24/09/2025 Daily Reports
• USD Reaction Muted: Fed Chair Jerome Powell struck a cautious balance yesterday, acknowledging both downside risks to jobs and upside risks to inflation. His tone was slightly hawkish compared to the wider FOMC consensus.
• Fed Voices Diverge: Michelle Bowman leaned dovish, emphasizing urgency to support the labor market. This reflects the split inside the Fed between hawks and doves, leaving USD direction sensitive to incoming data.
• Data Impact Limited: US PMIs disappointed, with the composite index slipping to 53.6, yet still holding at expansionary levels. The softness looks tied more to the labor market than to broad business sentiment.
• Euro’s Calmness: EUR/USD is hovering near 1.180, unmoved by Trump’s sharper rhetoric on Ukraine or his call for NATO allies to shoot down Russian planes. Geopolitical risks are being sidelined for now.
• What’s Next?
Despite Powell’s caution, I see USD retaining an edge in the short term. If geopolitics escalate or US data surprises to the upside. For traders, this feels like a consolidation phase for EUR/USD before the next directional push—likely USD-driven.
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Technology shares are leading a sell-off on US stock markets after comments from Powell about valuations. Germany’s manufacturing PMI has reached its highest point in 16 months. Japan’s Nikkei has fallen due to a slowdown in manufacturing.
U.S. markets are seeing a drop in value after comments from Federal Reserve Chair Jerome Powell, who said that stocks are “quite overvalued”. This made investors less willing to take risks, with the Nasdaq dropping 1% yesterday. This is in addition to the mixed economic picture. Flash U.S. PMIs for September showed a slight softening, which reinforces the Fed’s cautious approach to future rate cuts. Investors are now looking at new information about new home sales and crude inventories, which might change the market.
On the other hand, Germany’s flash PMI was better than expected, reaching its highest point in 16 months. This is providing support for cyclical stocks in Europe. However, a drop in France’s PMI is having a negative effect on the wider Eurozone, suggesting that the region’s recovery is still not uniform.
At the same time, in Japan, the Nikkei fell, which is similar to the tech sell-off that happened in the U.S. The latest Manufacturing PMI for Japan went down to its lowest level in six months, which is bad news for factory-heavy names. Although the weak yen is helping Japanese exporters a little, the ongoing slowdown in manufacturing and the possibility of a Bank of Japan rate hike in the future are making investors cautious.
