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17/10/2025 - 08:30 UTCThe USDX is extending its losses for a fourth straight session, moving 0.32% lower on Thursday and trading around 98.20 during Friday's Asian hours. The dollar continues to weaken as traders adopt caution amid a convergence of three negative factors: a prolonged US government shutdown, increased likelihood of Federal Reserve interest rate cuts, and escalating US-China trade tensions.
The US federal government shutdown will continue into next week after the Senate failed to end the stalemate for the tenth time on Thursday. This prolonged impasse continues to delay key economic data needed for policy decisions. Adding to the bearish sentiment, Federal Reserve Governor Christopher Waller stated on Thursday that he supports another interest rate cut at this month’s upcoming policy meeting. The Fed’s latest Beige Book also pointed to growing economic strains, citing rising layoffs.
Meanwhile, US-China trade tensions escalated further. Treasury Secretary Scott Bessent criticized China’s plans to restrict rare earth exports, calling the move "economic coercion" and "a global supply chain power grab," and warned that the world would have to decouple if China proved to be an unreliable partner. Both Bessent and US Trade Representative Jamieson Greer, however, expressed uncertainty over whether China would actually implement the announced export controls.
Asian equity markets fell sharply on Friday, tracking overnight losses on Wall Street where renewed concerns over the stability of US regional banks rattled investor confidence. This market retreat set most regional indices up for weekly declines, largely due to President Donald Trump’s fresh tariff announcements against China.
Chinese shares led the regional downturn amid heightening trade tensions with Washington. As of 06:06 AM GMT Friday, the China SSE fell -1.34%, the China SZSE dropped -1.13%, and the Hong Kong 50 slumped -1.95%. The renewed friction has reignited fears of a trade war after Trump's threat last week to impose additional 100% tariffs on Chinese imports, a move in response to Beijing’s expanded curbs on rare earth exports. Japanese shares also moved lower, with the Japan 225 down -0.29% and the Japan 100 falling -0.19% as of 06:06 AM GMT, reversing some of the sharp gains seen in the previous two sessions.
The main US equity indices slipped on Thursday after several US regional banks, disclosed troubled loans, sparking fresh concerns about the quality of regional bank lending. This banking sector worry dragged the broader market lower and contributed to souring investor sentiment across Asia.
The main US equity indices moved lower on Thursday, primarily due to renewed concerns over the quality of regional bank lending. Jitters spread across the banking sector after several regional lenders disclosed troubled loans, dragging the broader market down. The negative sentiment was compounded by the ongoing US government shutdown and heightened US-China trade tensions. Amid this backdrop, corporate results and news provided mixed signals for individual stocks: United Airlines shares fell -5.83% despite the carrier reporting third-quarter earnings that beat Wall Street estimates and forecasting record revenue for the current quarter; Salesforce stock jumped 3.79% after the cloud software company raised its long-term revenue target to more than $60 billion by 2030 and unveiled a $7 billion share buyback program; and Oracle shares gained 3.10% as the cloud software group held a meeting with financial analysts on the final day of its AI-focused conference. The looming trade war fears were amplified by Treasury Secretary Scott Bessent, who indicated the Trump administration would not back down from its tough stance on China, even if markets reacted negatively. This wall of worry, combined with the unresolved government shutdown extending into the next week, kept investors cautious despite an announcement that US-Russia talks on ending the war in Ukraine were set to resume.
The EUR/USD pair is extending its gains for a fourth consecutive session, moving 0.46% higher on Thursday and trading around 1.1710 during Friday's Asian hours.
The Euro is finding support following news that France's government survived a no-confidence vote, aided by Prime Minister Sebastien Lecornu's pledge to suspend a key pension reform. Further bolstering the Euro is a slightly less dovish tone from the European Central Bank (ECB) compared to the Federal Reserve. ECB policymaker Edward Scicluna cautioned that the central bank should not rush additional interest-rate cuts, noting that the impact of higher trade tariffs on inflation remains unclear. Governing Council member Martin Kocher added that the ECB believes it has either reached the end of its rate reduction cycle or is very close to it.
The pair's appreciation is amplified by the weakening US Dollar (USD), which continues to decline due to the unresolved US government shutdown. The shutdown is confirmed to extend into next week after the Senate failed to pass a funding bill for the tenth time on Thursday.
Gold's powerful, record-setting surge continued, moving 3.71% higher on Thursday to hit around the $4,380 per ounce region, and remains on track for its ninth consecutive weekly gain. The safe-haven metal's rally is driven by a persistent flight to safety amid a combination of global risks.
The supportive fundamental backdrop includes escalating US-China trade tensions, which were exacerbated by the tit-for-tat port fees and President Trump's tariff threats. Furthermore, the US government shutdown continues to fuel economic uncertainty after the Senate rejected a funding bill for the tenth time on Thursday. These geopolitical and economic risks are amplified by firmly dovish Federal Reserve (Fed) expectations, with traders having fully priced in two more rate cuts this year. This outlook continues to exert significant downward pressure on the US Dollar, further benefiting Gold and offsetting any signs of overbought conditions. The overall trend suggests the path of least resistance for the commodity remains to the upside.
Oil prices extended their declines in Asian trade on Friday, hitting their lowest level since early May, and are set for a weekly loss. The two main crude benchmarks moved sharply lower on Thursday: WTI Crude futures fell 2.19%, and Brent Crude futures dropped 2.34%.
This weakness was triggered by news that U.S. President Donald Trump and Russian President Vladimir Putin agreed to meet soon in Budapest, Hungary, to discuss ending the war in Ukraine. The prospect of peace is considered a net negative for oil prices, as any progress toward a ceasefire could lead to an easing of U.S. sanctions against Russia, potentially allowing Moscow to dramatically increase its oil exports and adding to global supply.
Crude prices are also being battered by concerns over generally sluggish demand and an existing looming supply glut, with a recent build in U.S. inventories also weighing heavily on sentiment. However, markets remain skeptical that the forthcoming meeting will yield any definitive agreements toward a ceasefire.
The main US equity indices moved lower on Thursday, primarily due to a broad-based sell-off driven by fresh concerns over the stability of US regional banks. This banking-sector turmoil stemmed from revelations by several regional lenders, including Zions Bancorp and Western Alliance, which disclosed issues with troubled and fraudulent loans, sparking fears over potential weaknesses in credit oversight across the sector. This negative sentiment was compounded by the ongoing political and geopolitical headwinds.
The banking rout was widespread: among the large financial institutions, Wells Fargo fell -2.91%, JPMorgan Chase dropped -2.47%, and Goldman Sachs slipped -1.32%.
Amid this backdrop, corporate results provided mixed signals for individual stocks: United Airlines shares fell -5.83% despite the carrier beating Wall Street earnings estimates; Salesforce stock jumped 3.79% after raising its long-term revenue target to over $60 billion by 2030; and Oracle shares gained 3.10% as the cloud software group held a final-day meeting at its AI-focused conference. Separately, Eli Lilly shares moved 1.75% higher on Thursday, recovering from earlier selling pressure after President Trump suggested the possibility of lower prices for their popular obesity drugs.
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