- Markets U-turn. The Nvidia-led rebound came to a sudden halt, with equities sliding on renewed AI concerns. The S&P 500 posted its steepest intraday reversal since April, dropping 3.6% from peak to trough.
- Volatility climbs. The Cboe Volatility Index spiked to 26.42, its highest since April, while the MSCI All Country World Index fell 3.1% this week, setting up its sharpest weekly decline since spring.
- Crypto bloodbath. Bitcoin slipped below $82,000, now down over 30% from its record high less than seven weeks ago. What began as stress in speculative corners has morphed into a broad cross‑asset unwind, most visible in crypto.
- Jobs data at last. A long-delayed report on official US labour market data says that US job growth topped expectations in September. The bad news, unemployment has risen to 4.4% – its highest level in more than four years.
- Fed cuts delayed, not abandoned. A chorus of Fed speakers signaled caution, leaving December cut odds near 40% and weighing on sentiment. But even if the Fed does skip December, two to three more cuts are on the radar for 2026.
- Japan’s stimulus. Prime Minister Sanae Takaichi’s cabinet has approved the largest extra budget since the pandemic — a $135.4bn stimulus package. Potentially, this sees real Japanese rates turn even more negative and will keep the yen soft.
- Countdown to Budget. The pound’s trajectory into year‑end hinges on whether UK Chancellor Reeves will deliver a credible, market-friendly Budget on Nov 26.
Global Macro
Climbing the wall of worry
Stale and mixed. Despite the six‑week lag, the jobs data grabbed attention with a mixed print. September payrolls surged 119,000 vs. 51,000 expected, led by health care and food services. A 33,000 downward revision to prior months barely dents the beat. Unemployment rose to 4.4% as participation climbed.
Fed flying blind. In a historic first since 1994, the Bureau of Labor Statistics cancelled the October employment report due to the government shutdown and won’t release the November data until December 16. That is a week after the Fed meets on December 9–10. With the only reliable comprehensive look at the labor market coming from September’s data, the central bank lacks the critical feedback loop needed to navigate internal division. Odds of a third rate cut this year have dropped to 35%.
When great isn’t good enough. S&P 500 margins hit 25-year record highs in Q3. Earnings are up 14% YoY and revenues 6%, reflecting strong cost discipline across different sectors. The long expected Nvidia earnings report were a beat on top and bottom lines, but markets sold off after an early rally, pushing the VIX above 26, the highest since Liberation Day.
Global fiscal stimulus. In a tight vote, Canada’s federal budget has cleared approval. In Japan, Prime Minister Sanae Takaichi proposed a supplementary budget of over 25 trillion yen ($161 billion) to finance her ambitious stimulus package. At the same time, Chinese policymakers are weighing an aggressive set of measures to rescue the beleaguered housing market, amid mounting concerns that the prolonged crisis could spill over into the broader financial system.
Week ahead
UK Autumn Budget puts GBP in spotlight
Budget day is here! The UK Autumn Budget will take place on 26 November a decisive moment that will set the path ahead for UK assets, particularly GBP. Reeves faces a large fiscal hole, while policy U‑turns and allegations of fractures within Starmer’s government have raised doubts about the administration’s ability to repair that hole and restore stability.
US data in the spotlight Investors are focused on US data following the end of the shutdown. Releases remain messy in terms of timing, with some last‑minute changes, but next week markets are keenly awaiting preliminary Q3 GDP readings and the Fed’s preferred inflation gauge – personal consumption expenditure (October release). September retail sales and the ETA’s weekly jobs report are also due.
Eurozone sentiment vs reality Next week brings a mix of sentiment and hard data from the eurozone. With hopes rising that 2026 may offer more certainty for the region’s economy, sentiment indices have picked up recently (European Commission confidence indicators are due). The reality, however, may tell a different story. Final GDP prints for France and Germany will be closely watched, alongside Germany’s retail sales.
Germany on recession watch Germany’s confirmation of Q3 growth at 0% flat is highly anticipated. Q2 revisions pushed growth into negative territory at ‑0.3%, meaning that if Q3 is revised lower, the eurozone’s largest economy will have entered a technical recession.
ECB alert on inflation risks Eurozone price pressures also warrant attention – particularly France and Germany CPIs. While inflation appears to have stabilised around target, risks of undershooting later into 2026 persist. If that risk materialises, the ECB has signalled readiness to step in with an additional cut, as officials have made clear in recent commentaries.
Disclaimer: As unpublished data continues to be released, the calendar may not reflect last‑minute updates to the schedule.
FX Views
Markets wrestle with Fed uncertainty
USD Hawkish repricing fades as jobs data divides. The US dollar index strengthened this week, rising almost 1%. Baseline support held throughout as risk‑off mood dominated amid equity bubble concerns. The dollar was pushed higher also on more hawkish Fed repricing following the release of the October Fed minutes, coinciding with the announcement that the October jobs report – or at least parts of it – along with November’s, won’t be published until after the December policy meeting. Left in a state of uncertainty, markets pared back easing bets to probabilities as low as 30%. However, following the release of the September jobs report – which showed 119k jobs added in September while unemployment ticked higher – easing expectations shifted back to ~40% chance of a September cut. Markets see the report as justifying further divisions within the FOMC, capping more sustained dollar upside until additional data is released. All to say, at these levels the dollar’s run may have been overextended. Technically, the DXY has breached the long‑term 200‑day moving average, offering dollar buyers a justified signal to stay engaged despite shakier fundamental grounds. That said, more data will be needed for the breach to hold.
EUR Dollar calls the shots in EUR/USD. The euro nears the week’s end almost 1% lower against the dollar, inching closer to the 200‑day moving average – a key barometer of long‑term momentum. The dynamic suggests euro buyers need to find fresh catalysts for short‑term momentum to regain pace; otherwise, more pronounced bearishness today may begin to erode the still‑intact long-term bullish structure. The US continues to dominate the EUR/USD story, not only because the headline risks of 2025 – typically tied to tariff threats or political interference in the Fed – have taken a back seat, but also because, as this week showed, US policy remains the most uncertain. It is the side with more uncut armour, while euro rates appear to have bottomed. On top of this, the current setup makes it highly unclear whether those cuts will materialise at all. In response, US‑side developments continue to drive the pair’s price action decisively. This week, the US jobs report may not have convinced markets of US strength enough to re‑establish the pair’s 21‑day moving average as resistance. Meanwhile, support at 1.15 is set to hold, keeping the pair anchored in the lower zone of this level.
GBP Budget bound. GBP/USD is holding firm above $1.30, yet upside momentum remains capped by the 21‑day moving average at $1.3184. Against the euro, sterling continues to trade below its key daily averages, but we see downside risk contained near €1.12 in the months ahead. UK data this week has compounded sterling’s recent weakness. Softer inflation and mixed PMIs reinforces scope for the Bank of England to continue easing, especially after weaker labour market and GDP prints. Yet markets remain reluctant to fully price a cut, with probabilities stuck near 80–90%. The latest inflation easing was not convincing enough to justify aggressive action, while disappointing retail sales and a smaller‑than‑expected fall in public borrowing highlight consumer caution and fragile public finances ahead of next week’s Budget. Options markets reflect this uncertainty, with GBP hedging costs climbing to multi‑month highs and skew underscoring investor caution. Sterling’s bearish bias remains intact, with quieter sessions inviting profit‑taking but ultimately resetting levels for sellers to re‑engage. With the Autumn Budget looming, the pound’s trajectory into year‑end hinges on whether fiscal credibility and BoE policy can align — or whether sterling’s risk premium becomes the defining feature of its close to 2025.
CHF Ceiling in sight. The Swiss franc has slipped over 1% against the US dollar in the past week and failed to gain ground versus sterling or the euro, even amid broad‑based risk aversion. That divergence raises questions about whether the franc’s safe‑haven appeal is fading. Market chatter suggests investors are wary of Swiss authorities stepping in to cap excessive strength, particularly with EUR/CHF hovering near levels that historically trigger intervention. Moreover, Swiss data continues to highlight the drag from tariffs, with October exports falling, including a near 6% drop to the US. While the recent trade deal reduces tariff rates from 39% to 15%, the burden remains significant for a trade‑dependent economy competing for global demand. With inflation still running below target, exports falling and the franc overvalued, policymakers have little incentive to tolerate further appreciation, leaving the franc vulnerable to softer demand as traders anticipate official resistance.
JPY Intervention alert. The first half of 2025 was defined by relative JPY stability, as intervention threats and cautious BoJ policy kept USD/JPY contained. The second half, however, has seen the currency unravel — fiscal expansion, softer data, and widening rate differentials have left the yen as the market’s shock absorber. The yen’s rapid drop this week looks set to extend despite official pushback. Weakness appears inevitable given both domestic and external pressures, from the BoJ’s rate path to mounting fiscal concerns. Intervention alarms are flashing as USD/JPY surged more than 2% over the past week to above 157, but jawboning has had little effect. EUR/JPY has also hit fresh all‑time high this week and is up over 2% month‑to‑date. The slide accelerated after Prime Minister Sanae Takaichi’s cabinet approved the largest extra budget since the pandemic, a move that risks driving real Japanese rates deeper into negative territory. The coming days may test nerves, with fiscal stimulus announcements and a long holiday offering a convenient backdrop for potential intervention. Yet any rebound will be fleeting. Relief in the yen would be more band‑aid than cure — temporary cover for a currency still bleeding from structural pressures.
CAD Firmly above 1.40. Broad US Dollar strength largely explains why the Loonie remains pinned near the upper edge of its six-month range. With the Federal Reserve’s next steps still shrouded in doubt, the Greenback’s path of least resistance has naturally been upward. Frankly, the picture is murky, and the Fed is essentially flying blind into its final meeting of the year. Even strong jobs data and Nvidia beating expectations haven’t been enough to calm market jitters. Investors are desperate for clarity on the US labor market, but a clearer view is out of reach. Due to the government shutdown, the October employment report was canceled, and the November data isn’t scheduled for release until December 16, awkwardly, that is a week after the Fed meets on December 9–10. Lacking this critical feedback loop, the central bank is navigating in the dark, which further lowers the odds of a December rate cut. Consequently, even though domestic macro data has stabilized, sheer Dollar strength is keeping the Loonie firmly above 1.40. Next week, Q3 GDP (Fri) will be on the spotlight.
AUD Risk-off keeps Aussie under pressure. AUD/USD ends the week over 1% lower, touching three‑month lows as risk‑off sentiment dominated despite a brief reprieve yesterday. The high‑beta currency was bound to underperform against a steady dollar, supported by a hawkish‑leaning Fed. Losses were partly trimmed late in the week as a rebound in sovereign yields spurred exporters to hedge USD receipts, with support at 0.644 holding for now. Still, technicals show 200‑DMA support giving way, with a close below October’s low confirming downside momentum. Near term, firmer USD and shaky risk sentiment – alongside fading expectations of a December Fed cut – will keep AUD pressured, but medium‑term prospects look brighter as US/China trade ties improve, yield spreads turn more favourable, and Chinese growth momentum picks up with stimulus traction.
MXN Escalating rhetoric. The Mexican peso’s strong appreciation through mid-2025 has been supported by a sharp improvement in terms of trade, as export prices outpaced imports during Q2 and Q3, boosting the trade balance and attracting capital inflows. USD/MXN fell from above 20.0 in April to near 18.3 by September as the Citi Terms of Trade Index climbed above 12.25, signaling robust external support. However, the trend has reversed in Q4 as trade conditions deteriorated toward 11.9, reducing tailwinds and leaving the peso vulnerable to renewed pressure. Sustaining gains into 2026 will depend on terms of trade resilience and supportive monetary policy amid global uncertainty. On the trade front, this week’s sell-off underscores how fragile year to date gains can be. The currency dropped to a fresh week low after inflammatory comments from President Donald Trump, who stated he would be “okay” with conducting strikes against Mexico to curb drug flows and added, “I am not happy with Mexico.” This escalation in rhetoric spooked markets and triggered risk aversion, with similar threats aimed at Colombia amplifying concerns. Emerging markets have delivered some of the best returns in 2025, but this episode highlights the vulnerability of EM FX to geopolitical shocks. Even without concrete action, headline risk can quickly reverse sentiment, reminding investors that political uncertainty remains a key risk factor.
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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.
