Powell Talks, PMI Walks

September 23, 2025

Elias Haddad

USD trading heavy while stocks edge higher. Powell and Bowman take the spotlight. US September PMI also in focus.

Riksbank delivered a final cut. SEK outperforms.

Eurozone growth edges up, while UK momentum slumps. EUR/GBP can edge higher.

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USD is trading heavy and the MSCI All Country World Index hit a fresh record high yesterday. USD downside looks limited in the near-term as 3-year swaps rates are hovering just above the FOMC’s 2027-2028 projections. And incoming data is unlikely to trigger a material downward revision to the swaps curve against USD. Beyond the near-term, the USD downtrend is intact.

The US September S&P Global PMI is up next (9:45am New York, 2:45pm London). The composite PMI is projected to dip to a three-month low at 54.0 vs. 54.6 in August, services is seen at 54.0 vs. 54.5 in August and manufacturing is expected at 52.2 vs. 53.0 in August which was the highest level since May 2022.

Fed Governor Michelle Bowman and Fed Chair Jay Powell speak on the economic outlook today. Bowman stands out as a more dovish than Powell, having broken ranks by backing a 25bps rate cut in July. Bowman stressed that the labor market showed increasing signs of fragility while upside risks to price stability had diminished. Powell still sees risks to inflation as tilted to the upside in the near-term.

SWEDEN

SEK outperforms across the board as the Riksbank delivered a final cut. The bank unexpectedly cut the policy rate 25bps to 1.75% (a cut was 38% priced-in) and highlighted that “the policy rate is expected to remain at this level for some time to come.” The Riksbank’s updated forecast has the policy rate at 1.75% until Q3/Q4 2026 which is in line with market pricing. Bottom line: The fundamental downtrend in USD/SEK is intact as the Fed delivers more rate cuts while the Riksbank is done easing.

EUROZONE & UK

EUR/GBP rallied to its highest level since July. The Eurozone economy remains on a modest growth path driven by the services sector and Germany. The composite PMI improved to a 16-month high at 51.2 (consensus: 51.1) vs. 51.0 in August, the services PMI increased to a 9-month high at 51.4 (consensus: 50.5) vs. 50.5 in August) while the manufacturing PMI unexpectedly dropped to a 3-month low at 49.5 (consensus: 50.7) vs. 50.7 in August. In parallel, Germany’s private sector strength offset the steeper activity downturn in France.

In contrast, UK private sector growth momentum slowed sharply in September. The composite PMI fell more than expected to a 4-month low at 51.0 (consensus: 53.0) vs. 53.5 in August, the services PMI dropped to a 2-month low at 51.9 (consensus: 53.5) vs. 54.2 in August while the manufacturing PMI unexpectedly eased to a 5-month low at 46.2 (consensus: 47.1) vs. 47.0 in August.

Bottom line: relative Eurozone/UK economic activity supports the uptrend in EUR/GBP. EUR/GBP must clear the double top at 0.8770 (July 2025 and November 2023 highs) to build upside traction.

HUNGARY

National Bank of Hungary is widely expected to keep rates steady at 6.50% (1:00pm London, 8:00am New York). At the last August 26 meeting, the bank decided unanimously to leave the base rate unchanged at 6.50%, marking the 11th consecutive hold since cutting rates 25bps in September 2024.

The bank showed no signs of departing from its hold stance warning that “For the rest of the year, inflation is expected to stay above the central bank tolerance band [3% +/-1%].” But the swaps market price-in nearly 100bps of cuts over the next two years. Regardless, Hungary’s positive real interest rates and current account surplus (1.7% of GDP in Q1) will continue to underpin HUF.

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