September was a month of significant shifts in global financial markets, fueled by strategic actions from both the US Federal Reserve and Chinese policymakers. After a period of wild volatility, global markets turned decisively positive, pushing key equity indices to record highs and igniting a rally across major FX markets.
With major FX pairs like GBP/USD and EUR/USD hitting multi-month highs, understanding the risks and opportunities ahead becomes crucial.
Our Global FX Outlook for October breaks down these developments and offers strategic insights to help your business meet its goals.
Fed’s bold moves drive market gains
One of the primary drivers was the Federal Reserve’s aggressive 50-basis-point rate cut, its largest move in recent history. This unexpected easing sent U.S. shares like the Dow Jones and S&P 500 soaring to new peaks. However, the rate cut also pushed the U.S. dollar lower, sparking notable reactions across global FX markets.
China’s stimulus adds fuel to the fire
China’s response was equally impactful. With a series of rate cuts and fresh incentives for bank lending, Chinese shares saw their best one-week performance since 2008. The optimism surrounding China’s economic prospects lifted the yuan and supported a rally in commodity-linked currencies like the Australian and Canadian dollars.
Looking ahead
As we move into Q4, all eyes are on central banks. The Fed’s dovish pivot, coupled with potential rate cuts in Europe and the UK, could set the stage for further turbulence. Meanwhile, China’s stimulus measures may continue to support risk appetite, but persistent uncertainty around global growth could create headwinds.
What does this mean for global trade?
These developments highlight both opportunities and risks for businesses involved in global trade. The weakening U.S. dollar could make imports into the U.S. more expensive, squeezing margins for American businesses reliant on foreign goods. On the other hand, a stronger yuan and rising commodity-linked currencies may benefit exporters targeting Asian markets, particularly those linked to China’s economic rebound.
Watch our Market Insights team provide a short summary of the most crucial insights from the October Global FX Outlook and start making informed decisions for your business today.
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