- Valuation meets volatility. Risk appetite wobbles as investors weighed tech euphoria against stretched AI valuations. The VIX equity fear index spiked. The tech-heavy Nasdaq is down around 4% from its peak. Asian stocks are on track for their worst week in three months, and Bitcoin is heading for its worst week since March.
- Shutdown signals & shadow data. With earnings season winding down and official US data frozen by the government shutdown, markets lean on private indicators to gauge the state of US economy.
- Fed Cut? Still a toss-up. ADP payrolls beat expectations (42k vs 30k), and ISM services surprised to the upside – keeping markets guessing on whether the Fed will move in December.
- Job cuts jolt. Volatility was reignited though after Challenger data revealed the largest October layoffs in over two decades, rattling sentiment. US dollar topside exposure was trimmed, with the dollar index slipping south of the 100 handle.
- Eurozone: mixed signals. Revised PMIs outperformed, particularly in France, but soft German industrial output and weak retail sales left EUR price action subdued.
- BoE: split decision. The Bank of England (BoE) held rates at 4% in a narrow 5–4 vote, with four members backing a cut – a dovish shift from the previous 7–2 split, reflecting softer inflation and labour market data.
- Data dump. A jam-packed week of data looms next week, particularly from the UK.
Global Macro
ADP fills NFP void
SCOTUS. President Trump’s sweeping use of executive authority to impose his signature tariffs came under intense scrutiny at the Supreme Court of the United States (SCOTUS), where justices appeared skeptical. Early indications of judicial concern over the administration’s reliance on the IEEPA framework could trigger renewed uncertainty in trade policy.
US labor and services. ADP data suggests a stabilizing U.S. labor market, with private payrolls rising by 42,000 after a prior downward revision. However, the gain was driven solely by large firms, while small business employment fell for the fifth time in six months, signaling continued demand softness. Meanwhile, the ISM Services Index rebounded sharply in October, expanding at its fastest pace in eight months, driven by surging demand. New Orders rose to 56.2 and Business Activity hit 54.3, signaling resilient consumer and business spending.
Fiscal focus on Canada and the UK. Prime Minister Mark Carney’s landmark budget pairs $141.4B in new spending with $58.2B in cuts, including a 10% reduction in the federal workforce, resulting in a projected $78.3B deficit, nearly double prior estimates. Later this month, UK Chancellor Reeves unveils Britain’s budget.
Bank of England. The Bank of England held rates at 4% in a narrow 5–4 vote, with four members backing a cut, up from two last meeting, highlighting growing divisions within the MPC. Sterling dipped and gilt yields fell on the decision. The Bank signaled inflation risks are now more balanced but reaffirmed a gradual easing path, dependent on incoming data.
RBA. Australia’s central bank held rates at 3.60%, maintaining its cautious stance amid rising inflation and softening labor data. The RBA, on pause since August after three cuts this year, signaled it needs more evidence of cooling prices.
Week ahead
UK numbers take centre stage ahead of Budget
UK data watch. A batch of UK data, both on the labour market and national accounts front, is due next week. It will be key in providing fresh directional impetus to the policy rate path and, in turn, GBP’s price action following the BoE’s cautiously dovish tone at its November meeting. A continued softening labour market, coupled with easing wage growth, would strengthen bets on a cut in December.
OBR downgrade in focus. Given the expected 0.3 percentage point downgrade by the OBR to be announced alongside budget data, it is wise to keep an eye on the UK’s output‑per‑hour print, due 13 November.
US inflation report uncertainty. While the September inflation report for the US was released, it is unlikely – at least as far as we know – that the October report will be published, despite being due next week. The government shutdown remains ongoing, now the longest in US history.
ZEW sentiment pulse. ZEW sentiment indices for Germany and the eurozone are out and remain useful for tracking expert views on the region, which continues to grapple with global trade uncertainty as well as idiosyncratic political upheavals.
FX Views
Thirsting for a compass
USD Overvalued at 100. The dollar’s weekly gains faded toward the week’s end. The greenback advanced on a mix of improved sentiment – the main driver being eased trade tensions, particularly with China following a one‑year trade agreement sealed last week – and safe‑haven flows. An equity correction, driven by rising fears over overstretched valuations, reaffirmed the dollar’s still‑vibrant safe‑haven appeal. That said, the mood shifted toward the end of the week, as cautious optimism, reinvigorated by better‑than‑expected ADP and ISM services PMI data released on Thursday, was offset by large layoffs – the most for any October in more than two decades, as reported by Challenger, Gray & Christmas Inc. The print modestly reinvigorated the chances of a December cut, with probabilities rising from 62% to as high as 72%, before scaling back slightly on Friday. Technically, the DXY had just flirted with its still downward‑sloping 200‑day moving average. A breach of that level seems unjustified for now, especially after the Challenger layoff result. From here, we expect the dollar to favour the top half of the 99 handle, barring continued significant data surprises that would drive the currency’s price action more directionally.
EUR Euro’s fate tied to US sentiment. Eurozone PMI prints beat expectations early in the week, with France’s industrial and manufacturing output also surprising to the upside despite political turmoil. In contrast, Germany’s industrial production and eurozone retail sales missed forecasts, raising doubts that optimism may be overblown amid the tariff-ridden outlook and keeping the euro’s price action muted. The currency, however, remains at the mercy of developments in the US. Investors continue to decipher the state of the US economy through alternative data, while also being influenced by complementary factors such as trade negotiations, which may have inflated USD-positive sentiment. EUR/USD has therefore traded undervalued relative to where its macro indicators and policy trajectory suggest fair value, before re-aligning more closely later in the week following disappointing eurozone hard data and a Challenger report that failed to convince policy doves, trimming US yield losses. While the undervalued setup led to a more aggressive rebound in the pair, now that the gap has narrowed, further euro upside will hinge on a steady flow of “soft” US data, as one-offs may no longer be enough.
GBP Relief, not revival. Sterling rallied across the G10 after the Bank of England held rates at 4%, but the move looks more technical than fundamental. The rebound likely reflects investors unwinding defensive positions following the absence of a surprise cut, offering GBP some short-term breathing room. Governor Bailey’s “we need to see data” tone keeps the dovish bias intact. With a heavy UK data calendar ahead, the bounce may simply provide better entry levels for sellers, as downside risks remain. GBP/USD has recovered from oversold conditions, holding above the psychologically important $1.30 mark. GBP/EUR, meanwhile, remains below €1.14, tracking the UK–Germany yield spread lower. Risk reversals – especially at the 1-month tenor tied to the November budget – show elevated demand for downside protection, highlighting persistent investor anxiety over GBP vulnerability. Meanwhile, leveraged funds remain net long sterling, leaving room for further downside if positions unwind, particularly with asset managers still firmly bearish.
CHF Haven status tested. The Swiss franc underperformed the yen this week despite a broadly risk-off backdrop – an unusual shift given its recent role as the preferred safe haven. Since “Liberation Day,” CHF has gained nearly 10% against the dollar, while JPY has declined around 3%, making this divergence particularly notable. The move may signal the early stages of a regime shift. Speculation around SNB intervention has resurfaced, with recent price action suggesting possible franc sales. EUR/CHF jumped nearly 1.2% even as global sentiment deteriorated, reinforcing the view that policymakers may be leaning against excessive strength. On the macro front, October’s inflation print of just 0.1% highlights the disinflationary drag from a strong currency. With core pressures subdued and imported costs compressed, the franc is likely to remain broadly stable into year-end – though with a slight weakening bias as the SNB seeks to recalibrate its policy stance.
CAD Near a 7-month high. After climbing to 1.414, its highest level since April, and notching five consecutive days of gains, the USD/CAD has finally found some respite, after a better than expected jobs data for the month of October, which sent the USD/CAD trade from 1.41 to 1.406. As the US Dollar shows signs of stalling, the CAD looks to consolidate the recent move around 1.41. Last week’s brief dip in USD/CAD below 1.39 following the BoC’s rate cut was swiftly reversed. The pair surged back above 1.40 after Fed Chair Powell signaled that a December cut is not guaranteed, prompting markets to reassess the “two and through” narrative. This was further exacerbated by a stronger U.S. dollar. Looking ahead, beyond fiscal concerns, markets will be closely watching developments from the U.S. Supreme Court hearings on the legality of administration-imposed tariffs. Since sectoral tariffs have not been enacted under the IEEPA framework, a ruling against IEEPA-based tariffs is unlikely to materially alter the current outlook for regional trade.
AUD Gold surge lifts Aussie. Australia’s trade surplus jumped to AUD 3.94 billion in September, up from a revised AUD 1.11 billion the month before, beating expectations thanks to a surge in gold exports. Shipments of non-monetary gold soared 62.2%, helping total exports rebound 7.9% after an 8.7% drop. Bullion prices also climbed 12% month-on-month. Imports edged up 1.1%, led by capital goods, slowing from a 3.3% rise previously. The Aussie held steady against the US dollar, supported by China’s move to ease tariffs on US agricultural goods starting November 10 and suspend 24% duties on select items for a year. AUD/USD remains 3.3% below its recent high of 0.6707, last seen on September 17. Traders are eyeing resistance around 100-day EMA of 0.6518, followed by 21-day EMA of 0.6525. Aussie buyers may see current levels as a chance to step in. Key data ahead includes building approvals, employment change, and the jobless rate.
CNH China’s services slow but stay strong. China’s services sector expanded at its slowest pace in three months, with the private PMI slipping from 52.9 to 52.6 in October. Export sales weakened amid tariff uncertainty, but stronger domestic demand helped the index beat expectations. The official PMI, which tracks larger state-linked firms, edged up from 50.1 to 50.2. Since January 2023, services activity has consistently stayed above the 50 mark – signalling ongoing growth – according to a private survey focused on smaller, export-driven businesses along China’s eastern coast. USD/CNH is now 1% above its recent low of 1.0851, last seen on September 17. Resistance levels sit at 50-day EMA of 7.1328, followed by 100-day EMA of 7.1531. Traders are watching upcoming data on CPI, PPI, fixed asset investment, industrial production, and unemployment rate.
JPY Rate hike chatter, USD/JPY at one-week low. Japan’s Ishin party co-leader Fumitake Fujita warned that a Bank of Japan rate hike could send conflicting signals, as the government continues to push for more private sector investment. He also ruled out tax hikes to fund recent defense spending increases but gave no details on alternative funding. Markets are currently pricing in a 25bps hike in March 2026. Traders are watching USD/JPY closely, with verbal intervention possible if the pair approaches the 155.00 mark. USD/JPY is trading at one-week low, with support at 152.48 (21-day EMA), followed by 150.77 (50-day EMA). Verbal intervention remains a risk if the pair nears 155.00. Eyes are on the BoJ’s upcoming BoJ summary of opinions, PPI and current account.
MXN Risk aversion hurts the Peso. This week, the Mexican peso slumped to its weakest level since last September against the U.S. dollar, as a wave of risk aversion swept through global markets following warnings from Wall Street executives urging investors to prepare for a pullback in U.S. equities. The decline coincided with recent growing expectations of a more dovish trajectory for Banxico, which this Thursday cut rates by 25 bps as expected. Over the last week, the peso started sliding, mirroring broader weakness across emerging-market assets, after Fed Chair Jerome Powell tempered hopes for a December rate cut. Domestically, Mexico’s economy contracted by 0.3% quarter-on-quarter in Q3, marking only the second quarterly decline since early 2021. The downturn was driven by a roughly 1.5% drop in industrial output, weighed down by U.S. auto tariffs, stagnant services activity, and a slowdown in annual growth to just 0.2%. Struggling against a strengthening U.S. dollar, the peso failed to hold lower support levels. After consolidating around 18.4 for much of October, it weakened into October-end, breaking above its 50-day Simple Moving Average and testing key resistance at 18.7. As market sentiment returns to calm, the Peso inches closer to 18.5. A sustained move higher in USD/MXN hinges on continued Dollar strength and worsening global market sentiment. For the short-term, the USD/MXN is expected to continue trading around 18.5-18.7, holding year-to-date gains at 12%.
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
