The risk complex remained subdued early Wednesday as traders awaited more clarity amid mixed data and news. Key catalysts included the U.S. September Purchasing Managers' Indices (PMIs), Federal Reserve Chairman Jerome Powell's speech, and U.S. President Donald Trump’s address at the United Nations (UN). Also significant were updates from the Organization for Economic Co-operation and Development (OECD), and statements from Ukrainian President Volodymyr Zelenskiy, Canadian Prime Minister (PM) Mark Carney, and Bank of Canada (BoC) Governor Tiff Macklem.
September's preliminary readings of the S&P Global Purchasing Managers' Indices (PMIs) for the U.S. were weak, which weighed on the U.S. Dollar, even as Fed Chair Powell reiterated a “data-dependent” approach. Despite risk-negative statements from Trump, the U.S. Dollar didn’t rise but weighed on equities and cryptocurrencies.
Both the Manufacturing and Services PMIs matched market forecasts of 52.0 and 53.9, respectively, down from 53.0 and 54.5 in the prior month. The Composite PMI, however, fell to 53.6, below analysts' expectations of a repeat of the 54.6 figure. Additionally, the Richmond Federal Reserve Manufacturing Index for September came in at -17, worse than the expected -5 and the prior month's -7.
Before the U.S. data release, Federal Reserve Vice Chair for Supervision Michelle Bowman expressed concerns that the Federal Reserve might be behind the curve on the U.S. jobs market, citing a dovish tone.
Federal Reserve Chairman Jerome Powell spoke today for the first time since the Federal Open Market Committee (FOMC) rate decision, stating, "Our policy is not on a preset course." He also highlighted risks to both inflation and employment, suggesting a cautious, data-dependent approach. On the same line, Federal Reserve President Raphael Bostic emphasized his concerns about inflation, even as discussions about the Federal Reserve’s policy framework continue.
Donald Trump spoke at the UN General Assembly, initially praising the UN but later criticizing its effectiveness in peace efforts, claiming it only issued empty statements. He also criticized the UN’s support for asylum seekers entering the U.S. He stated that Russian President Vladimir Putin's refusal to end the war was not making Russia look good and warned that the U.S. could impose strong tariffs. Trump further suggested that Ukraine could reclaim all its lost territory with European support and called for the North Atlantic Treaty Organization (NATO) to shoot down Russian military aircraft if needed.
The OECD raised its 2025 global growth forecast to 3.2%, up from 2.9%, citing resilient emerging markets, artificial intelligence investment, and Chinese fiscal support. However, the OECD also warned of the continued impact of tariffs.
Ukrainian President Volodymyr Zelenskiy expressed confidence that U.S. support for Ukraine was strengthening. He was encouraged by Trump’s comments suggesting Ukraine could retake all occupied land. However, Zelenskiy voiced skepticism about China’s stance on the war, suggesting China may not want to bring the conflict to an end. His comments underscored Ukraine’s dependence on continued U.S. backing and the potential importance of U.S.-China diplomacy in shaping the conflict's direction.
China announced that it would no longer seek developing-nation status at the World Trade Organization (WTO), removing a major barrier to U.S. trade reform talks. Premier Li Qiang also urged Canada to better understand China’s position amid rising tensions.
Japan’s September preliminary Manufacturing PMI came in at 48.4, missing expectations and indicating the fastest pace of contraction in the manufacturing sector in six months. However, Japan’s Services PMI stayed in expansion at 53.0, contributing to a Composite PMI of 53.0, which marked the slowest growth in overall business activity since May.
In Australia, consumer prices rose at their fastest annual pace in a year, increasing 3% in August, higher than the expected 2.9%. This reduced the likelihood of a rate cut by the Reserve Bank of Australia (RBA) at its upcoming meeting. A key measure of core inflation, the trimmed mean, eased to 2.6% from 2.7% in July. A measure excluding volatile items and holiday travel rose to 3.4% from 3.2%.
New Zealand appointed Anna Breman as the first female Governor in the Reserve Bank of New Zealand’s (RBNZ) 90-year history. Breman, currently the First Deputy Governor at Sweden’s Riksbank, will take over as RBNZ Governor on December 1.
Bank of Canada (BoC) Governor Tiff Macklem praised Jerome Powell for doing a good job under challenging circumstances. Macklem also mentioned that the value of the U.S. Dollar as a hedge has been dented for many investors.
Canadian Prime Minister Mark Carney stated that discussions with Trump about Canada-U.S. trade relations are ongoing and will continue through the United States-Mexico-Canada Agreement (USMCA) review process. He added that Canada would sign the deal once the right agreement is reached.
In the United Kingdom, PMIs were downbeat across the board, while the European Union and German PMIs were mixed. Additionally, U.S. API crude oil inventories reported a larger-than-expected draw, propelling crude oil prices amid ongoing geopolitical concerns.
The U.S. Dollar Index (DXY) ended the day negatively but bounced early Wednesday, snapping a two-day losing streak. This triggered EURUSD sellers and led to a retreat in GBPUSD after two days of gains. Meanwhile, USDJPY posted its first daily gain in four days, while AUDUSD surged on strong Aussie inflation data. The NZDUSD remained under pressure. Bitcoin (BTCUSD) rebounded from a two-week low, breaking its three-day losing streak, while Ethereum (ETHUSD) dropped for the fourth consecutive day, hitting the lowest level since August 20.
On the equity front, the Dow Jones and S&P 500 both reached record highs but ended the day lower, while the Nasdaq closed with mild losses. The Nasdaq and S&P 500 snapped three-day winning streaks, and the Dow Jones posted its first daily loss in five days.
EURUSD snapped its two-day winning streak with mild losses as traders awaited the German ZEW Economic Sentiment data and gauged European traders’ reactions to the latest geopolitical tensions following the UN speeches. EU and German data have been mixed recently, and European Central Bank (ECB) officials have sent unclear signals, including resisting further rate cuts, which could support EURUSD bulls unless the U.S. Dollar strengthens in a risk-off environment.
In Japan, September PMIs came in mixed, and the return of Tokyo traders after a holiday allowed them to reassess multiple catalysts. This helped push USDJPY up for the first time in four days. Additionally, a reduction in the odds of Bank of Japan (BoJ) rate hikes likely added to the strength of USDJPY.
GBPUSD posted its first daily loss in three as market players reassessed the UK’s weak September PMIs, released the previous day, amid a broad corrective bounce in the U.S. Dollar. Positioning ahead of Bank of England (BoE) Monetary Policy Committee member Megan Greene’s speech and the western response to risk-negative headlines from late Tuesday also pressured the pair. These factors, combined with doubts over the UK’s economic strength, employment conditions, and concerns about a downbeat autumn budget, weighed on GBPUSD.
AUDUSD buyers were upbeat following strong inflation data from Australia, which raised concerns that the Reserve Bank of Australia (RBA) may hold off on a rate cut next week. The risk-barometer pair shrugged off the U.S. Dollar’s corrective bounce and a broadly cautious market mood.
Meanwhile, the appointment of the first female Governor at the Reserve Bank of New Zealand (RBNZ) failed to boost NZDUSD, as the pair struggled under a firmer U.S. Dollar and a cautious sentiment, compounded by China-related news that dampened optimism.
USDCAD also rose for a third consecutive day, despite a strong run-up in crude oil, Canada’s key export, on Tuesday. The Canadian Dollar faced pressure from dovish comments by Bank of Canada (BoC) Governor, mixed remarks from Canadian Prime Minister Mark Carney, and ongoing trade tensions with China and the U.S.
Gold prices remain firm for the fourth consecutive day, though slightly lower than the all-time high of $3,791 marked the previous day. The precious metal continues to benefit from its traditional haven status, despite the stronger U.S. Dollar.
Meanwhile, the American Petroleum Institute (API) weekly crude oil inventory report showed a higher-than-expected draw in stockpiles, which, along with geopolitical fears from the United Nations (UN) updates and mostly mixed global Purchasing Managers' Indices (PMIs), contributed to the biggest daily jump in crude oil in three weeks. However, oil prices remain mildly offered early Wednesday as traders await the official U.S. inventory data from the U.S. Energy Information Administration (EIA).
Cryptocurrencies are lacking a clear direction after a volatile day, with the U.S. Dollar’s corrective bounce, a technical breakdown in major coins, and month-end price consolidation weighing on market sentiment. Bitcoin (BTC) rebounded from a two-week low, ending a three-day losing streak, while Ethereum (ETH) dropped for the fourth consecutive day, hitting its lowest level in five weeks. Position liquidations, quarterly settlements, geopolitical risks, and hawkish Federal Reserve (Fed) remarks seem to be challenging crypto bulls recently.
Meanwhile, U.S. equities reversed their previous uptrend, despite the Dow Jones Industrial Average (DJI) and S&P 500 (SPX) reaching all-time highs. The Nasdaq marked its first daily loss in five. Equity traders initially reacted positively to strong technology share performance but were later weighed down by risk-negative news from the UN and hawkish Fed comments. Notably, the Asia-Pacific shares are also edging lower while the European and British equities lack a clear direction of late.
Looking ahead, sentiment data from Switzerland and Germany will precede U.S. New Home Sales and the weekly crude oil inventory report from the U.S. Energy Information Administration (EIA) on Wednesday’s economic calendar. However, the main focus will likely be on market reactions to the latest risk-negative headlines from the United Nations (UN) and comments from Federal Reserve (Fed) Chair Jerome Powell. These developments could keep the U.S. Dollar on the firmer side, potentially putting downside pressure on risk assets like commodities, Antipodean currencies, cryptocurrencies, and equities.
That said, Gold prices may remain supported, while EURUSD and GBPUSD could extend their recent pullbacks. Additionally, USDJPY might pare some of its recent gains, given the Japanese Yen’s haven status in times of uncertainty.
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