The USDX is trading on a negative note near 98.60 during Tuesday’s Asian session, after posting a modest gain of 0.08% on Monday. The dollar continues to face downward pressure primarily from the ongoing US government shutdown and dovish signals from Federal Reserve officials. The government shutdown has stretched into its 21st day with no end in sight after senators failed for the eleventh time to resolve the impasse on Monday. Fears that this prolonged lapse—now the third-longest in modern US history—will hurt economic activity continue to weigh on the dollar. Contributing to the pressure are dovish remarks from Fed officials. Governor Christopher Waller and St. Louis Fed President Alberto Musalem both indicated they could support another interest rate cut at the Fed’s upcoming meeting later this month, citing mixed job market readings and the need for contained inflation. However, the downside for the USDX might be limited as trade tensions between the US and China have calmed somewhat. Markets are anticipating de-escalation, although analysts suggest jittery sentiment will persist until explicit announcements are made. Given the data drought caused by the shutdown, traders are now keenly focused on the US September CPI inflation data due later this week.
Despite the recent slide, Gold posted a significant 2.89% gain in the previous session marking a new record peak. Its downside remains limited by several key factors: persistent concerns that the prolonged US government shutdown will hurt the economy, deeply entrenched Federal Reserve rate cut expectations for October and December, and ongoing geopolitical tensions (specifically surrounding the Russia-Ukraine conflict). While signs of easing US-China trade tensions, reinforced by President Trump’s mixed comments over the weekend, encouraged some profit-taking, the market’s fundamental uncertainties continue to provide a crucial floor for the safe-haven commodity.
Geopolitical risks remain elevated as peace talks hit a familiar roadblock. Russian President Vladimir Putin reportedly reiterated his demand that Ukraine cede all of Donetsk Oblast to end the conflict, though he suggested Russia might surrender parts of occupied southern Ukraine. This proposal was complicated by President Trump, who stated on Sunday that the battle lines should be frozen where they currently stand. Crucially, Ukrainian President Volodymyr Zelenskyy has repeatedly rejected any idea of forfeiting the Donbas or any other occupied territory.
Japanese shares achieved fresh record highs on Tuesday as conservative leader Sanae Takaichi secured a key lower house vote, largely confirming her as the nation’s next prime minister. As of 07:03 AM GMT, the Japan 225 was down -1.03% and the Japan 100 was down -0.51%, reflecting some profit-taking after the initial surge. The rally was initially fueled by the expectation of fiscal stimulus, higher defense spending, and government investment under Takaichi’s leadership, who is viewed as a fiscal dove. The Yen weakened following the vote, with the USD/JPY rising on speculation that the Bank of Japan may delay further interest rate increases to support economic expansion.
In other news, shares of Beyond Meat soared significantly in pre-market trading, continuing momentum after a previous gain. The stock’s dramatic surge is attributed to growing speculative interest in small-cap stocks with high short interest, making it vulnerable to a potential short squeeze. Approximately 10.5% of the shares are held short, amplifying the effect and potentially positioning the stock as a “meme stock” among retail investors. This price action appears to be technical and driven by short-covering rather than any fundamental company news or business outlook change.
The third-quarter earnings season is set to intensify, with results from major companies like Netflix and Tesla highlighting the week’s docket, following a positive start from Wall Street lenders. Netflix, which reports after the close on Tuesday, has seen its stock climb over 35% this year following its move to introduce advertising to its streaming platform. However, investors will be keen to see if subscriber growth has been affected by Elon Musk’s recent call for users to cancel subscriptions over a controversy related to one of the streaming giant’s animated shows.
EUR/USD
The EUR/USD pair continues its two-day losing streak, slipping below 1.1630 during Tuesday’s Asian session. The common currency remains under pressure as the U.S. Dollar gains momentum amid growing optimism that the ongoing U.S. government shutdown could be resolved later this week.
Investor sentiment toward the dollar improved after White House economic adviser Kevin Hassett told CNBC on Monday that he expects the “Schumer shutdown” — a reference to Democratic leader Chuck Schumer — to end sometime this week. His comments reinforced hopes that political negotiations in Washington could soon bring the government impasse to a close.
Further supporting the dollar, market participants remain optimistic about progress in U.S.–China trade talks. Traders are closely watching for developments ahead of the expected meeting between President Donald Trump and Chinese leader Xi Jinping later this month.
Attention now turns to the upcoming release of the delayed U.S. Consumer Price Index (CPI) data for September, scheduled for publication on Friday. The inflation figures will be closely watched for clues on the Federal Reserve’s next policy steps, particularly as markets reassess the outlook for interest rates amid recent economic data releases.
While the euro continues to weaken against the dollar, it has found some stability relative to other major currencies. Market expectations are growing that the European Central Bank (ECB) will keep interest rates unchanged through the remainder of the year. Several ECB officials have recently emphasized that rates should stay at current levels until the potential impact of U.S. tariffs on eurozone prices becomes clearer.
Gold
Gold prices climbed more than 2% on Monday, supported by growing expectations of additional U.S. interest rate cuts and persistent safe-haven demand, as investors looked ahead to key U.S.–China trade talks and inflation data scheduled for release later this week.
Gold’s rally comes amid deepening political uncertainty in the United States, as the government shutdown entered its 20th day on Monday. Lawmakers have failed multiple times to reach an agreement to end the impasse, delaying several key economic data releases and leaving both investors and policymakers with limited visibility ahead of the Federal Reserve’s policy meeting next week.
The U.S. Consumer Price Index (CPI) report — postponed due to the shutdown — is now expected to be released on Friday. The data will be closely scrutinized for signals on inflation trends and potential guidance for the Fed’s next moves.
Market participants are currently pricing in a 99% probability that the Federal Reserve will cut interest rates next week, with another reduction expected in December. Gold, a non-yielding asset, typically performs well in lower interest rate environments as the opportunity cost of holding it decreases.
In summary, gold prices continue to find support from mounting expectations of U.S. rate cuts, ongoing political uncertainty, and renewed safe-haven demand, while traders await fresh inflation data and updates on U.S.–China trade relations for the next market cue.
WTI Oil
Oil prices fell to their lowest levels since early May on Monday as investors weighed growing concerns about a potential global supply glut and renewed U.S.–China trade tensions, which are amplifying fears of an economic slowdown and weaker energy demand.
Market sentiment has shifted sharply in recent days, with traders increasingly focused on the risk of oversupply rather than tightness in the oil market.
Both crude benchmarks declined more than 2% last week, marking a third consecutive weekly loss, after the International Energy Agency (IEA) projected that the market could face a significant supply surplus by 2026.
For much of the year, oil prices had traded in the opposite structure — backwardation — where near-term prices are higher than those for later delivery, reflecting expectations of tight supply and strong demand.
The latest downturn also comes amid renewed U.S.–China trade friction. The world’s two largest oil consumers have imposed new port fees on cargo shipments between them — a series of tit-for-tat measures that could disrupt global trade flows.
Meanwhile, uncertainty persists over Russian oil supply, as President Donald Trump reiterated that the U.S. would maintain “massive” tariffs on India unless it halts purchases of Russian crude.
In summary, oil prices continue to face downward pressure amid growing signs of oversupply, renewed trade tensions between the U.S. and China, and expectations of rising inventories. Traders are watching for this week’s U.S. stockpile data and global economic signals to gauge whether the current bearish momentum will deepen further.
US 500
U.S. stocks rallied on Monday, with all three major indexes closing sharply higher as investors grew more optimistic about a potential U.S.–China trade resolution, the end of the U.S. government shutdown, and a busy week of corporate earnings.
Market sentiment improved after President Donald Trump signaled a softer stance on trade, suggesting that his previously proposed triple-digit tariffs on China were “not sustainable.” The comments fueled hopes that trade relations between the world’s two largest economies could stabilize in the near term.
Hopes also rose that the U.S. government shutdown, now in its third week, could soon come to an end. White House economic adviser Kevin Hassett said in an interview with CNBC that he believes the “Schumer shutdown is likely to end sometime this week,” referring to Senate Minority Leader Chuck Schumer.
Investors are also bracing for a heavy week of earnings reports, with several major technology and industrial companies set to release third-quarter results.
Netflix will report today, followed by Tesla on Wednesday. Other notable companies on deck include GE Aerospace , Coca-Cola , Philip Morris, RTX Corp, General Motors, Lockheed Martin , and Texas Instruments.
Analysts say earnings will be closely watched for signs that corporations have maintained profitability amid trade tariffs, rising costs, and a cooling labor market.
In summary, Wall Street began the week on a strong note, lifted by hopes of progress on U.S.–China trade negotiations, expectations of a government shutdown resolution, and optimism ahead of key corporate earnings releases. With inflation data due Friday and high-profile companies set to report throughout the week, investors are likely to stay focused on economic and earnings signals for further market direction.
