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🧠 Tariff risk and data gaps test the dollar

Published: 10/13/2025

Overall Market Sentiment: Cautious risk-on as U.S.–China tariff threats meet a thin, holiday-affected tape. The U.S. bond market is closed for Columbus Day and re-opens Tuesday, so policy tone at the IMF meetings is the steering wheel while the Beige Book lands midweek.

Currency Outlooks

🔻 USD: Futures price roughly a 90–95 percent chance of a 25 bp cut on Oct 28–29, with moderate odds of another move by December. Treasuries are shut today; front-end guidance from Powell and peers can keep yields capped and the 2s10s in the +50 to +60 bp zone, which usually limits fresh dollar upside when growth worries linger. CPI has been rescheduled to Fri, Oct 24; consensus core is near +0.3 percent m/m. Levels: DXY stalled near 99.5 on Friday; a clean break below 98.00 would confirm momentum loss. Nuance: conciliatory U.S.–China headlines plus Tuesday’s Treasury re-open could squeeze the USD, but the burden of proof is on stronger U.S. activity.

⚖️ EUR: Bias is modestly constructive on softer USD and a stabilizing French risk premium. Markets assign a very low probability to an October ECB move, so EUR trades the U.S. rates impulse more than euro idiosyncrasies until hard data resume. Levels: support 1.1650, then 1.1600; resistance 1.1760 and 1.1810. A topside extension needs either a dollar fade around Powell or further easing in French spreads.

🔻 JPY: Political noise has cooled BoJ-hike odds into late October, keeping USDJPY heavy on yen weakness while intervention sensitivity rises near 150. A durable push lower in USDJPY likely needs a dip in U.S. front-end yields or a clearer BoJ tightening signal. Levels: resistance 148.80 and 150.00; support 147.20 then 146.50.

⚖️ GBP: Sterling trades the dollar and European risk rather than domestic stories this week. Markets keep only a small probability of additional BoE easing by year-end. Levels: 1.3400 support, 1.3600 resistance; a daily close above 1.3600 opens 1.3720. (Direction is mostly USD-driven.)

🔻 CAD: Softer crude and a still-dovish BoC path cap rallies. Without Brent reclaiming the low 70s, USDCAD dips toward 1.3850 should find support, with 1.3950 and 1.4000 topside magnets on risk wobble. A firmer oil tape is needed to flip momentum. Recent OPEC+ guidance remains for +137k bpd in November.

⚖️ AUD: The RBA is parked and China’s tone is mixed, so AUD trades global risk. Levels: 0.6500 support, 0.6670 resistance; a sustained daily close above 0.6670 targets 0.6750.

🪙 Gold: Constructive while cuts are priced and real yields are capped. The metal remains near record levels above $4,000 on tariff risk and policy easing hopes; dips toward prior breakout zones should be supported unless Powell leans notably hawkish.

🛢 Oil: Still soft after OPEC+’s modest November hike and calmer Middle East risk. Energy-beta FX remains vulnerable until timespreads firm.

📈 Stocks: Thin liquidity today keeps moves contained. If Powell validates an easier path and the Beige Book softens on Wednesday, quality growth outperforms cyclicals and the dollar drifts lower into midweek.

Week-Ahead Playbook

  • Tuesday: Treasury market re-opens; Powell and IMF panels in focus. A dovish tilt would pressure DXY toward 98.00.
  • Wednesday: Beige Book is the key read-through on labor and pricing; a cooler tone reinforces cut pricing and supports EUR and JPY.
  • All week: U.S.–China tariff rhetoric into the Nov 1 effective date is the wild card. Sharp escalations favor gold and weigh on the dollar.