The U.S. dollar strengthened and Treasury yields rose on Thursday afternoon following comments by Federal Reserve Chair Jerome Powell. By Friday, the dollar had pared some of its gains against major G10 currencies, while U.S. Treasury yields softened. Equity markets appeared subdued, with U.S. stock futures poised to open lower after Thursday’s weak close. Meanwhile, gold, which had seen a sharp five-day decline of around 4.3%—its steepest drop in over three years—is stabilizing and threatening to reverse its slide. January crude oil (WTI) continues to hover around the $68 mark.

Asia-Pacific Markets
Japan and China released key economic data earlier in the day. Japan's Q3 GDP grew by 0.2% quarter-on-quarter, slowing from Q2’s 0.5% growth (revised down from 0.7%). The yen's exchange rate against the dollar demonstrated volatility, with the greenback reaching JPY156.25 on Thursday before retreating during the U.S. session, driven by a pullback in U.S. 10-year yields.
The Australian dollar spent its first session below $0.6500 since April 23, hitting a low near $0.6440. Although it has struggled to regain momentum, trading near $0.6475, a retest of $0.6500 remains possible.

European Markets
The UK economy contracted by 0.1% in September but managed modest Q3 growth of 0.1% quarter-on-quarter. While the data fell short of expectations, it had little impact on monetary policy forecasts. Markets still see a minimal chance of a Bank of England rate cut in December but estimate an 80% probability of a February cut.
The euro showed resilience after briefly dipping below $1.05 during European trading on Thursday, climbing to almost $1.0580 before losing momentum.
Sterling followed a similar pattern, recovering from a low near $1.2630 and touching $1.2720 in North American trading. Despite the rebound, sterling is on track to record its seventh consecutive weekly decline.

American Markets
As the week ends, shifts in market expectations for Fed policy are evident. Powell's remarks reiterated three key themes: the Fed is transitioning toward a neutral policy stance, its path is data-dependent, and immediate action is not warranted as the economy remains strong. These comments recalibrated market expectations, reducing the odds of a December rate cut from 82% to less than 60%.