Italy’s Services Purchasing Managers’ Index (PMI) rose to 52.5 in September, beating expectations of 51.4. Typically, this report is overshadowed by the US Nonfarm Payrolls release, but this time, it stands out due to unique circumstances. The US ISM Services PMI is expected to show stable industry trends that reflect the current economic situation. This upcoming report will help guide us through recent job market updates and shifting market conditions.

Gold Prices React

Gold prices have hit new daily highs, boosted by positive market sentiment and a rebound in the US Dollar. Investors think the Federal Reserve may lower interest rates, which affects gold prices. In currency markets, the Japanese Yen is struggling compared to other G10 currencies, while the British Pound has made small gains. The Euro remains stable, as the US Dollar weakens in anticipation of the US services data. Meanwhile, USD/CNH is expected to trade between 7.1260 and 7.1410. Silver prices have surged past $47.50, driven by a weaker US Dollar. Decentralized Finance (DeFi) tokens, such as Ether.fi (ETHFI) and PancakeSwap (CAKE), are leading recent gains in the cryptocurrency sector, reflecting market trends.

Upcoming PMI Report

Later today, on October 3, 2025, the US ISM Services PMI report will be released, and we expect significant volatility. This follows a slightly disappointing Nonfarm Payrolls report for September, which added only 160,000 jobs. The PMI figure will be a crucial indicator of economic performance. If it comes in below the forecast of 52.0, it could speed up the decline of the US Dollar and confirm a slowdown in the services sector. This data is vital for the US Dollar, which has been weakening as expectations of Federal Reserve rate cuts rise before the end of the year. The core PCE inflation number remains steady at 2.7%. Any indication of economic weakness in today’s report may strengthen predictions for a dovish Fed pivot. However, a robust PMI result could challenge this outlook and potentially spark a quick rally in the dollar. In contrast, the Euro shows underlying strength, supported by Italy’s surprising rise in the services PMI. Eurozone inflation has also stayed higher than in the US, with a September 2025 estimate at 3.1%. This makes it less likely for the European Central Bank to cut rates soon. This divergence makes long Euro positions against the Dollar, perhaps through call options, an appealing strategy if the US data disappoints. The dollar’s decline has supported precious metals, pushing silver above $47.50, a level it hasn’t held since the 2011 peak. Gold is also gaining from lowered rate expectations and ongoing geopolitical tensions. We believe it’s wise to use derivatives to maintain long exposure to gold and silver, as confirmation of a dovish Fed could drive prices higher. The Japanese Yen and British Pound continue to struggle, making them poor choices for expressing a weak-dollar view. The Bank of England faces recent GDP figures showing just 0.1% growth for the second quarter of 2025, weighing down the Pound. The Yen’s decline is a structural issue, stemming from significant interest rate differences with the US. The rise in speculative assets like DeFi tokens indicates that investors are still seeking high returns. This risk-on sentiment in parts of the crypto market suggests traders aren’t fully prepared for a downturn. However, this mood is delicate and could change rapidly if today’s US services data is much stronger than expected, leading to a reassessment of Fed expectations. Create your live VT Markets account and start trading now.

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