This website uses cookies and is meant for marketing purposes only.
The USDX is trading on a positive note around 98.05 during Monday’s Asian session, recovering some ground despite the ongoing US government shutdown. The potential for further upside, however, remains limited as the government shutdown entered its fifth day, with US Senators failing to pass spending proposals, and President Donald Trump threatening to lay off federal workers. The primary drag on the USDX is the growing expectation of additional Fed rate cuts, with traders currently pricing in a high probability (95% for October, 83% for December) of two more 25 basis point reductions this year. This expectation is supported by dovish comments from officials like Fed Governor Stephen Miran, who on Friday supported an aggressive path of rate cuts citing the impact of administration policies. This view, however, is countered by the hawkish stance of Dallas Fed President Lorie Logan, who reiterated the central bank's need for caution on further cuts given that non-housing services inflation remains "worrisome."
With the US September employment report delayed due to the shutdown, the USDX is now heavily reliant on upcoming policy cues. The minutes from the Federal Open Market Committee's (FOMC) September monetary policy meeting, due later on Wednesday, will be closely watched, as any cautious tone from officials could offer a potential lift to the US Dollar in the near term.
Gold surged to a fresh all-time high early Monday, reaching $3,945.3 per ounce, resuming a strong run that saw the precious metal climb 3.16% higher last week. The rally is underpinned by two key fundamental drivers: growing acceptance for further Federal Reserve rate cuts and persistent safe-haven demand stemming from the ongoing US government shutdown and rising geopolitical tensions. The election of Sanae Takaichi as Japan's next Prime Minister also provided support, raising speculation that the Bank of Japan (BoJ) will delay raising interest rates. This strong bullish momentum has seen the non-yielding metal rise despite typically negative headwinds, including a firmer USD and a general risk-on mood in markets.
Japanese stocks led gains across Asian markets on Monday, with the Japan 225 surging 1.2% as of 06:58 AM GMT and the Japan 100 gaining 0.28% to record highs as of 06:44 AM GMT. The rally was fueled by the weekend election of fiscal dove Sanae Takaichi as the leader of the ruling Liberal Democratic Party, making her the next Prime Minister of Japan. This outcome fueled bets on increased fiscal spending, particularly on industrialization and defense, and encouraged speculation that the Bank of Japan would delay raising interest rates. A sharp fall in the Yen also bolstered the heavyweight export sector.
Outside Japan, Asian stocks were mostly languid as market holidays in China kept trading volumes low. However, early quoted figures showed the China SSE up 0.46% and the China SZSE rising 0.37% as of 06:58 AM GMT. The Hong Kong 50 was the region's worst performer, falling 0.69% on a sharp pullback in technology shares, which had been a major driver of regional gains last week amid optimism over artificial intelligence demand.
In the crypto space, Bitcoin corrected slightly on Monday after soaring over the weekend to a record high of $125,740, capping a strong run that saw the world's largest cryptocurrency gain 11.62% last week. The bullish momentum, which has pushed the token up over 30% since the start of the year, is underpinned by massive institutional demand and ongoing uncertainty in the US fiscal landscape.
The primary driver of the surge was a flood of capital into US spot Bitcoin ETFs, which saw net inflows of $3.24 billion last week, the largest weekly increase of the year, reflecting renewed institutional interest. This institutional rush coincided with mounting concerns over the prolonged US government shutdown, which has delayed key economic data releases. Reports suggest investors are viewing the cryptocurrency as a “debasement trade” asset, seeking refuge from fiat currencies and fiscal stress on expectations that the Federal Reserve will maintain an accommodative stance once operations resume.
The EUR/USD pair is holding near the 1.1700 mark early on Monday, giving back part of last session’s gains as the US Dollar strengthens amid shifting interest rate expectations. Despite the pullback, further downside appears limited, with markets increasingly betting on Federal Reserve (Fed) rate cuts in the coming months.
According to the CME FedWatch Tool, traders are pricing in a 95% probability of a rate cut in October and an 84% likelihood of another in December, reflecting growing expectations that the Fed will move to support the economy amid signs of slowing growth.
Meanwhile, the Greenback’s momentum may be capped by continued political uncertainty in Washington. US Senators have again failed to pass spending bills to reopen the government, extending the federal shutdown into another week.
On the European side, the Euro (EUR) could find support from expectations that the European Central Bank (ECB) will maintain a cautious policy stance. Last week, ECB policymaker Martins Kazaks noted that current interest rate levels remain “very appropriate” and should be kept steady for now, citing elevated uncertainty and the need for flexibility in future decisions.
Investors will be watching upcoming remarks from ECB Vice President Luis de Guindos and Executive Board member Philip Lane later today for further policy signals. Additionally, attention will turn to the release of Eurozone Sentix Investor Confidence and August Retail Sales data, which could offer fresh insights into the region’s economic outlook.
Bitcoin (BTC) is trading almost unchanged early on Monday, easing from a record peak above $125,000 reached over the weekend. The slight pullback comes after a sharp rally fueled by robust inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) and ongoing concerns surrounding the U.S. government shutdown, both of which continue to bolster investor sentiment.
The leading cryptocurrency surged more than 11% last week and is now up over 30% year-to-date, reflecting renewed institutional demand.
The move coincides with increased market anxiety over Washington’s ongoing government shutdown, now entering its second week. The political impasse has delayed key economic data releases and heightened uncertainty over fiscal policy, fueling speculation that the Federal Reserve could adopt a more cautious approach to interest rates once operations resume.
In corporate developments, Walmart-backed fintech firm OnePay plans to introduce cryptocurrency trading and custody services within its banking app later this year, according to a CNBC report citing sources familiar with the matter.
Oil prices climbed early on Monday after OPEC+ announced a smaller-than-expected increase in production for next month, easing some supply concerns and providing short-term support to crude markets. However, analysts warned that gains might remain limited amid persistent worries over weak demand heading into the final quarter of the year.
On Sunday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, agreed to increase production by 137,000 barrels per day (bpd) in November — matching the modest rise seen in October. The decision reflects ongoing caution amid fears of a potential supply glut.
Ahead of the meeting, reports suggested Russia favored a restrained 137,000 bpd increase to avoid downward pressure on prices, while Saudi Arabia had reportedly pushed for a much larger boost — potentially up to four times that figure — to recover market share more rapidly.
Last week, finance ministers from the Group of Seven (G7) nations pledged to intensify pressure on Russia by targeting entities helping to circumvent oil sanctions, part of a broader effort to curb Moscow’s revenues amid the war in Ukraine.
Despite these geopolitical dynamics, analysts expect weak demand fundamentals to limit further upside for oil prices.
U.S. stocks ended mixed on Friday, with the US 500 closing little changed but still posting weekly gains as investors shrugged off worries about the ongoing U.S. government shutdown and focused instead on economic data and corporate developments.
Treasury Secretary Scott Bessent cautioned in a CNBC interview on Thursday that the current federal shutdown could inflict greater economic damage than previous ones.
One key consequence of the shutdown is the delay of the September nonfarm payrolls report, a data release closely watched by the Federal Reserve as it weighs the timing and pace of potential interest rate cuts to support growth and hiring.
Recent labor data painted a mixed picture. Challenger job cuts declined in September, while ADP private payrolls showed a sharp drop, suggesting softer hiring momentum.
Meanwhile, the ISM Non-Manufacturing PMI — a key gauge of the services sector — fell to 50.0 in September from 52.0 in August, signaling a near-stall in growth. The slowdown was driven by weaker new orders and subdued employment trends, adding to concerns of waning demand.
In corporate news, Applied Materials shares weakened after the chip-equipment maker warned that new U.S. export restrictions would trim revenue by roughly $110 million in the fourth quarter and about $600 million in fiscal 2026.
Palantir Technologies also declined after a Reuters report revealed that an internal U.S. Army memo had identified significant security vulnerabilities in a battlefield communications network developed by Palantir and its partners.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
Join iFOREX to get an education package and start taking advantage of market opportunities.