September inflation data showed a slowdown: CPI rose from 2.9% to 3.0% year-over-year and eased from 0.4% to 0.3% month-over-month, while the core CPI dropped from 3.1% to 3.0% and from 0.3% to 0.2%, respectively — reinforcing expectations of Fed policy easing.
AUD/USD
The Australian dollar is gaining against the U.S. dollar, testing the 0.6530 level for an upside breakout as traders await fresh momentum. On Wednesday at 02:30 (GMT+2), Australia will release Q3 inflation data, expected to accelerate from 2.1% to 3.0% year-over-year and from 0.7% to 1.1% quarter-over-quarter — bolstering expectations that the Reserve Bank of Australia (RBA) will delay further monetary easing. Later that day at 20:00 (GMT+2), the U.S. Federal Reserve will announce its policy decision, with analysts expecting a 25-basis-point rate cut to 4.00%. Some even anticipate a larger move, given last week’s inflation report showing core CPI slowing from 3.1% to 3.0% YoY and from 0.3% to 0.2% MoM. Australia’s October manufacturing PMI (S&P Global) fell from 51.4 to 49.7, while services PMI rose from 52.4 to 53.1, bringing the composite index to 52.6. In the U.S., manufacturing PMI climbed from 52.0 to 52.2 and services from 54.2 to 55.2.
USD/JPY
The U.S. dollar continues its strong upward trend against the Japanese yen, trading near February highs. Despite broad expectations of a Fed rate cut this Wednesday, the dollar remains in demand. Given the latest inflation data, markets are pricing in an increased likelihood of more aggressive easing—either this month or in December. However, the Fed still lacks updated labor market data due to the shutdown. The CPI slowed from 0.4% to 0.3% MoM but accelerated from 2.9% to 3.0% YoY, while the core CPI declined from 0.3% to 0.2% and from 3.1% to 3.0%, respectively. Stronger business activity also supported the dollar: U.S. manufacturing PMI rose from 52.0 to 52.2, and services PMI from 54.2 to 55.2, beating forecasts. The Bank of Japan meets on Thursday and is expected to keep policy unchanged but may signal possible tightening ahead. The appointment of Sanae Takaichi as Japan’s new Prime Minister — known for her dovish stance — could complicate future rate hikes amid unstable inflation dynamics.
XAU/USD
Gold consolidates near 4075.00 as traders await the U.S. Federal Reserve’s policy meeting on Wednesday, October 29. Analysts widely expect a 25-basis-point rate cut to 4.00%, with the possibility of further easing by year-end. Some even foresee a 50-point reduction. Last week’s inflation data showed CPI rising from 2.9% to 3.0% YoY but slowing from 0.4% to 0.3% MoM, while core CPI eased from 3.1% to 3.0% and from 0.3% to 0.2%, respectively. The ongoing government shutdown continues to pressure the dollar, with the White House resorting to mass federal layoffs to push Democrats toward compromise. Treasury Secretary Scott Bessent also warned that, after November 15, the government may face difficulty paying military salaries. This week will also feature policy meetings from the Bank of Canada, European Central Bank, and Bank of Japan. Both the BoC and the Fed are expected to cut rates by 25 basis points, while the ECB and BoJ will likely maintain their current policies unchanged.