The FXIFY Trading Desk Brief: Week of 5 October 2026

Situation Report

Last week delivered three releases that pulled in opposite directions and left the October 28-29 FOMC decision more genuinely uncertain than at any point since the September 16 hike.

Core PCE for August came in at 3.0% year-on-year on Wednesday, well below the 3.3% forecast. October hike probability fell from 71% to 38% in a single session. Goldman Sachs moved its next hike forecast from October to December. New York Fed President John Williams said the central bank has time to weigh the data and signalled no urgency to act.

The Q2 GDP third estimate revised growth up to 2.2% annualised from 1.5%, stronger than expected and a meaningful data point in the opposite direction from the PCE miss.

Then ISM Manufacturing landed on Thursday. The headline held near flat at 54.5, keeping the sector in expansion for a ninth consecutive month. But the Prices Paid component surged 6.8 percentage points to 77.9, its highest level since the start of the Iran conflict. No commodity category reported a price decrease for the month.

September NFP releases today at 12:30 PM GMT. The consensus across Bloomberg and FinancialJuice surveys is 90K jobs added, unemployment holding at 4.1%, and average hourly earnings at 3.1% year-on-year. The result will set the opening tone for markets on Monday and feeds directly into the October 28-29 FOMC calculus alongside Wednesday’s PCE and Thursday’s ISM Prices Paid data.

This week is lighter on tier-one data. No CPI, no PCE, no FOMC. The defining event of the current rate cycle lands next Wednesday 14 October, when the BLS releases September CPI at 8:30 AM ET. That is the last major inflation reading before the October 28-29 FOMC vote. This week’s data, including ISM Services, JOLTS, and Jobless Claims, feeds the context around that number.

Last Week in Review

Core PCE August: below forecast, but the methodology changed

The BEA released August Personal Income and Outlays on Wednesday 30 September. Core PCE came in at 3.0% year-on-year, compared to a 3.3% forecast and a prior reading of 3.3%, which was itself revised down to 3.0% after the BEA incorporated its annual update. Month-on-month, core PCE rose 0.2%, below the 0.3% forecast.

Headline PCE came in at 3.4% year-on-year, below the 3.7% forecast. Real PCE rose 0.6% month-on-month in August after a near-flat 0.1% in July. Personal income rose just 0.2%, missing the 0.4% forecast. The personal saving rate improved to 4.1% from 3.0% in July.

The caveat the market spent Wednesday afternoon absorbing: the BEA simultaneously incorporated its annual methodology revision to the national accounts. The revision overhauled how prices are measured for software, legal services, and portfolio management fees, the same portfolio management component that had driven core PPI sharply higher in July. Part of the improvement came from a changed measurement methodology rather than prices themselves cooling. Goldman Sachs estimated that on the new basis, Q4 core PCE is projected around 3.0% annualised, still a full percentage point above the Fed’s 2% target.

Q2 GDP: revised up to 2.2% from 1.5%

The Bureau of Economic Analysis simultaneously released the Q2 GDP third estimate, revising growth up from 1.5% to 2.2% annualised. The revision reflected stronger consumer spending data than the second estimate had captured. A stronger growth print alongside softer inflation pulled the dollar in two directions on Wednesday. It fell on the PCE miss, then partially recovered on the GDP revision.

ISM Manufacturing September: still expanding, prices surge

The Institute for Supply Management reported its Manufacturing PMI held at 54.5 in September, 0.1 points below August’s 54.6 and slightly below the 54.8 forecast. The sector remained in expansion for a ninth consecutive month. The Prices Paid component told a different story. It surged 6.8 percentage points to 77.9, the highest reading since the start of the Iran conflict, with pricing volatility cited in 46% of panelist comments and no commodity category reporting a price decrease. New Orders expanded to 55.3 from 53.7, maintaining demand-side strength.

The Prices Paid surge is the forward signal that matters. If manufacturing input costs at 77.9 flow through to finished goods prices over the next two to three months, they feed into October and November CPI and PPI. That pipeline risk is what September CPI on 14 October will begin to illuminate.

This Week’s Events

Monday, 5 October — ISM Services PMI (USD) | 2:00 PM GMT

The ISM Services PMI for September releases at 10:00 AM ET. It provides the services-sector counterpart to last week’s manufacturing reading and is the first major data point of the week.

Services accounts for roughly 80% of US economic output. The August ISM Services PMI came in at 51.5, slowing from 53.3 in July, the softest reading since early 2024. The sector has been in expansion for over 12 consecutive months, but August’s deceleration raised the first question about whether the rate environment is beginning to weigh on service sector activity.

The September reading will either confirm or reverse that slowdown. Given that manufacturing Prices Paid surged to 77.9 in September, any similar acceleration in the Services Prices Paid sub-component would signal that input cost pressures are broad-based across the economy, not confined to goods, and would add to the inflation case heading into October 14 CPI.

What traders are watching:

Above 53: Services momentum is recovering. Consistent with an economy that can absorb further tightening.

Below 50: The largest sector in the economy has entered contraction. Eases October hike expectations and adds to the case for December.

Tuesday, 7 October — JOLTS Job Openings August (USD) | 2:00 PM GMT

The Bureau of Labor Statistics releases August JOLTS Job Openings at 10:00 AM ET. Tight labour markets create wage pressure, which feeds into services inflation. This reading gives the first look at labour demand in August, complementing Friday’s September NFP headline.

July JOLTS came in at 7.673 million, above expectations and consistent with a resilient labour market. August’s reading will show whether that demand held through the summer.

What traders are watching:

Above 7.5 million: Labour demand remains firm. Services inflation pipeline stays pressured heading into October 14 CPI.

Below 7.0 million: Labour demand is softening faster than the headline NFP suggests. Reduces wage-inflation concern.

Thursday, 9 October — Initial Jobless Claims (USD) | 12:30 PM GMT

Weekly initial jobless claims for the week ending 3 October release at 8:30 AM ET. The four-week moving average entering this week stands at 200,000, consistent with a stable labour market that is slowing gradually rather than deteriorating sharply.

This week’s claims data covers the period immediately following September NFP. Any significant jump above 225,000 would suggest the NFP headline masked underlying labour market weakness and would be the first signal of deterioration heading into October 14 CPI.

What traders are watching:

Below 210,000: Labour market stability holds. No incremental change to October hike expectations.

Above 230,000: An early signal that the labour market may be softening. Reduces October hike probability.

Looking Ahead: September CPI, Wednesday 14 October

This is the most important release between now and the October 28-29 FOMC vote. The BLS releases September CPI at 8:30 AM ET on Wednesday 14 October, 12:30 PM GMT.

October hike probability stands at approximately 38% heading into this week, down from 71% before the PCE release and down from 49% before the September 16 hike. The PCE miss gave the hold camp a data point. But the methodology revision means the committee cannot interpret the 3.0% print straightforwardly. September CPI will provide an independent inflation signal that either validates the disinflation story or contradicts it.

Two directional inputs are relevant. First, gasoline prices fell materially in September following partial stabilisation of the Iran conflict, with the EIA’s retail gasoline price index declining approximately 9.3% for the month. That should pull headline CPI lower month-on-month. Second, shelter costs, which drove much of August’s core acceleration at 0.3% month-on-month, are expected to moderate based on leading rent indicators that have shown easing in recent months. If shelter eases and energy pulls lower, September CPI core at 0.2% or below would validate the PCE disinflation signal and push October hike probability toward 25-30%. Nowflation’s consensus forecast for the October 14 release is 3.7% YoY headline.

If core CPI holds at 0.3% or above despite falling energy prices, it signals that services inflation remains sticky and the PCE methodology revision obscured genuine persistence. October hike probability would recover above 50%.

The key number: Core CPI month-on-month. 0.2% or below validates the disinflation story. 0.3% or above challenges it.

The Call

This week is a positioning week, not a reaction week. No tier-one data lands between Monday and Thursday that will materially change October 28-29 FOMC pricing on its own. The real decision point is next Wednesday.

Three things to monitor that are not on this week’s calendar.

First, the ISM Services Prices Paid component today. If it follows manufacturing’s 77.9 with its own surge, it signals that input cost pressures are broad-based. That is a forward inflation signal that CPI on 14 October has not yet captured and that would argue for the October hike camp regardless of the PCE miss.

Second, Fed speakers. Several FOMC members are expected to speak this week in the post-meeting period. Williams already signalled patience on Tuesday 30 September. Any member who pushes back on that framing or who references the ISM Prices Paid surge as a concern would signal the committee is not uniformly settled on a December timeline.

Third, the 10-year Treasury yield. It fell from 5.0% to around 4.75% in the session following the PCE release. If it holds below 4.85% through this week, the bond market is maintaining its confidence in the disinflation story. If it climbs back above 5.0% ahead of next Wednesday’s CPI, the hawkish case is reasserting itself in the rates market before the inflation data confirms it.

October hike probability at 38% means the market is leaning toward December but has not committed. Next Wednesday’s September CPI is the data point that commits it.

Calendar

Date	Event	CCY	Time GMT	Impact
Mon 5 Oct	ISM Services PMI (Sep)	USD	2:00 PM	HIGH
Tue 7 Oct	JOLTS Job Openings (Aug)	USD	2:00 PM	MEDIUM
Thu 9 Oct	Initial Jobless Claims	USD	12:30 PM	MEDIUM
Wed 14 Oct	Consumer Price Index (Sep) — NEXT WEEK	USD	12:30 PM	CRITICAL

Upcoming tier-one releases:

• Wed 14 Oct: September CPI (8:30 AM ET)
• Thu 15 Oct: September PPI (8:30 AM ET)
• Thu 29 Oct: September Core PCE (8:30 AM ET)
• Tue 28–Wed 29 Oct: FOMC rate decision

Risk Notice

Make sure you understand how your FXIFY account drawdown rules work before trading around this week’s releases. While the scheduled data is secondary-tier, ISM Services today and Fed speaker commentary carry the potential to move October FOMC pricing and generate sharp moves in USD pairs and bonds ahead of next Wednesday’s critical CPI release. For more on managing volatility as a funded trader, see our guides on trading styles for funded traders and how news events affect prop traders.