Forex News

Commerzbank Research highlights Vietnam’s Q3 GDP growth at 10.0% year-on-year, the strongest since the pandemic, driven by investment and industry. Achieving the government’s 10% full-year target would require an unusually strong Q4. September CPI rose to 5.1%, above the 4.5% target on average, with elevated Oil prices and rapid credit growth constraining SBV’s room for additional monetary support.

Growth-led but inflation constraints

"Q3 GDP beat expectations, rising 10.0% yoy (Bloomberg consensus: 8.7%) vs 8.8% in Q2, which was revised up from 8.4% initially. This marked the strongest growth since the pandemic, bringing year-to-date expansion to 8.9%. This implies that Q4 has to expand by 12.5% to achieve the government’s full-year target of 10%. While growth momentum should remain strong in Q4, achieving the target would require an unusually large further acceleration."

"Nguyen Thu Oanh, the head of the National Statistics Office, stated that “as capital flows into production, investment and consumption, its impact could become more evident in the final months of the year”."

"The strong growth was broad-based but remained heavily driven by investment and industry. It reflects the continued capacity expansion amid the diversification away from Chinese supply chains. Industry and construction grew 12.5% yoy in Q3, while services expanded 9.5%. Manufacturing rose 11.4% yoy vs 10.8% in Q2, contributing 2.8%-points to headline growth. Construction jumped 12.2% vs 8.9% in Q2 due to resilient foreign investment interest."

"Overall, the robust Q3 growth has been largely investment led. Growth momentum should continue in Q4, but this could raise demand-side price pressures. Furthermore, upside risks to inflation are elevated due to higher global oil prices amid the conflict in the Middle East."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• EUR/USD remains under heavy selling pressure near a 17-month low.
• France’s public-finance concerns keep the Euro vulnerable.
• Markets await the FOMC minutes for fresh clues on the Fed’s policy outlook.

EUR/USD extends its decline on Wednesday as the Euro (EUR) remains under broad selling pressure, while the US Dollar (USD) strengthens alongside surging US Treasury yields. At the time of writing, the pair trades around 1.1195, down 0.57% on the day, hovering near its lowest level in 17 months.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 102.30, at levels last seen in April 2025. Meanwhile, the benchmark 10-year US Treasury yield climbs to 5.365%, its highest level since 2002, before easing toward 5.31%.

Higher Oil prices, concerns over rising government debt and a resilient US growth outlook are contributing to the increase in borrowing costs. The rise in Treasury yields supports demand for US Dollar-denominated assets, while elevated energy prices keep inflation risks tilted to the upside and strengthen the case for the Federal Reserve (Fed) to maintain a restrictive policy stance.

Markets now await the minutes of the Federal Open Market Committee’s (FOMC) September meeting, due at 18:00 GMT. The Fed raised interest rates by 25 basis points (bps) last month, lifting the federal funds target range to 3.75%-4.00%. However, the latest employment and Personal Consumption Expenditures (PCE) inflation figures came in softer than expected, reducing pressure on the Fed to raise interest rates again at its October 27-28 meeting.

On the Eurozone side, concerns over France’s public finances remain a major drag on the shared currency. The uncertainty has pushed French borrowing costs higher and widened bond spreads.

Strategists at ABN Amro highlight that the Euro “tends to weaken when government bond yields in a major Eurozone country, or in several countries, rise sharply because of political and/or fiscal concerns.” In such episodes, “there was some fear of contagion, and this impacts the currency as well.” ABN Amro argues that “periods of fiscal and political uncertainty in the Eurozone often coincide with speculators holding net short Euro positions and a lower EUR/USD,” pointing to the “recent relationship between the ten-year French-German government bond spread and the Euro” as a clear illustration of how widening spreads and political risk have been feeding into currency weakness.

Turmoil in Eurozone bond markets could limit the scope for aggressive tightening by the European Central Bank (ECB). Markets nevertheless continue to price in additional rate increases as elevated energy prices keep inflation risks firmly in focus, even as policymakers maintain a cautious tone.

ECB policymaker Álvaro Santos Pereira said headline and core inflation remain “far below” the levels seen during the 2022 energy shock, while other goods prices show no signs of inflation expectations becoming de-anchored.

• US 10-year yield jumps above 5.31%, extending its summer surge.
• US 30-year yield reaches 5.724% as investors demand higher premiums.
• December Fed hike odds hold near 85% despite October pause bets.

US Treasury yields soar on Wednesday, with the 10- and 30-year yields reaching 24-year highs of 5.35% and 5.724%, respectively, suggesting that investors are demanding a higher premium on US debt amid inflation and fiscal policy concerns.

Fiscal strains and inflation fears drive a sharp repricing of US debt risk

The US 10-year Treasury yield rises more than three basis points to 5.31% at the time of writing, boosting the Greenback’s appeal, as reflected in the US Dollar Index (DXY), which gains over 0.47%.

The DXY, which measures the buck’s performance against six currencies, is up at 102.32, still shy of testing the year-to-date (YTD) high of 102.53. In the currency market, the Dollar is the strongest, followed by the safe-haven Yen and Swiss Franc, while the Euro is the weakest and plunges amid France’s fiscal concerns.

Investors' eyes are on the release of the latest minutes from the Federal Reserve’s September meeting. Worth noting, a 10-year bond auction would be scrutinized as the US Treasury plans to sell $39 billion of 10-year notes.

The yield on the US 10-year T-note has risen by over 60 basis points since the end of July, when hostilities in the Middle East resumed, pushing West Texas Intermediate (WTI) up around 20% at that time.

So far, money markets have priced in that the Federal Reserve will keep interest rates on hold at the October meeting. The odds of a rate hike are slim at 18%, but the odds of a December meeting remain at 85%, according to Prime Terminal.

US 10-year Treasury note yield chart – Monthly

Rabobank’s Senior FX Strategist Jane Foley highlights Switzerland’s strong current account and budget positions, credible central bank and governance, and high liquidity as underpinning the Swiss Franc’s safe haven status. Despite low inflation and a zero Swiss National Bank (SNB) policy rate raising questions about Swiss Franc (CHF) as a funding currency, the Foley stresses safe haven demand linked to Eurozone fiscal jitters and recent CHF outperformance.

Franc caught between haven and carry

"This, however, would at times be in conflict with the CHF’s established safe haven character."

"Over the past 5 days the CHF has been the second best performing G10 currency after the NOK. This performance provides some resolution to the debate over whether the CHF is a safe haven or a funding currency."

"The CHF is a long-established safe haven currency. Switzerland’s textbook credentials for a safe haven are strong."

"Despite Switzerland’s safe haven credentials, the country’s inflation is relatively low, and the SNB’s main policy rate is at zero."

"While there has been some talk in the market that the SNB could announce a rate hike at its next policy meeting in December, the consensus currently views this as highly unlikely given the fiscal jitters in the Eurozone and its impact on safe haven demand for the CHF."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

TD Securities’ Ryan McKay and Bart Melek note heavy CTA (Commodity Trading Advisors) selling across Precious Metals, with Gold under pressure from surging real rates and a stronger US Dollar (USD). However, they highlight ongoing ETF inflows and sustained central bank purchases, particularly by the PBoC, as key supports. The authors expect persistent demand driven by geopolitical and macro concerns to underpin a new Gold bull run into 2027.

CTAs sell but structural bids support

"Precious metals come under heavy selling pressure, with CTAs selling gold, silver and platinum. However, we expect a strong dip buying impulse for gold in particular as longer-term drivers and flows remain supportive."

"Expecting strong dip buying in gold. The yellow metal is on the back foot again this morning amid surging real rates and a stronger dollar, but on the flip side ETF accumulation continues and the PBoC reported a 23rd consecutive month of central bank buying, with another 23 tonnes in September."

"A continued bid from discretionary traders, ETFs, and central banks all combine to provide a strong floor for gold."

"Given the drivers of these flows range from geopolitical risk, fiscal concern, dollar debasement, de-dollarization and stagflation concerns, we expect the appetite to be more persistent and ultimately hold firm in the face of surging real rates."

"We continue to see the stage being set for gold to disconnect from real rates further and begin a new bull run into 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)