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Japan’s real wages declined for a ninth consecutive month in September as inflation-adjusted earnings fell -1.4% yoy, following a revised -1.7% drop in August, extending a contraction streak that began in January.

Nominal wages rose 1.9% yoy, slightly below expectations of 2.0% and well short of the 3.4% increase in consumer prices, which accelerated for the first time since April.

While regular pay rose 1.9% yoy, matching August’s pace, and overtime pay ticked up to 0.6% yoy, these gains were insufficient to offset higher living costs. Special payments, largely seasonal bonuses, rose 4.5% after a -7.8% fall in August, offering some temporary relief.

RBNZ Governor Christian Hawkesby said the recent deterioration in the country’s labour market was within expectations. Speaking before a parliamentary committee, Hawkesby noted that the rise in unemployment to its highest level since 2016 reflects where the economy stands in the current cycle. “It is hard out there,” he said, adding that the RBNZ expected this period of softness as part of the adjustment following its recent easing moves.

Despite the alignment with forecasts, Hawkesby warned that risks remain elevated, citing a long list of concerns led by global trade fragmentation and intensifying trade wars. He remarked that “we don’t think we’re out of the worst yet,” pointing to persistent global uncertainty that continues to cloud the medium-term outlook.

The Governor also described New Zealand as a multi-speed economy, with regions and industries responding differently to the current slowdown. While some sectors continue to show resilience, others are struggling under higher costs and weaker demand.

BoC Tiff Macklem told lawmakers overnight that the central bank’s recent policy easing reflects both cyclical weakness and deeper structural challenges facing the Canadian economy. Macklem reiterated that last week’s 25bps rate cut to 2.25% — the second in as many meetings — was aimed at supporting growth amid “contained inflationary pressures.”

Macklem laid out four key messages in his remarks. He said U.S. tariffs and trade uncertainty have significantly weakened Canada’s economy, leading to expectations of “very modest growth” through the rest of 2025, with “some pickup” only by 2026. The trade conflict, he noted, is also producing offsetting inflation dynamics — dampening overall demand but raising input costs for businesses. As a result, these opposing forces should “roughly offset,” keeping inflation near the BoC’s 2% target.

Crucially, Macklem warned that the current slowdown is “more than a cyclical downturn.” He described it as a “structural transition”, arguing that U.S. trade actions have permanently reduced Canada’s productive capacity. The damage from tariffs, he said, has lowered potential growth and limited the central bank’s ability to stimulate demand without reigniting inflation.

“Monetary policy can help the economy adjust as long as inflation is well-controlled,” Macklem emphasized, “but it cannot restore the economy to its pre-tariff path.”

Looking ahead, Macklem suggested that the current policy rate is now “about the right level” to balance inflation control with economic support. The message signals a likely pause in further easing, barring new shocks.

Full remarks of BoC's Macklem here.

The US government shutdown officially became the longest in history today — 36 days and counting — yet markets found some relief in stronger-than-expected private data amid the lack of public releases.

The ISM Services PMI hit its highest level since February, and ADP employment came in at 42K vs. 25K expected, underscoring the economy’s resilience despite the political gridlock.

Equities staged a solid rebound after a rough weekly open, but sellers re-emerged late in the session, capping gains and reminding traders that volatility is here to stay.

Adding to the uncertainty, Trump’s tariffs are now being reviewed by the Supreme Court, injecting another layer of tension into an already fragile market mood.

With the December Fed rate cut still about 60% priced in despite Powell's recent hawkish return, elevated volatility looks set to persist.

Cross-Assets Daily Performance

Cross-Asset Daily Performance, November 5, 2025 – Source: TradingView

Today's flows got right back to the 2025 regular flows: Risk-assets rallying among gold (Cryptos largely overperformed) and the losing combo being US Treasuries and Oil.

Despite the better US-China relations and very decent numbers, oversupply from OPEC+ and Russia keep on dragging oil prices lower after every rebound.

A picture of today's performance for major currencies

Currency Performance, November 5 – Source: OANDA Labs

Today's trading saw low amplitude in Forex movement. Nonetheless, the US stopped its multi-week ascent (which didn't leave much space for other majors).

The Japanese yen continues to underperform since PM's Takaichi got appointed, with USD/JPY trading in the 154.00 handle, up 4.56% since beginning October.

A look at Economic data releasing through tonight and tomorrow's session

For all market-moving economic releases and events, see the MarketPulse Economic Calendar.

Once again, participants won't be able to access the normally weekly Jobless Claims release (the 6th consecutively not released) amid the ongoing shutdown.

The FX program is expected to be quite filled with Australian trade data releasing tonight, and overnight's EU retail sales data.

The North American session will first welcome the Bank of England Rate decision with the release of the Monetary Policy Report (Very important for the GBP).

Throughout the rest of the session, expect a flurry of speakers from the Bank of England, Bank of Canada, the usual heavy FEDspeak and a few from the ECB.

All speeches from Central bank speakers in tomorrow's session

Safe Trades!

The Dollar index keeps firm tone and riding on the fresh wave of risk aversion, to crack psychological 100 barrier (also former top of Aug 1) and nearby falling 200DMA (100.15) on Wednesday.

The recent more hawkish than expected remarks from Fed chief Powell faded high expectations for another rate cot in December and boosted the greenback.

Absence of key labor data for the second consecutive month, due to US government closure, added to Fed’s argument about more cautious approach to monetary policy that cooled market bets for December rate cut from 92% to 75%.

The only available report – ADP private sector payrolls, showed better than expected results in October, bringing a dash of optimism about the condition of the US labor sector that would also contribute to current lowered expectations for December policy meeting.

Sustained break of these barriers would generate fresh bullish signal and further strengthen firm bullish structure on daily chart, however, overbought conditions warn that bulls may face headwinds at this zone and pause for consolidation / limited correction.

Potential dips should find footstep above supports at 99.30/20 zone (former top / 10DMA) to keep bulls intact and offer better levels to re-enter bullish market.

Res: 100.18; 100.40; 100.74; 101.10.
Sup: 99.87; 99.53 99.20; 99.05.

Markets

A cautious risk sentiment still dominated (equity) trading today. Macro data probably won’t be a major factor in deciding whether this move has to continue or how far it should go. Still some of today’s data are worth mentioning. Final EMU PMI’s almost by definition are no market movers. Even so, the headline composite PMI improved an already better than expected preliminary release. At 52.5, the index indicates the fastest pace of EMU growth since May 2023, driven by an acceleration in services activity. The report even assesses a ‘breakout from the generally subdued growth trend seen throughout 2025 so far’. On a country level solid data were registered for Spain (56, 10-month high), Germany 53.9 (29-month high) and Italy (53.1, 19-month high). The figure still was dragged down by a poor performance of France (47.7, 8-month low, but less worse than the preliminary reading of 46.8). Even as HCOB comments that ‘keeping up this relatively strong growth momentum in the services sector over the coming months won’t be easy’, PMI’s confirm that he ECB is indeed in a good place to keep its wait-and-see stance well into next year. At the same time, the ECB negotiated wage tracker suggests modest wage growth for next year (2.2% for the headline indicator in Q3 2026). A risk-off correction as such isn’t a direct trigger for a central bank to ease policy and given recent data this a fortiori applies for current ECB stance. In this context EMU yields yesterday and today decline only marginally despite the risk-off. German yields today are changing less than 1 bp. A similar story for US bond markets. After last week’s hawkish Fed cut, US yields in yesterday’s risk sell-off declined less than 3 bps. Today, yields initially declined marginally further, but a slightly stronger than expected ADP private job report (October job growth of 42k from -29k in Sept. and +30k expected) even was enough to push yields into positive territory (2-y +4 bp; 30-y +5 bpn). The US Treasury also published its quarterly refunding statement, keeping auction seizes unchanged. At time the finishing this report, a solid services ISM (52.4 from 50) support the intraday rebound in yields. Returning to risk sentiment, equity markets show some hesitancy (EuroStoxx 50 +0.15%; Nasdaq regains 0.5%). At least there is no aggressive follow-through selling on yesterday’s setback.

On FX, the US dollar, after recent risk driven gains, shifts into a lower gear but the DXY trade-weighted index is still testing the 100.26 early August top. The yen slightly underperforms (USD/JPY 153.95). EUR/USD trades little changed near 1.148. Sterling maintains recent losses going into tomorrow’s BoE policy decision. EUR/GBP broke the 0.877

News & Views

The Riksbank kept its policy rate unchanged at 1.75% today. It said the outlook for inflation and economic activity remains largely unchanged. Prices are still rising at a speed (between 2.7-3.1% depending on the gauge) faster than the central bank’s 2% target but the deceleration has been in line with the September forecast. That strengthens the Riksbank’s view that elevated inflation is transitory. Economic growth meanwhile has come in somewhat stronger than expected and the labour market, though still weak, is showing signs that a turnaround is on its way. The central bank assumes the current policy rate level to remain there for some time to come, in line with the September communication. The krona traded little changed on today’s decision. With EUR/SEK hovering around 11.01, the Swedish currency is about the same level as it was in September and therefore much stronger compared with the beginning of the year. The central bank anticipates some further strengthening going forward and said this too would contribute to dampening inflation.

Czech CPI rose a faster-than-expected 0.5% m/m last month. Core gauges all increased between 0.4% and 0.6% and food prices rallied 1.1%. Annual figures picked up from September as well with the headline number coming in at 2.5%. Underlying series printed well north of 3%, creeping further north of the central bank’s 2% +/-1 ppt target range. Energy prices dropped 0.2% m/m and 3.3% y/y but goods inflation quickened sharply, by 0.7% to 1.3% y/y (from 0.8%). Still-elevated services inflation (0.4% m/m, 4.6% y/y) is one of the key reasons for the ongoing cautious stance by the Czech National Bank. The inflation numbers come on the heels of last week’s much stronger than expected Q3 growth and cement the CNB’s rates status quo at 3.5%. The central bank meets tomorrow. EUR/CZK hovers near 24.37, with the pair trading a tight trading range for the last two months between 24.2 & 24.4.

The U.S. services sector expanded at its fastest pace since February, signaling renewed momentum in the largest part of the economy. ISM Services PMI rose to 52.4 in October from 50.0, beating expectations of 50.8.

The report showed broad-based improvement, with business activity up to 54.3 from 49.9 and new orders surging to 56.2 from 50.4 — a clear sign that demand remains resilient. The employment index improved modestly to 48.2 from 47.2 but stayed in contraction, suggesting that service providers remain cautious about hiring.

However, the standout concern came from prices, which rose from 69.4 to 70.0, marking the highest reading since October 2022 and the 11th consecutive month above 60.0. That points to persistent inflationary pressure in the sector.

According to ISM, the October reading corresponds to roughly 1.2% annualized gain in U.S. GDP.

Full US ISM services release here.

Daily Pivots: (S1) 1.1459; (P) 1.1496; (R1) 1.1520; More…

EUR/USD's decline is in progress and intraday bias stays on the downside for 100% projection of 1.1917 to 1.1540 from 1.1727 at 1.1350. Decisive break there would prompt downside acceleration to 38.2% retracement of 1.0176 to 1.1917 at 1.1252. On the upside, above 1.1540 minor resistance will turn bias neutral and bring consolidations first, before staging another fall.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1306) holds, the up trend from 0.9534 (2022 low) is still expected to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep outlook bearish.

Daily Pivots: (S1) 1.2972; (P) 1.3059; (R1) 1.3108; More...

GBP/USD's fall from 1.3787 is in progress and intraday bias stays on the downside for 61.8% retracement of 1.2099 to 1.3787 at 1.2744 next. Sustained break there will pave the way to 1.2099 support next. On the upside, above 1.3095 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 1.3247 support turned resistance holds, in case of recovery.

In the bigger picture, the break of 55 W EMA (now at 1.3185) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Further break of 1.2099 support should confirm this bearish case. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.