Shutdown Pressure: USDX Retreats as Health and Tech Stocks Rally

The EUR/USD pair remained flat on Wednesday, as investors digested a disappointing U.S. jobs report while shrugging off the ongoing government shutdown. Market sentiment was shaped by weak private hiring, political uncertainty in Washington, and mixed economic signals from both sides of the Atlantic.

The latest ADP National Employment Change report showed that U.S. private-sector payrolls unexpectedly contracted by 32,000 in September, following August’s downwardly revised loss of 3,000 jobs.

On the manufacturing side, the ISM Manufacturing PMI ticked up slightly to 49.1 in September from 48.7 previously, modestly above forecasts of 49.0. However, the reading still reflected the sector’s seventh consecutive month of contraction.

Meanwhile, the U.S. government shutdown remains unresolved. Vice President JD Bance said he expects the disruption to be temporary, pledging to ensure essential services continue.

In Europe, data was relatively firmer. The HCOB Manufacturing PMI for September edged higher to 49.8, up from 49.5, and in line with expectations. Meanwhile, the Harmonized Index of Consumer Prices (HICP) rose 2.2% year-on-year, up from 2.0% in August, with core HICP steady at 2.3%.

Despite the slightly stronger prints, ECB President Christine Lagarde struck a cautious tone, stating that inflation risks “appear contained in both directions.” Markets therefore expect the central bank to hold policy steady, with no imminent shifts in rates or guidance.

Gold prices soared to fresh record levels on Wednesday as investors sought safety amid political turmoil in Washington and growing confidence that the Federal Reserve will ease policy this month.
The U.S. dollar weakened, making bullion more affordable for overseas buyers. According to analysts, political gridlock over government funding has darkened sentiment toward U.S. assets, boosting demand for gold as a hedge against uncertainty.
With inflation moderating and growth headwinds building, markets are increasingly confident the Fed will cut interest rates at its next meeting. The CME FedWatch Tool now assigns a near-certain probability of easing, reinforcing gold’s appeal as a non-yielding asset.

Investor appetite for bullion-backed funds has strengthened in recent weeks, highlighting a broader shift toward safe-haven assets. Analysts say the combination of policy uncertainty, softer growth, and expectations of lower borrowing costs is likely to keep gold well supported in the near term.

Oil prices fell for a third straight session on Wednesday, sinking to their lowest levels since early summer as worries over a U.S. government shutdown, rising crude inventories, and expectations of higher OPEC+ supply weighed on sentiment.

Market attention is increasingly focused on OPEC+ policy, with traders bracing for a fresh production increase in November. Sources suggested the group could raise output by as much as 500,000 barrels per day, though OPEC officials dismissed some of the reports as misleading. At the same time, the group’s monitoring panel urged members to improve compliance and compensate for earlier quota breaches.

Adding to bearish momentum, the U.S. Energy Information Administration reported that crude inventories rose by 1.8 million barrels last week, a larger build than anticipated.

Concerns over slowing consumption in the world’s biggest oil markets further pressured prices. In Asia, factory activity contracted across most major economies in September, deepening fears of weaker fuel demand. In the U.S., manufacturing activity showed only marginal improvement, with new orders and hiring subdued.

Meanwhile, geopolitical risks remain in play. Ukrainian drone attacks have disrupted Russian refining capacity, freeing up more crude for export, while Venezuela’s shipments surged to their highest in over three years, highlighting growing supply competition.

U.S. stocks advanced on Wednesday, with the US 500 closing at an all-time high as investors bet the economic fallout from the government shutdown will be contained and weaker labor data bolstered expectations for further interest rate cuts.

The U.S. entered a government shutdown after the Senate rejected a Republican-backed funding bill, raising concerns over disruptions to federal services and furloughs for thousands of workers. Still, markets appeared largely unfazed, with analysts noting that past shutdowns have had limited long-term impact.

Treasury yields slipped as investors increased bets on more Fed rate cuts. The move followed data showing private-sector employment contracted in September, its sharpest decline in over two years. The figures added urgency to expectations of further policy easing, particularly as the shutdown threatens to delay Friday’s widely watched nonfarm payrolls report.

In corporate news, Nike rose after posting stronger-than-expected quarterly earnings and a surprise revenue gain, signaling early progress in its turnaround strategy despite headwinds in China and tariff pressures.

Intel surged more than 7% on reports the chipmaker is in early talks to manufacture processors for rival AMD, a move seen as potentially transformative for its foundry business.