Daily Analysis 15/10/2025

• GBP/USD Price: The GBP/USD pair recovered from two days of losses, trading near 1.3375 in early European hours. The rebound reflects a mild correction as traders reassess U.S. dollar strength amid dovish Fed signals.
• UK Labor Data: The UK unemployment rate rose to 4.8%, while private sector wage growth slowed to 4.4% from 4.7%. The soft data highlight emerging cracks in the labor market, tempering expectations for Bank of England tightening and capping sterling’s upside.
• Powell’s Stance: Fed Chair Powell reiterated a meeting-by-meeting approach, acknowledging persistent inflation driven mainly by tariffs. His balanced tone indicates flexibility but hints that rate cuts remain possible if job market risks intensify.
• Fed Policy: Boston Fed’s Susan Collins noted that policy remains restrictive and that rates could stay steady even with further easing. Her remarks underscore the Fed’s cautious bias, which limits aggressive dollar appreciation.
• U.S. Shutdown: The ongoing government shutdown postponed key economic releases, including the jobs report, with CPI now due on October 24. This data vacuum creates short-term uncertainty, keeping markets sensitive to Fed commentary.

Closing statement: GBP/USD is stabilizing as dollar momentum fades amid dovish Fed messaging and delayed U.S. data. However, weak UK fundamentals suggest limited room for sustained gains, with near-term resistance seen around 1.34 unless U.S. inflation data softens further.

• XAU/USD Price: XAU/USD surged to new all-time highs near $4,200 as investors favored the safe-haven metal amid a weakening U.S. dollar. The sustained rally reflects strong risk aversion and growing conviction that the Fed’s next move will be a rate cut.
• US-China Trade: President Trump’s comments about possibly ending certain trade ties with China, including cooking oil imports, reignited trade war fears. Rising geopolitical friction boosts gold’s appeal as a hedge against uncertainty and market volatility.
• Fed Signals: Chair Powell confirmed that the Fed is prepared to lower rates at the upcoming October 29 meeting due to labor market weakness. The prospect of easing monetary policy continues to depress yields and the dollar, further fueling gold’s rally.
• Fed Speeches: Traders are now focused on upcoming remarks from Fed officials Miran, Waller, and Schmid for confirmation of Powell’s dovish stance. Any reinforcement of easing expectations could extend gold’s momentum above $4,200.
• IMF Outlook: The IMF raised its 2025 global growth forecast to 3.2%, yet cautioned that a renewed U.S.-China trade war could dampen the recovery. This mixed outlook reinforces gold’s dual role as both a safe haven and inflation hedge.

Closing statement: Gold remains firmly bullish, driven by a softer dollar, dovish Fed outlook, and rising geopolitical risks. Unless tensions ease or the Fed surprises with a neutral tone, XAU/USD could extend gains toward $4,250 in the near term.

• Crude Oil Price: West Texas Intermediate (WTI) crude slipped to $58.10 per barrel in early European trading, marking another minor decline from Tuesday’s close. The continued softness reflects subdued market sentiment amid supply surplus concerns.
• Chinese Demand: China’s consumer prices fell 0.3% y/y in September, while producer prices declined 2.3%, pointing to persistent demand weakness. Although core inflation ticked higher, the overall deflationary trend underscores sluggish energy consumption prospects in the world’s largest oil importer.
• Geopolitical Risk: Reports that President Trump may send Tomahawk missiles to Ukraine maintain elevated geopolitical tension. However, markets appear largely focused on supply-demand fundamentals, with limited reaction in crude prices so far.
• IEA Warning: The International Energy Agency projected a potential 4 million bpd surplus in 2026, exceeding previous estimates. Rising OPEC+ production amid weak demand signals a looming oversupply, keeping oil prices under sustained pressure.
• API Data: Traders are awaiting the latest U.S. API crude inventory report, which could provide short-term direction. A surprise drawdown may offer temporary support, but any build would reinforce the bearish tone.

Closing statement: Crude oil remains under downward pressure as oversupply risks and weak Chinese demand dominate sentiment. Unless upcoming inventory data show a significant decline, WTI is likely to stay below $58.50, with potential downside toward the $57.50 region.

• DAX Price: The DAX remains volatile around 24,300 points, with fluctuations reflecting an ongoing tug-of-war between optimism from corporate earnings and caution over global risks. The index continues to trade at elevated levels but shows limited directional conviction.
• Investor Sentiment: The October ZEW survey showed investor confidence deteriorating, with the current situation index falling sharply to -80.0 versus expectations of -74.2. Although expectations improved slightly, the weak assessment underscores persistent concerns over Germany’s sluggish growth outlook.
• Government Shutdown: The Senate’s failure to pass the stopgap funding bill extends the U.S. government shutdown into a third week. Prolonged fiscal uncertainty in the world’s largest economy adds to global risk aversion, indirectly pressuring European equities.
• Tech Sector: ASML’s stronger-than-expected order intake in Q3 boosted sentiment across the European tech sector. The report provided a partial offset to broader market weakness, helping stabilize the DAX despite macroeconomic headwinds.
• Automotive Sector: A sharp 9% drop in Michelin’s stock after it cut its full-year outlook weighed on automakers across Europe. The negative spillover particularly affects German carmakers, raising concerns that weaker North American demand could dampen upcoming earnings results.

Closing statement: The DAX trades sideways as strong tech earnings balance out weak sentiment and sectoral pressure from autos. Near-term direction hinges on upcoming corporate reports, but risks remain tilted to the downside unless U.S. political and global growth uncertainties ease.