Forex investors remain focused on the government shutdown that began Wednesday: most federal employees have been furloughed, and government operations have halted. New York’s infrastructure projects have already suffered $18.0 billion in damage, while climate protection programs lost $8.0 billion in funding. President Donald Trump stated he would use the situation to cut federal agencies linked to the Democratic Party, which could weaken his political opponents. Reports suggest layoffs could reach tens of thousands. Meanwhile, Dallas Federal Reserve Bank President Lorie Logan noted that the Fed acted reasonably by cutting the interest rate by 25 basis points in September to support the labor market, but warned officials should proceed cautiously with further easing.

Eurozone

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

Investors assessed August producer price data, which declined from 0.3% to –0.3% month-over-month (vs. –0.1% forecast), and from 0.2% to –0.6% year-over-year (vs. –0.4% forecast). This reduction in inflationary pressure lowers the chances of further monetary easing by the European Central Bank (ECB) this year. Meanwhile, the services PMI rose from 50.5 to 51.3, slightly below the 51.4 forecast, while the composite index climbed from 51.0 to 51.2. In Germany, the bloc’s largest economy, services PMI improved from 49.3 to 51.5, and the composite from 50.5 to 52.0, returning to expansion territory. This positive momentum, the strongest in eight months, is largely driven by rising domestic demand, while external demand remains subdued. Italy’s economy minister Giancarlo Giorgetti said ECB officials should return to a dovish stance to help revive the EU economy, which is hovering near stagnation.

United Kingdom

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

September services PMI dropped from 54.2 to 50.8, a five-month low, versus the 51.9 preliminary reading, while the composite index fell from 53.5 to 50.1, compared to 51.0 forecast — placing it on the brink of stagnation. Analysts note the negative trend reflects businesses delaying spending decisions ahead of the autumn budget, while households also hold back on major purchases due to high inflation and tax concerns.

Japan

The yen is weakening against the euro and pound, while showing mixed dynamics versus the U.S. dollar.

Bank of Japan Governor Kazuo Ueda stated that inflation is on track toward the 2.0% target but warned global uncertainty could hinder wage growth. He also pointed to U.S. trade tariffs and signs of weakness in the American labor market as key risks. His cautious comments disappointed investors, contrasting with Deputy Governor Shinichi Uchida’s more optimistic remarks about improving business sentiment and solid corporate profits despite export pressure. Meanwhile, Japan’s services PMI rose from 53.1 to 53.3 (vs. 53.0 forecast), while the composite index fell from 52.0 to 51.3.

Australia

The Australian dollar is weakening against the euro and pound but strengthening versus the yen and U.S. dollar.

September services PMI was revised down from 55.8 to 52.4, still above the 52.0 forecast, while the composite index declined from 55.5 to 52.4. In these conditions, Reserve Bank of Australia (RBA) officials are unlikely to adjust monetary policy further before year-end.

Oil

Oil prices corrected lower on expectations that OPEC+ producers may significantly increase output at Sunday’s meeting.

Experts estimate production could rise by 274,000–411,000 barrels per day in November, two to three times more than this month, creating a large supply surplus amid modest demand. Analysts at JPMorgan Chase & Co. warned markets to prepare for such a scenario in Q4 and into next year.