The dollar strengthened against a broad range of currencies yesterday, although its gains were modest enough (a bit more than 0.5%), amid some paring back of Fed rate cut expectations and higher US bond yields. EURUSD and GBPUSD are trading at around $1.1740 and $1.3460 respectively this morning, down from Tuesday’s closing levels of $1.1815 and $1.3525 (but a touch above yesterday’s intra-day lows), with both still well within the fairly tight ranges that have prevailed through the month of September to date. EURGBP is little changed from yesterday morning’s levels at about £0.8730.
Yesterday’s Events
US government bonds underperformed yesterday. Yields increased by 2-4bps across the curve as Fed rate cut expectations softened a touch, in contrast to largely unchanged yields in the case of both German and UK bonds (this in the context of narrow trading ranges for yields generally this week). In equity markets, US stocks retreated some more from Monday’s record highs although losses were small (about o.3% in the case of the S&P 500), while the Euro Stoxx 600 was flat on the day.
In remarks yesterday, Bank of England Governor Andrew Bailey said monetary policy remains in “restrictive” territory and “there is still some further journey down in interest rates to go.” He cautioned though that “exactly when that will be and how much it will be will depends on the path of inflation”. The market sees little chance of the BoE lowering rates again this year and is not pricing in another full quarter-point reduction until April next year.
Business confidence in Germany fell in September according to the latest ifo survey, with the Business Climate Index dipping by more than expected to 87.7 (down from 88.9 in August and its lowest level since May). Sentiment amongst manufacturing and (particularly) services companies declined this month, but there was an improvement in confidence in the construction sector.
The Day Ahead
Looking to the day ahead, economic data due include money supply & credit growth in the Euro area and jobless claims, durable goods orders, existing home sales, and a third estimate of Q2 GDP growth in the US. A large number of Fed members are due on the wires over the course of the day as well.
Today's Talking Points 25.09.2025
Market Commentary
The dollar strengthened against a broad range of currencies yesterday, although its gains were modest enough (a bit more than 0.5%), amid some paring back of Fed rate cut expectations and higher US bond yields. EURUSD and GBPUSD are trading at around $1.1740 and $1.3460 respectively this morning, down from Tuesday’s closing levels of $1.1815 and $1.3525 (but a touch above yesterday’s intra-day lows), with both still well within the fairly tight ranges that have prevailed through the month of September to date. EURGBP is little changed from yesterday morning’s levels at about £0.8730.
Yesterday’s Events
US government bonds underperformed yesterday. Yields increased by 2-4bps across the curve as Fed rate cut expectations softened a touch, in contrast to largely unchanged yields in the case of both German and UK bonds (this in the context of narrow trading ranges for yields generally this week). In equity markets, US stocks retreated some more from Monday’s record highs although losses were small (about o.3% in the case of the S&P 500), while the Euro Stoxx 600 was flat on the day.
In remarks yesterday, Bank of England Governor Andrew Bailey said monetary policy remains in “restrictive” territory and “there is still some further journey down in interest rates to go.” He cautioned though that “exactly when that will be and how much it will be will depends on the path of inflation”. The market sees little chance of the BoE lowering rates again this year and is not pricing in another full quarter-point reduction until April next year.
Business confidence in Germany fell in September according to the latest ifo survey, with the Business Climate Index dipping by more than expected to 87.7 (down from 88.9 in August and its lowest level since May). Sentiment amongst manufacturing and (particularly) services companies declined this month, but there was an improvement in confidence in the construction sector.
The Day Ahead
Looking to the day ahead, economic data due include money supply & credit growth in the Euro area and jobless claims, durable goods orders, existing home sales, and a third estimate of Q2 GDP growth in the US. A large number of Fed members are due on the wires over the course of the day as well.
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