The Empire State Manufacturing Index for October showed a value of 10.7, which is much better than the expected -1.8. This suggests that the manufacturing sector in the region is performing stronger than analysts predicted. In other financial news, the US Dollar fell against the Canadian Dollar, largely due to possible rate cuts from the Federal Reserve and changes in oil prices. The USD/JPY pair also weakened because of trade tensions and uncertainty about US fiscal matters, leading to a softer dollar.

GBP/USD Stability Amid Rate Talks

The GBP/USD pair held steady at about 1.3350, despite some recent drops. This stability comes as the market reacts to discussions about interest rates from the Federal Reserve and the Bank of England. Gold prices have remained stable at around $4,200 per troy ounce, supported by ongoing geopolitical issues and worries about a US government shutdown. Bitcoin’s price recovery has been limited due to renewed US-China trade tensions and a long government shutdown. The International Monetary Fund raised its global growth forecast slightly for October 2025, but growth remains slow. The New York Empire State Manufacturing Index for October hitting 10.7 is a big surprise, as it beats the forecast of -1.8. This shows unexpected strength in manufacturing, which challenges the common belief that the Federal Reserve will soon lower interest rates. This single data point adds uncertainty about what the Fed will do next.

How Manufacturing Data Affects Fed Decisions

We need to assess this strong economic signal against ongoing inflation. During 2023-2024, core inflation remained stubbornly high, above 3.5% for several months, even with the Fed tightening rates. If this manufacturing strength leads to stronger overall economic performance, the Fed might delay any planned rate cuts, which the market is not currently considering. The US dollar has been weak lately because traders expect the Fed to ease rates, but this new data might cause a quick turnaround. The dollar’s decline could be too far gone, opening opportunities for traders. Strategies that could benefit from a stronger dollar include buying call options on the USD index or puts on currency pairs like EUR/USD and AUD/USD. Market uncertainty is elevated, with the IMF describing the global outlook as “subdued” and ongoing risks from a possible US government shutdown. We cannot forget the 35-day shutdown from 2018-2019 and the chaos it caused in the market. However, recent readings from the CBOE Volatility Index (VIX) have shown relatively low volatility, indicating some complacency, which might make long volatility strategies like index straddles seem underpriced. Gold remains a safe investment, holding strong at around $4,200 an ounce amid geopolitical and domestic political concerns. This strength is likely to continue until the US fiscal situation is resolved. Traders can consider buying call options on gold or gold-related ETFs to protect against or speculate on further market anxiety in the coming weeks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now