The euro rose in European trading on Wednesday against a basket of global currencies, extending its gains for the second consecutive day against the US dollar, as part of its recovery from two-month lows, supported by weakness in the American currency following comments by Federal Reserve Chairman Jerome Powell.

The rise was also supported by positive political developments in France, where newly appointed Prime Minister Sébastien Lecornu suspended the 2023 pension reform until after the presidential elections scheduled for 2027, in a move aimed at easing political and social tensions in the eurozone’s second-largest economy.

Price Overview

• The EUR/USD exchange rate rose by 0.2% to 1.1626 from an opening level of 1.1606, after hitting a low of 1.1601.

• The euro ended Tuesday’s session up by 0.3% against the dollar, marking its second gain in the past three days, as part of its recovery from a two-month low of 1.1542 dollars.

US Dollar

The US Dollar Index fell by more than 0.2% on Wednesday, extending its losses for the second consecutive session and moving away from two-month highs, reflecting continued weakness in the greenback against a basket of major global currencies.

Jerome Powell left the door open for a potential interest rate cut at the Federal Reserve’s policy meeting on October 28–29. He stated on Tuesday that the labor market remains stagnant, with both hiring and layoffs at low levels, and that the absence of official economic data due to the government shutdown has not prevented policymakers from assessing the economic outlook, at least for now.

Political Developments in France

French Prime Minister Sébastien Lecornu announced the suspension of the 2023 pension reform until after the presidential elections scheduled for 2027, in a move aimed at reducing political and social tensions and responding to strong pressure from left-wing lawmakers who warned that pushing ahead with the reform could jeopardize the political stability of the new government.

Analysts believe this shift reflects a move toward less austere fiscal policies compared to the previous administration, signaling Lecornu’s intent to calm public sentiment and strengthen confidence in his newly formed government.

At the same time, French bonds recorded strong performance, becoming the best among their eurozone peers, according to economist Marc Chandler, who noted that markets are viewing the easing of austerity measures and the support for political stability in Paris positively.

European Interest Rates

• Market pricing currently shows less than a 10% probability of a 25-basis-point rate cut by the European Central Bank in October.

• Traders have scaled back expectations for further monetary easing by the ECB, suggesting that the current rate-cutting cycle may be over for this year.

• To reassess these probabilities, investors are awaiting a series of upcoming economic data releases in Europe, in addition to monitoring remarks from ECB officials.

The Japanese yen rose in Asian trading on Wednesday against a basket of major and minor currencies, extending its gains for the second consecutive day against the US dollar and reaching its highest level in a week, supported by the decline in the American currency following comments by Federal Reserve Chairman Jerome Powell.

This rise was also bolstered by the intense moves of Japan’s opposition parties, which are seeking to unite and agree on a consensus candidate for the premiership in an effort to break the Liberal Democratic Party’s long-standing dominance of the political scene.

As a result, Sanae Takaichi faces growing challenges on her path to power, especially after the sudden withdrawal of the Komeito Party, the traditional coalition partner in the ruling alliance, which significantly weakens her chances and increases political uncertainty in Japan during this sensitive period.

Price Overview

• The USD/JPY exchange rate fell by 0.55% to ¥151.00 — its lowest in a week — from an opening level of ¥151.84, after touching a high of ¥151.87.

• The yen ended Tuesday’s session up by 0.3% against the dollar, marking its second gain in the past three days, as part of a recovery from an eight-month low of ¥153.27.

US Dollar

The US Dollar Index fell by more than 0.2% on Wednesday, extending its losses for the second session in a row and moving away from its two-month highs, reflecting continued weakness in the greenback against a basket of global currencies.

Jerome Powell left the door open for a potential interest rate cut at the Federal Reserve’s policy meeting on October 28–29. He stated on Tuesday that the labor market remains stagnant, with both employment and layoffs at low levels, and that the lack of official economic data due to the government shutdown has not prevented policymakers from assessing the economic outlook — at least for now.

Political Developments in Japan

Japan’s political scene is experiencing unprecedented turmoil following the resignation of Prime Minister Shigeru Ishiba on September 7 and the continuation of his cabinet in a caretaker capacity. Sanae Takaichi, leader of the Liberal Democratic Party, now faces a tough challenge in her bid for the premiership after the sudden withdrawal of the Komeito Party from the ruling coalition on October 10, which cost her party its parliamentary majority.

This development opened the door for the opposition to unify its ranks. The Constitutional Democratic Party, Japan’s largest opposition force, plans to form an alliance with Komeito to support a consensus candidate, Yuichiro Tamaki, who is emerging as a potential leader capable of steering a strong opposition bloc.

While the Liberal Democratic Party remains the largest group in parliament with 196 seats, its waning influence and the growing momentum of the opposition signal a possible political shift in the world’s fourth-largest economy.

Opinions and Analysis

• A note from Bank of America highlighted that attention is turning toward the runoff in the prime ministerial election, which will take place in two rounds. The two candidates with the highest votes in the first round will compete if no one secures an outright majority. The note clarified that if the House of Representatives and the House of Councillors select different candidates, the decision of the lower house will take precedence.

• The bank added, “Despite the difficulties facing the opposition in uniting their ranks, the three main opposition parties collectively hold more seats than the Liberal Democratic Party.” It emphasized the importance of monitoring discussions on the individual positions of each party, including Komeito, to determine which side they will support in the decisive runoff.

Japanese Interest Rates

• Following Takaichi’s victory, market pricing for a 25-basis-point rate hike by the Bank of Japan in its October meeting fell from 60% to 25%.

• The yen swap market also indicated a 41% probability of a rate hike by December, down from 68% before the ruling party’s leadership election.

Gold prices rose on Tuesday as the U.S. dollar weakened against most major currencies, pushing the precious metal to new record highs.

China announced today that it added five U.S. companies affiliated with South Korean shipbuilder Hanwha Ocean to its sanctions list, a move Beijing said was intended to protect national security.

The decision came after President Donald Trump threatened to impose 100% tariffs on Chinese goods starting in early November, in response to China tightening its export restrictions on rare earth minerals.

Meanwhile, Federal Reserve Chair Jerome Powell said Tuesday that the U.S. labor market remains stuck in a state of stagnation, with low hiring and firing rates through September, though the broader economy “may be on a somewhat stronger path than previously expected.”

Powell explained that policymakers will take a “meeting-by-meeting” approach to any additional interest rate cuts, seeking to balance labor market weakness with inflation that remains above the 2% target. He added that data available before the government shutdown suggest that economic activity may be slightly stronger than anticipated.

Powell stressed that “there is no risk-free path for monetary policy,” noting a nearly even split among policymakers on whether the next rate cut should come later this month or in December — and whether one more reduction, or none, would be sufficient this year.

He cautioned that these expectations could shift as new data emerge, saying: “These projections should be understood as a set of possible outcomes whose probabilities change as new information comes in. We will set policy based on the evolving economic outlook and the balance of risks, not on any pre-set course.”

Although the release of the September jobs report was delayed due to the government shutdown, Powell — who devoted much of his speech to discussing the Fed’s balance sheet policy — said he relied on a mix of public and private data to form a clearer picture of the labor market.

He also noted that high inflation partly reflects rising prices for goods affected by tariffs rather than broad-based inflationary pressure.

Elsewhere, the U.S. dollar index fell 0.2% to 99.05 by 20:58 GMT, after touching a high of 99.4 and a low of 98.9.

As for trading, spot gold rose 0.6% to $4,157.8 an ounce at 20:58 GMT.

The global copper market has endured a turbulent year, as a series of accidents and shutdowns disrupted supply chains around the world. On September 8, approximately 800,000 tons of wet material flooded multiple levels of the Grasberg Block Cave mine in Papua, Indonesia, forcing a suspension of all underground operations.

The incident marked the latest in a string of disruptions that have hit copper production throughout 2025.

Reports indicate that the flooding reached the level under development, killing two workers. Following the accident, Freeport-McMoRan Inc. declared force majeure, citing its inability to meet contractual obligations due to a natural disaster or circumstances beyond its control.

Grasberg is the world’s second-largest copper mine, contributing over 3% of global supply. The shutdown is expected to negatively impact copper and gold sales in Q4 this year and constrain supply through 2026.

Previous projections estimated output of around 1.7 billion pounds of copper and 1.6 million ounces of gold, but the company has now cut its 2026 production outlook by 35%. Operations are not expected to return to normal levels until 2027, with gradual restarts planned next year.

Copper supply disruptions in 2025

The Grasberg incident adds to a series of setbacks that have hit the copper industry this year, including:

• A tunnel collapse at Codelco’s El Teniente mine in Chile.

• Flooding at Ivanhoe’s Kakula mine in the Democratic Republic of Congo.

• Operational issues at Teck Resources and Anglo American.

Between July 31 and August 1, an earthquake-triggered tunnel collapse killed six workers and halted all underground operations at El Teniente.

Codelco, Chile’s state-owned mining company, suspended all extraction activities and placed its Caletones smelter on maintenance after running out of feedstock.

El Teniente is one of the world’s largest copper producers, with annual output of roughly 400,000 metric tons, making it a cornerstone of the global market.

Grasberg impact likely to extend through 2027

Even before the Grasberg accident, analysts estimated that roughly 497,000 tons of copper production had been lost to mining disruptions by the end of August.

With the addition of Grasberg’s lost output, the global supply outlook for copper has turned considerably darker.

According to Reuters, citing Benchmark Mineral Intelligence, roughly 600,000 tons of refined copper could be lost between September 8 and the end of 2026 due to this disruption alone.

The event represents a pivotal shift in global copper supply dynamics and comes at a critical time, as demand for the metal surges thanks to its key role in electronics, renewable energy infrastructure, and data centers.

With repeated disruptions among major producers, the crisis highlights the fragility of mining infrastructure and the urgent need for investment in safety, automation, and resilient supply chains.

Analysts believe the effects of these disruptions will persist not only through 2026 but also into 2027.

Price and trade effects following the Grasberg shutdown

The world’s top 20 copper mines are expected to supply around 36% of global production in 2025, yet most face challenges ranging from geological constraints to operational and social pressures.

Benchmark Mineral Intelligence (BMI) sharply raised its forecast for the 2026 copper supply deficit from just 72,000 tons to about 400,000 tons. Citi offered a similar outlook, warning of an additional 350,000-ton shortfall in 2027 unless copper prices rise enough to spur new investment.

Goldman Sachs also revised its forecasts for copper prices and production for 2025–2026, estimating output losses of about 260,000 tons in 2025 and 270,000 in 2026 at Grasberg.

In total, Goldman expects around 525,000 tons of lost copper supply, prompting the bank to cut its global production forecast by 160,000 tons for H2 2025 and 200,000 tons for 2026.

Following the September 8 accident, copper futures jumped to $10,485 per ton — the highest level in 15 months.

Prices had seen a similar spike after the El Teniente shutdown, climbing 12% to $9,707.50 per ton.