October 2025 Market Roundup

• Written by: Ian Morley
• 31/10/2025

Monthly Market Update: October 2025

Currency Movements:

US Dollar (USD)
October was dominated by the prolonged US government shutdown and shifting Federal Reserve policy expectations. The Dollar initially weakened sharply as political gridlock led to delays in key data releases and growing market uncertainty. However, the USD later rebounded, supported by safe-haven demand amid political turmoil in France and Japan. By the final week of October, the Federal Reserve’s more hawkish tone—despite implementing a rate cut—helped the Dollar recover most of its earlier losses. The USD Index ended the month near 99.00.

British Pound (GBP)
Sterling traded under persistent pressure through October. Early in the month, GBP gained modestly from a stronger-than-expected UK GDP revision, but fiscal concerns, dovish comments from BoE policymakers, and expectations for a November rate cut weighed heavily on the currency. Weak retail inflation and cooling labour data compounded losses, pushing GBP/USD below 1.3150—its weakest level since early August. Against the Euro, GBP/EUR dropped to its lowest level since May 2024.

Euro (EUR)
The Euro had a mixed month, initially benefiting from strong inflation figures and solid ECB messaging. However, political instability in France, a downgrade to the country’s sovereign credit rating by Standard & Poor’s, and weak German industrial data limited upside momentum. The ECB’s decision to hold rates steady and President Lagarde’s balanced tone helped the Euro remain stable late in the month, though EUR/USD ended slightly lower around 1.1560.

Swiss Franc (CHF)
The Swiss Franc strengthened in the early part of October as risk aversion surged amid global political uncertainty. However, softer Swiss inflation data and dovish SNB commentary later capped gains. The SNB reiterated that interventions and negative rates remain possible, which limited CHF’s rally. By month-end, USD/CHF had climbed above 0.8020 following broad Dollar strength post-Fed.

Australian Dollar (AUD)
The Aussie began October on a firmer footing, supported by stable RBA policy and improving risk sentiment. Mid-month, however, escalating US-China trade tensions—following the US President’s announcement of 100% tariffs on Chinese imports—weighed on the AUD. Stronger domestic inflation data and optimism about a trade breakthrough briefly lifted AUD/USD above 0.6600, but weak Chinese PMI data trimmed gains into month-end.

Canadian Dollar (CAD)
The Canadian Dollar mirrored broader market sentiment, starting the month under pressure from a firming USD and soft domestic data. The Bank of Canada’s 25bps rate cut to 2.25% initially weakened CAD, but the “hawkish cut” tone—signalling an end to the easing cycle—helped stabilise the currency. Despite weaker oil prices, USD/CAD finished the month near 1.3980, showing relative resilience.

Events Driving the Market:

1. US Government Shutdown & Fed Policy
   The extended US government shutdown delayed key data releases, creating uncertainty and weighing on USD early in the month. Later, safe-haven demand and the Fed’s hawkish rhetoric after its October rate cut supported a rebound, with investors trimming bets for another cut in December.
2. Bank of England Policy Outlook
   Weaker inflation and labour data increased expectations for a BoE rate cut in November. Despite a small upward revision in UK GDP, fiscal concerns and talk of potential tax rises in the upcoming budget pressured GBP across the board.
3. ECB Stability Amid Eurozone Risks
   The ECB left policy unchanged, striking a cautious but stable tone. Political turbulence in France and weak German data weighed on sentiment, though the Euro drew limited support from firm inflation readings.
4. US-China Trade Escalation
   The announcement of 100% tariffs on Chinese imports reignited global risk aversion mid-month. The move dampened AUD and Asian markets but boosted safe-haven assets like the Swiss Franc and Gold, which reached new record highs above $3,800.
5. BoC ‘Hawkish Cut’ & Commodity Markets
   The Bank of Canada’s decision to reduce rates while signalling the end of its easing cycle lent stability to CAD. Oil price weakness limited upside potential, though the Loonie outperformed other commodity-linked currencies.

Market Outlook:

As November begins, attention will turn to whether the US government fully resolves its shutdown and how the Fed’s tone evolves after its October meeting. The BoE’s upcoming policy decision will be crucial for Sterling, while Eurozone sentiment will hinge on French fiscal stability and German industrial recovery. Commodity currencies will remain sensitive to US-China trade developments, Chinese growth data, and global risk sentiment. Safe-haven demand may keep the Franc supported, though further SNB action could moderate gains.