September industrial production data were stronger than expected: output increased from 0.1% to 0.7% month-on-month, compared with forecasts of 0.4%, while annual growth accelerated to 2.2%. The positive figures give the US Federal Reserve more room to focus on persistent inflationary pressure. In September, the Consumer Price Index (CPI) reached 3.7% year-on-year, while the Producer Price Index (PPI) climbed to 6.3%. As a result, the probability of an interest rate increase in December reached approximately 88.7%, according to the Chicago Mercantile Exchange (CME) FedWatch Tool. Markets largely expect a 25-basis-point adjustment, although some policymakers, including Cleveland Federal Reserve Bank President Beth Hammack, have warned that more aggressive tightening could become necessary if inflation expectations deteriorate significantly. Investors are also following changes in US sanctions policy toward Russia. On September 18, President Donald Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, which provides for tariffs of up to 500.0% on certain Russian goods imported into the United States and additional duties of 100.0% on imports from countries among the five largest buyers of Russian oil and gas, including China and India, under specified conditions. However, on Friday, Trump signed an executive order waiving the application of several sanctions and tariff provisions under the law. The decision could facilitate additional energy supplies and help ease pressure on global fuel prices, although other US sanctions remain in force. As discussed in our previous forex market review, the combination of inflation risks, monetary policy expectations and energy market developments remains a major driver of the dollar's performance.
Eurozone
The euro is weakening against the British pound, strengthening against the Japanese yen and showing mixed dynamics against the US dollar.
Over the weekend, European Central Bank (ECB) President Christine Lagarde said that the recent decline in bond prices has increased borrowing costs across the eurozone, potentially slowing economic growth and eventually reducing inflationary pressure. Meanwhile, investors are closely monitoring political instability in France, where ongoing protests could complicate the approval of Prime Minister Sébastien Lecornu's government budget for 2027, putting additional pressure on the single currency. Tomorrow at 08:00 (GMT+2), market participants will focus on Germany's September Producer Price Index (PPI). The annual indicator is expected to accelerate from 4.6% to 5.3%, which could reinforce expectations of further monetary tightening by the European Central Bank.
United Kingdom
The British pound is strengthening against the US dollar, Japanese yen and euro.
According to October data from property portal Rightmove, the UK House Price Index increased from 0.7% to 1.0% month-on-month, while the annual rate improved from –0.8% to –0.1%. Nevertheless, the company's experts note that elevated mortgage rates are increasingly affecting housing affordability and limiting buyers' purchasing power. Prospective homebuyers are also taking a cautious approach ahead of the government's forthcoming budget announcement, awaiting details of possible tax changes and measures to support first-time buyers. Tomorrow at 08:00 (GMT+2), the Office for National Statistics (ONS) will publish its latest labour market report, covering employment and unemployment developments through August. Investors will assess whether the unemployment rate remains close to its previous level of 4.9%, as well as changes in employment and wage growth. Stronger-than-expected figures could provide additional support for the British currency.
Japan
The Japanese yen is weakening against the British pound, euro and US dollar today.
Traders are focused on comments from Bank of Japan Governor Kazuo Ueda, who said that underlying inflation is approaching the regulator's 2.0% target. According to the official, strong global demand for artificial intelligence (AI) technologies is contributing to inflationary pressure, while Japan's tight labour market continues to support wage growth and domestic demand. Investors interpreted his remarks as another indication that the central bank could raise interest rates at its December meeting, although no adjustment is widely expected in October. Ueda also noted that tightening monetary policy at an appropriate pace could help prevent abrupt increases in government bond yields and support financial stability.
Australia
The Australian dollar is strengthening against the euro, British pound, Japanese yen and US dollar today.
Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent said that expectations of further monetary tightening had eased following the publication of weaker labour market data. However, he emphasised that future decisions would depend on incoming economic indicators, particularly the quarterly inflation figures scheduled for release next week. The September employment report showed an unexpected decline in the number of employed Australians, while unemployment remained at 4.7%, suggesting that the labour market may be cooling faster than previously anticipated. At present, market participants estimate the probability of an interest rate increase at the November RBA meeting at approximately 30.0%, while the likelihood of a hike by December stands near 50.0%. The upcoming inflation report could significantly change these expectations.
Oil
Oil prices remain volatile after an early decline, as traders weigh the prospect of additional Russian fuel supplies against continuing disruptions in the Persian Gulf.
Crude oil came under pressure after the US administration waived several sanctions and tariffs affecting Russia's energy sector, potentially allowing additional supplies to reach international markets. Under the recently announced arrangements, Russian diesel deliveries could gradually increase from approximately 2.3 million barrels to as much as 7.6 million barrels per month. However, these volumes remain projections rather than confirmed additional supply. At the same time, geopolitical tensions in the Persian Gulf continue to support oil prices as attacks on commercial vessels near the Strait of Hormuz raise concerns about the security of one of the world's most important energy transport routes. According to shipping intelligence company Kpler, crude oil flows through the strait have recently fallen from more than 20.0 million barrels per day to approximately 8.5 million barrels per day amid mounting shipping risks. These disruptions could limit the downward pressure from additional Russian supplies and keep energy markets volatile in the near term.
