When the U.S. federal government entered a funding impasse at the start of October, leading to a halt in the work of key statistical agencies, it created a vacuum in the economic data flow. With the Bureau of Labor Statistics and the U.S. Census Bureau largely inactive, markets and the Federal Open Market Committee found themselves making decisions in a low‑visibility environment. The only notable print from that period was the September CPI report, which came in below expectations, giving the Fed some latitude ahead of its October meeting. Meanwhile the Fed signalled that a rate cut in December was not guaranteed, a hawkish tilt that buoyed the U.S. dollar.
In tandem, the announcement of the end of quantitative tightening from December added another layer of complexity for currencies, particularly as the dollar gained across major pairs despite policy easing.
In Europe and the UK the spotlight turned to fiscal headwinds. In France, political turbulence around the budget and pension reforms dampened confidence in the euro. In the UK, the forthcoming Autumn budget looked set to widen the structural deficit, with the Bank of England maintaining a cautious stance as inflation remained sticky and several Monetary Policy Committee members signalled reluctance to rush rate cuts. As a result, the pound underperformed amid elevated gilt premiums and concerns around growth and tax burdens.
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