The United States dollar faced some pressure in trading on Wednesday, as market participants speculated that the Federal Reserve might consider more aggressive interest rate cuts next year. This expectation arose after Fed Chairman Jerome Powell hinted at an imminent halt to the quantitative tightening process (bond sales that absorb liquidity).
Additionally, the escalating trade war between the U.S. and China, coupled with the U.S. government shutdown entering its 16th day, could lead to a decline in the American economy. This sentiment is likely to continue affecting market movements during trading on Thursday (16/10/2025), along with the release of economic data. The following data is from Trading Central:
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- UK GDP growth (month-on-month/August) at 13:00 WIB; forecast 0.1% versus previous 0%.
- UK industrial production (month-on-month/August) at 13:00 WIB; forecast 0.5% versus previous -0.9%.
- US Philadelphia Fed Manufacturing Index (August) at 19:30 WIB; forecast 4 versus previous 23.3.
GOLD
Gold prices (XAUUSD) surged by over $65 or 650 pips to $4,207.77 per troy ounce during trading on Tuesday. Today, Gold again climbed to an all-time high of $4,242.08 per troy ounce. However, by midday, Gold experienced a downturn due to profit taking.
So far this year, Gold has raised more than 50%. A sharp increase occurred at the beginning of the year, followed by a sideways trend from May to August, before another spike.
The worsening relations between the U.S. and China provide a new positive catalyst for Gold. The risks associated with the trade dispute compel market players to anticipate that central banks across the globe will resume purchasing Gold as a reserve asset.
Central bank purchases have been a significant driving factor behind the ongoing bull run in Gold prices since 2023. These buying actions by central banks create psychological effects in financial markets, prompting investors to also engage in buying. Consequently, Gold prices continue to rise. With the Fed expected to adopt a more aggressive stance on interest rate cuts, Gold benefits from further positive sentiment, which will likely influence its movement during the European trading session.
OIL
Oil prices (CLS10) remained close to the lowest levels seen in five months, closing at $58.74 per barrel on Wednesday. Oil is under pressure from negative sentiment stemming from heightened U.S.-China tensions that may escalate into a significant trade conflict. This could impact the global economy, leading to a potential decrease in Oil demand.
Such negative sentiment is expected to overshadow Oil in the upcoming European trading session.
EURUSD
EURUSD rose close to 400 points (40 pips) to 1.16446 during trading on Wednesday, marking two consecutive days of gains.
This movement indicates that the U.S. dollar is currently under pressure due to expectations that the Fed might adopt a more aggressive approach to interest rate cuts. This sentiment is expected to continue influencing EURUSD during the European trading session.
GBPUSD
GBPUSD skyrocketed 832 points (83.2 pips) to 1.33973 on Wednesday, recovering sharply after having dropped to a two-month low the previous day. This significant increase in GBPUSD reflects the strong pressure on the U.S. dollar.
During the European session, the upcoming release of UK GDP and industrial production data could be key drivers for GBPUSD. If the data exceeds the forecast from trading central, as mentioned above, there’s potential for GBPUSD to benefit from positive sentiment.
USDJPY
USDJPY fell 751 points (75.1 pips) to 150.981 in trading on Wednesday. Today, USDJPY briefly declined to 150.510 before recovering. The sharp drop in USDJPY since last Friday triggered a short covering rally, leading to its rebound.
However, with negative sentiment still surrounding the U.S. dollar, there is potential for USDJPY to face further pressure in the European trading session.
NASDAQ
The Nasdaq index climbed 187 points to 24,941 during trading on Wednesday. Optimism regarding strong earnings reports from various issuers and the prospect of the Fed being more aggressive in cutting interest rates propelled Nasdaq upwards.
Nevertheless, risks associated with the U.S.-China trade conflict persist, raising the possibility of profit taking affecting Nasdaq in upcoming European trading sessions.
