With few top-tier reports to digest, markets continued to price in Powell’s less dovish remarks.
The dollar staged its strongest rally in three weeks, while gold retreated sharply from record highs, reflecting traders’ reassessment of the Fed’s easing trajectory amid persistent inflation concerns.
Check out the headlines and economic updates you may have missed in the latest trading sessions!
Headlines:
- New Zealand Finance Minister Willis appoints Swedish Riksbank’s Anna Breman as RBNZ Gov. starting December 1
- Copper prices jumped by more than 3% after mining company Freeport-McMoRan declared force majeure at its Grasberg mine in Indonesia
- Japan S&P Global Manufacturing PMI Flash for September 2025: 48.4 (50.3 forecast; 49.7 previous); Services PMI at 53.0 (53.4 forecast; 53.1 previous)
- Bank of Japan Core CPI for August 2025: 2.0% y/y vs. 2.0% y/y previous
- AUD Rallies as Australian Inflation Hits 13-Month High
- Swiss Economic Sentiment Index for September 2025: -46.4 (-40.0 forecast; -53.8 previous)
- Germany Ifo Business Climate for September 2025: 87.7 (89.2 forecast; 89.0 previous)
- U.S. Building Permits Final for August 2025: -2.3% m/m (-3.7% m/m forecast; -2.2% m/m previous)
- U.S. New Home Sales for August 2025: 20.5% m/m (-1.8% m/m forecast; -0.6% m/m previous)
- FOMC member Goolsbee warned against “overly frontloading a lot of rate cuts“
- FOMC member Daly said “further policy adjustments” likely as labor market has slowed and inflation has risen less as expected
- Crypto firm Tether eyes $500 billion valuation in a private placement
- U.S. EIA Crude Oil Stocks Change for September 19, 2025: -0.61M (-9.29M previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Risk-off sentiment gripped U.S. equity markets on Wednesday after Powell struck a cautious tone on monetary policy. He noted that equity valuations look “fairly highly valued,” which was also enough to trigger broad repositioning across asset classes.
The S&P 500 fell 0.3% as tech dragged the index lower. Nvidia slipped 0.9% and Oracle dropped 1.7%, extending Tuesday’s pullback. Gold tumbled to $3,735 in its steepest decline in weeks after setting new records Tuesday. US dollar strength and Powell’s warning that cutting rates too quickly could reignite inflation, especially with tariff effects still hitting consumers, likely weighed heavily on the metal.
Bitcoin bucked the trend, inching higher to $113,500. Support came from Tether’s reported $20 billion capital raise at a $500 billion valuation and optimism around the SEC’s faster ETF approval process. Oil jumped more than 2.5% to $64.80, its highest in seven weeks. The move followed an unexpected 607,000-barrel draw in U.S. inventories, Ukraine’s intensified strikes on Russian energy sites, and Iraq’s stalled exports to Turkey.
European equities were mixed. Germany’s DAX managed a 0.2% gain despite weak IfO sentiment data, while France’s CAC 40 lost 0.6% as traders weighed Powell’s remarks, Fed rate cut expectations, and U.S. backing of Ukraine’s efforts to reclaim territory. In bonds, the 10-year Treasury yield climbed 2.7 basis points to 4.15%, a near three-week high as markets reassessed the Fed’s easing path.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The dollar staged a broad recovery on Wednesday, recouping some of its weekly losses as traders reassessed the Fed’s policy expectations following Chair Powell’s cautious remarks on the pace of future easing.
During Asian hours, the Greenback advanced against most majors except the Australian dollar, which surged after the country’s August CPI accelerated to 3.0% year-over-year, effectively ruling out an October RBA cut and trimming November cut odds to 50%.
The dollar’s momentum accelerated through European trading as Germany’s IfO business climate disappointed at 87.7 vs 89.3 expected, marking its lowest reading since May, while the ten-year Treasury yield climbed 2.7 basis points to nearly three-week highs, providing additional support for the greenback.
The combination of weak European data and rising US yields extended dollar strength into early New York trading, with traders digesting Powell’s warning that cutting rates too aggressively could reignite inflation risks. The surprising 20.5% surge in August new home sales to 800,000 units provided only a temporary pause to the dollar’s advance.
By session’s end, the dollar index had climbed 0.6%, marking its strongest performance in three weeks, with particularly sharp gains registered against the yen, New Zealand dollar, and euro.
Upcoming Potential Catalysts on the Economic Calendar
- Germany GfK Consumer Confidence for October 2025 at 6:00 am GMT
- France Consumer Confidence for September 2025 at 6:45 am GMT
- Swiss SNB Interest Rate Decision for September at 7:30 am GMT
- Euro Area Monetary Developments for August 2025 at 8:00 am GMT
- U.K. CBI Distributive Trades for September 2025 at 10:00 am GMT
- U.S. Fed Goolsbee Speech at 12:20 pm GMT
- Canada Average Weekly Earnings for July 2025 at 12:30 pm GMT
- U.S. Durable Goods Orders for August 2025 at 12:30 pm GMT
- U.S. GDP Price Index Final for Q2 2025 at 12:30 pm GMT
- U.S. PCE Prices QoQ Final for Q2 2025 at 12:30 pm GMT
- U.S. Initial Jobless Claims for September 20, 2025 at 12:30 pm GMT
- U.S. Fed Williams Speech at 1:00 pm GMT
- U.S. Existing Home Sales for August 2025 at 2:00 pm GMT
- U.S. Fed Bowman Speech at 2:00 pm GMT
- U.S. Kansas Fed Manufacturing Index for September 2025 at 3:00 pm GMT
- U.S. Fed Barr Speech at 5:00 pm GMT
- U.S. Fed Daly Speech at 7:30 pm GMT
- U.S. Fed Balance Sheet for September 24, 2025 at 8:30 pm GMT
- New Zealand ANZ Roy Morgan Consumer Confidence for September 2025 at 10:00 pm GMT
- Japan Tokyo CPI for September 2025 at 11:30 pm GMT
The dollar’s strength looks set to carry into European trading, with the Swiss National Bank decision and weak German sentiment possibly weighing on the euro and franc.
In the U.S., durable goods orders, GDP data, and a lineup of Fed speakers will show whether yesterday’s surprising jump in home sales was enough to justify the hawkish shift in rate expectations. Traders are now pricing in just one Fed cut for 2025, down from two earlier in the week.
As always, look out for global trade developments and geopolitical headlines that could influence overall market sentiment. Stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
