The U.S. dollar traded with a softer tone against most major currencies after a combination of lower oil prices and less aggressive comments from New York Fed President John Williams helped calm interest-rate expectations. Markets significantly reduced the probability of another Federal Reserve rate increase, while expectations for future policy easing increased. Currency trading reflected the shift, with most G10 currencies stabilizing against the greenback. Meanwhile, China introduced additional fiscal and monetary support measures and set the yuan reference rate at its strongest level since early 2023 ahead of a week-long national holiday.

Asia Pacific Markets

Trading across Asia-Pacific markets was shaped by central bank developments, economic releases, and Chinese policy actions. The Australian dollar weakened despite another Reserve Bank of Australia rate increase, as investors focused on softer inflation data and a sharp drop in building approvals. In Japan, quarter-end flows pushed the yen to its strongest level in more than a week before it surrendered part of the gain. Economic figures disappointed, with retail sales and industrial production both falling in August. China’s latest PMI surveys improved, with manufacturing activity moving back above the 50 threshold, while fresh support measures boosted confidence before mainland markets close for an extended holiday.

European Markets

European currencies showed signs of stabilization after recent pressure. The euro recovered modestly after falling to its lowest level since mid-2025, while sterling advanced toward recent highs following a stronger revision to UK second-quarter growth. Germany reported stronger retail sales and stable unemployment, while inflation data from regional states pointed to firmer national price readings. France recorded weaker consumer spending but annual inflation accelerated because of favorable base effects. Investors also looked ahead to upcoming eurozone inflation data, while expectations remained firm that the Bank of England would continue tightening policy in the coming months.

American Markets

North American markets were influenced by easing bond yields and a retreat in energy prices. U.S. Treasury yields pulled back after Williams downplayed the urgency for further policy tightening, although September remained a difficult month for global bond markets. Equity performance stayed fragile, with the S&P 500 extending a pattern of frequent weekly declines. Commodity markets were mixed: gold rebounded after a sharp selloff earlier in the week, while silver also recovered from recent lows. Oil prices weakened as supply-related developments increased pressure on crude. Investors awaited key U.S. data on income, consumption, inflation measures, GDP revisions, and private-sector employment.