The European Central Bank (ECB) announced its interest rate decision on Thursday, concluding its October 29–30 meeting. As widely expected, the bank kept rates unchanged at 2.15% — the lowest level since October 2022 — marking the third consecutive meeting without a change.

Policymakers at the ECB believe that no further rate cuts are necessary to achieve the 2% inflation target, emphasizing in recent weeks that the current monetary easing cycle is either nearing completion or has effectively reached its end.

Oil prices fell on Thursday as investors weighed a potential trade truce between the United States and China, after President Donald Trump announced tariff cuts on Chinese goods following his meeting with Chinese President Xi Jinping in South Korea.

Brent crude futures dropped 42 cents, or 0.65%, to $64.50 a barrel by 11:36 GMT, while US West Texas Intermediate (WTI) futures fell 38 cents, or 0.63%, to $60.10 a barrel.

Trump agreed to reduce tariffs on China to 47% from 57% under a one-year deal, in exchange for Beijing’s resumption of US soybean purchases, continued rare-earth exports, and tighter controls on the illegal fentanyl trade.

Tamas Varga, an analyst at PVM, said investors view the agreement as a de-escalation of tensions rather than a structural shift in US–China relations, noting that Brent’s decline ran counter to the sharp drop in US oil inventories.

Fed rate cut lifts growth outlook

The US Federal Reserve’s decision on Wednesday to cut interest rates — in line with market expectations — supported the broader economic outlook. However, the bank signaled that this may be the final cut of the year amid a prolonged government shutdown that is limiting data availability.

Claudio Galimberti, chief economist at Rystad Energy, wrote in a research note: “The Fed’s move reflects a broader policy shift toward gradual easing and growth support, creating favorable conditions for commodities sensitive to economic activity.”

Both Brent and WTI had gained in the previous session after data showed a larger-than-expected drawdown in US crude and fuel inventories.

Still, both benchmarks are on track for losses exceeding 3% in October — their third straight month of declines — amid persistent concerns about oversupply.

US Energy Information Administration (EIA) data showed crude inventories fell by 6.86 million barrels to 416 million barrels in the week ending October 24, compared with analysts’ expectations for a drop of just 211,000 barrels in a Reuters poll.

Investors are also keeping an eye on the upcoming OPEC+ meeting scheduled for November 2, where the alliance is widely expected to announce a fresh production increase of around 137,000 barrels per day in December.

The US dollar edged lower on Thursday morning, giving up part of the gains recorded the previous night as traders digested the outcome of the Federal Reserve meeting and the results of trade talks between the United States and China.

At 05:20 a.m. ET (09:20 GMT), the US Dollar Index — which measures the greenback’s performance against a basket of six major currencies — slipped 0.1% to 98.950 after touching a two-week high on Wednesday.

Dollar supported by fading rate-cut expectations

The Federal Reserve cut interest rates by 25 basis points to a range between 3.75% and 4.00%, a move that was widely expected. However, uncertainty remains over whether another reduction will come later this year amid limited economic data due to the ongoing US government shutdown.

In a press conference following the decision, Fed Chair Jerome Powell said another similar rate cut in December was “far from guaranteed.”

After his comments, traders lowered their expectations for a December rate cut to 71%, down from 90% previously.

Analysts at ING wrote: “The Fed’s message makes it difficult to sell the dollar now. We would need very weak labor market data for markets to price in an additional 75-basis-point cut next summer — otherwise, even one more 25-point cut may drop out of current pricing.”

The dollar also found support from lingering uncertainty surrounding trade negotiations between US President Donald Trump and Chinese President Xi Jinping.

Trump described the meeting — the first between the two leaders in six years — as “wonderful” and announced that the United States would immediately reduce tariffs on Chinese goods.

He added that Beijing had pledged to help combat the smuggling of chemicals used in producing the opioid fentanyl and agreed to suspend export restrictions on rare earth metals.

However, analysts at Vital Knowledge said these developments “do not fundamentally change the current state of US–China trade relations.”

Euro supported by French GDP data

In Europe, the euro rose 0.2% to 1.1618 against the dollar after data showed that France — the eurozone’s second-largest economy — grew by 0.5% in the third quarter, exceeding market expectations of 0.2%.

The French economy had previously expanded by 0.3% in the second quarter.

Investors now await the region-wide GDP figures later in the day, expected to show quarterly growth of just 0.1%, or 1.2% year-on-year.

ING analysts noted: “While sentiment indicators have improved, actual data over the summer were weak. Without a major upside surprise in eurozone GDP, it will be hard for EUR/USD to gain further traction.”

The European Central Bank is expected to keep interest rates unchanged at its meeting later today. ING added: “We doubt that President Christine Lagarde will seek to shift market expectations, which currently lean only slightly toward a new rate cut within the next nine months.”

Sterling steady, yen weaker

The British pound edged up 0.1% to 1.3199 but remained near Wednesday’s five-and-a-half-month low.

In Asia, the dollar gained 0.7% against the yen to 153.74 after the Bank of Japan left interest rates unchanged and maintained a cautious outlook on the economy.

The central bank warned that Japan’s economy faces increasing near-term uncertainty but reiterated that its accommodative stance will help cushion the impact. It also reaffirmed that it will raise rates only if its projections for growth and inflation are met.

Meanwhile, China’s yuan slipped 0.2% to 7.1089 against the dollar following the conclusion of the Trump–Xi meeting, retreating from its strongest level in a year.

Speaking to reporters after the meeting, Trump said he expects a trade agreement with China “very soon,” adding that both sides also reached deals covering rare-earth minerals and agriculture.

Gold prices rose in European trading on Thursday for the first time in five sessions, recovering from a three-week low as the impact of the Federal Reserve’s policy meeting faded and the dollar’s rally lost momentum in global currency markets.

As expected, the Federal Reserve cut its benchmark interest rate by 25 basis points to a range of 4.00%, the lowest level since November 2022 — marking the second consecutive rate reduction.

Fed Chair Jerome Powell said policymakers are struggling to reach a consensus on the future path of monetary policy, adding that markets should not assume another rate cut in December.

Price Overview

• Gold prices rose 1.35% to $3,982.65 per ounce, up from the session’s opening at $3,930.44, after touching a low of $3,915.38.

• On Wednesday, gold settled 0.45% lower, extending losses for a fourth straight session and reaching a three-week low of $3,886.64 in the prior day’s trading.

US Dollar

The US Dollar Index fell more than 0.2% on Thursday, retreating from a two-week high of 99.36 points, signaling a pause in the greenback’s upward trend against a basket of major and minor currencies.

Beyond profit-taking, the dollar’s decline was also driven by easing US–China trade tensions and sustained expectations that the Fed will cut rates again in December.

Federal Reserve

At the conclusion of its seventh policy meeting of 2025, the Federal Reserve on Wednesday lowered rates by 25 basis points to 4.00%, the lowest since November 2022 — its second consecutive cut.

The decision was supported by most members of the Federal Open Market Committee (FOMC), with two exceptions: Steven Miran, who favored a 50-basis-point cut, and Jeffrey Schmid, who preferred to keep rates unchanged.

The Fed’s policy statement maintained its characterization of the labor market, noting that job growth has slowed and unemployment has edged higher but remains low. It also said recent data indicate that economic activity continues to expand at a moderate pace, while inflation remains elevated compared to the start of the year.

Jerome Powell

Powell stated that another rate cut in December “is not a foregone conclusion” and emphasized that the FOMC is “deeply divided on how to proceed in December.”

He noted that tensions in money markets have increased over the past three weeks, prompting the Fed to adjust its liquidity operations. Powell added that the central bank is now relying on all available data — including private-sector surveys — amid the ongoing government shutdown that has halted official data releases.

Powell described the current situation as complex, with the economy caught between the risks of high inflation and labor market weakness, adding that monetary policy remains “moderately restrictive.”

US Rate Outlook

According to CME’s FedWatch Tool, after the latest meeting, market pricing for a 25-basis-point rate cut in December dropped from 99% to 70%, while the probability of no change in rates rose from 1% to 30%.

SPDR Gold Holdings

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — fell by 2.87 metric tons on Wednesday to 1,036.05 metric tons, the lowest level since October 16.