China’s central bank, the PBOC, has kept its interest rate at 3%, which is what many expected. The loan prime rates also remain unchanged for October. In the third quarter of 2025, China’s economy grew by 4.8% compared to last year, just as projected. The PBOC set the USD/CNY reference rate at 7.0973, a slight drop from 7.0949 before.

Currency Pairs Performance

Recent events have led to a mixed performance in currency pairs. The EUR/USD has weakened due to France’s downgraded credit rating, while GBP/USD stays above 1.3400, supported by a softening US dollar and a more cautious outlook from the Bank of England. Gold prices have dipped to about $4,245, as demand has decreased following the festive season. Upcoming reports on CPI and PMI may influence central bank decisions, with markets on alert for any potential changes. On the global front, all eyes are on the upcoming Trump–Xi meeting at the APEC summit. Traders are being cautious about how this meeting may affect tensions between the two countries. Cryptocurrency markets have seen losses, with BNB, Solana, and Cardano all dropping by over 10%. Total liquidations in the crypto market surpassed $1 billion yesterday, leading to significant declines among top cryptocurrencies.

Upcoming Economic Data

The market is anxious as upcoming inflation data from the US and UK could challenge the cautious outlook from central banks. The Trump-Xi meeting at the APEC summit adds another layer of uncertainty. This suggests short-term, data-driven trades might be more beneficial than long-term bets. France’s credit rating drop to A+ puts pressure on the Euro, reminding us of the sovereign debt issues from the early 2010s. It may be wise to buy puts on the EUR/USD, especially since Eurozone PMI data, expected later this week, is likely to be weak. The Sentix Investor Confidence index, which fell to -18.5 last week, supports this negative view on the Eurozone economy. For GBP/USD, a key point of interest is the dovish expectations for both the Bank of England and the US Federal Reserve. We are monitoring the upcoming UK CPI report; a miss on the 2.5% forecast could lead to a Bank of England rate cut, triggering a short on the pound. Given the pair’s tight range above 1.3400, setting up straddles could be a smart play for the breakout after the inflation data is released. China’s economic data shows stability but lacks excitement, with Q3 GDP growth at the expected 4.8%. This indicates that the PBOC may stay on the sidelines, but a gradual weakening of the Yuan reference rate ahead of the Trump-Xi meeting suggests underlying tensions. Long volatility positions on the USD/CNH (offshore Yuan) could be a smart move to prepare for any surprises from the summit. While the market has been expecting Federal Reserve rate cuts, we should be careful because the US labor market remains strong. The last NFP report showed a gain of 195,000 jobs. If CPI comes in higher than expected this week, it could lead to a quick shift that strengthens the dollar. Any unexpected positive news from the APEC summit could trigger a sharp risk-on rally. The crypto market is showing extreme risk aversion after over $1 billion in leveraged long positions were liquidated over the weekend. The significant losses in major altcoins suggest we should hold off on aggressive long positions for now. Instead, we can implement options strategies that take advantage of current high implied volatility, such as selling covered calls on existing holdings. Create your live VT Markets account and start trading now.

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