The trading week saw a major sell-off in the U.S. tech sector, downward pressure on precious metals and the cryptocurrency market, and mixed performance across key global currencies. Investors remained focused on central bank interest rate decisions, a reassessment of AI spending, and escalating geopolitical tensions in the Middle East.
The September Core Personal Consumption Expenditures (Core PCE) price index rose by 0.5%, which is the largest monthly increase since March, pushing annual inflation up to 3.6%. In the meantime, U.S. Q3 GDP grew at an annualized rate of 3.4%, topping forecasts of 3.2%. The Fed kept rates steady, but persistent inflation alongside strong economic growth has led markets to price in roughly a 75% probability of a rate hike in December. Amid a broad-based sell-off in Big Tech equities, Treasury yields pulled back, while the U.S. Dollar Index (DXY) slipped toward 101.5.
The European Central Bank left key interest rates unchanged. That being said, ECB President Christine Lagarde confirmed that a rate hike was discussed, with market-implied odds of further policy tightening in December exceeding 80%. The euro rebounded from its lows to $1.116, despite ongoing inflation risks driven by high energy prices and fiscal challenges in France.
The UK Chancellor presented a restrained budget featuring tax increases for banks and the gambling industry. The announcement had little impact on market expectations, with investors fully pricing in a rate hike at the Bank of England's November 5 meeting, and additional tightening anticipated by February. Sterling held above $1.3300.
The Bank of Japan kept its policy rate at 1.25% in an 8–1 vote, noting that core inflation has stably met its 2% target. The central bank signaled a readiness for further rate hikes in December. Against this backdrop and demand for safe-haven assets, the yen strengthened to 157 per dollar.
The New Zealand dollar recovered to $0.5640 following comments from RBNZ officials that persistent inflationary pressures make a December rate hike fully justified. Traders currently price in a 76% probability of a rate increase in December.
DXY: Slipped toward 101.5 as Treasury yields declined and investors shifted into government bonds.
EUR/USD: Rebounded to $1.1160 after Christine Lagarde signaled a likely ECB rate hike in December.
GBP/USD: Traded above $1.3300, maintaining upside momentum on expectations of a BoE rate hike on November 5.
USD/JPY: Dropped toward 157.00 following the Bank of Japan’s decision and demand for yen as a safe-haven currency.
NZD/USD: Strengthened to $0.5640 driven by hawkish comments from RBNZ officials.
USD/CAD: Came under pressure as the Canadian dollar strengthened following the Bank of Canada’s decision to hike rates by 25 bps to 2.50%.
Gold (XAU/USD): Dropped below $4 000 per ounce, weighed down by robust U.S. economic data and high expectations of a Fed rate hike.
Silver (XAG/USD): Fell below $51.00 per ounce, touching an 11-month low amid a broader slump in precious metals.
Brent Crude: Surged above $112.00 per barrel, approaching 4-year highs on concerns over potential U.S. military strikes against Iran and threats to shipping through the Strait of Hormuz.
Bitcoin (BTC): Slid to $76 000—its lowest level since mid-September—amid news of a data breach at Binance involving an estimated $6.3 billion in compromised assets. Another source of pressure was the liquidation of $1.3 billion in long positions ahead of options expiry.
Institutional Inflows: Despite the price drop, U.S. spot BTC ETFs recorded $423.7 million in net inflows during the first half of the week.
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