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03/11/2025 - 08:14 UTCThe U.S. Dollar Index edged higher in early Asian trading on Monday, hovering around 99.70 as investors scaled back expectations for further Federal Reserve rate cuts. Attention now turns to the release of the U.S. October ISM Manufacturing PMI, due later in the day.
The dollar’s strength follows the Fed’s 25-basis-point rate cut at its October meeting, which brought the federal funds rate to a range of 3.75%–4.00%. Despite the move, Fed Chair Jerome Powell suggested it could be the final reduction of the year, emphasizing the need for clearer economic signals before taking additional action.
Market pricing now reflects roughly 68% odds of another rate cut in December, down sharply from 93% a week earlier, according to the CME FedWatch Tool. However, ongoing concerns over the U.S. government shutdown, now in its sixth week, could limit further dollar gains. Lawmakers in Washington remain deadlocked over a Republican-backed funding bill, with no resolution in sight, raising the risk that the standoff could become the longest in U.S. history.
Most Asian equities were subdued on Monday as investors weighed fresh signs of slowing momentum in China’s manufacturing sector, while South Korean stocks surged to a record high, driven by strong gains in major semiconductor firms. Market attention also turned to the Reserve Bank of Australia (RBA), which begins its two-day policy meeting later in the day.
The RBA is widely expected to hold its cash rate at 3.6% when it announces its decision on Tuesday, amid signs that inflationary pressures remain elevated. Recent data showed Australia’s consumer price index rose 1.3% in Q3 and 3.2% year-on-year, above expectations and the RBA’s 2–3% target range. Rising core inflation has tempered hopes for early rate cuts next year, prompting analysts to forecast a longer period of policy restraint.
China’s private RatingDog manufacturing PMI slipped to 50.6 in October from 51.2 in September, missing expectations of 50.7. The data signaled only modest expansion in factory activity, reinforcing concerns that the world’s second-largest economy continues to face soft demand at home and abroad. South Korea was the region’s standout performer after government data showed exports rose 3.6% year-on-year in October, exceeding forecasts for a slight decline.
Wall Street ended higher on Friday, capping a strong week and month for equities as upbeat earnings from Amazon lifted sentiment, even as Federal Reserve officials struck a more cautious tone on further rate cuts. Amazon jumped 9.6% to a record high after issuing an optimistic sales forecast, driving the consumer discretionary sector to its best day since May. Broader earnings momentum remained strong, with over 83% of S&P 500 companies beating estimates, according to LSEG data.
On the energy front, oil prices rose on Monday after OPEC+ decided to pause production hikes in the first quarter of 2026, easing concerns about a potential supply glut. Gains were tempered by weak factory data from Asia and ongoing uncertainty over Russian supply disruptions and softening global demand, keeping the market cautious.
On the cryptocurrency front, Bitcoin extended losses on Monday after posting its first October decline since 2018, as concerns over a slowing global economy and U.S.–China trade tensions weighed on risk appetite. Bitcoin lost about 4% in October, ending its long-standing “Uptober” trend. Hawkish signals from the Federal Reserve and a modest U.S.–China trade deal offered little support. Coinglass data showed the Coinbase premium—the difference between Bitcoin’s price on Coinbase and the global average—turned negative, highlighting subdued U.S. retail and institutional demand and coinciding with outflows from U.S. crypto ETFs.
The EUR/USD pair ended the session 0.30% lower on Friday, posting losses for a third consecutive day. The euro remains under pressure as the U.S. dollar gains support amid fading expectations for a December rate cut by the Federal Reserve (Fed).
The move follows the Fed’s decision last week to lower its benchmark rate for the second time this year, bringing it to a range of 3.75%–4.00%. Despite the cut, Fed Chair Jerome Powell signaled caution at the post-meeting press conference, noting that another rate reduction in December is “far from certain.” Powell emphasized a “wait-and-see” approach until official economic data releases resume.
According to the CME FedWatch Tool, markets now assign a 69% probability of a December cut—down sharply from 93% just a week earlier.
Meanwhile, investor sentiment remains fragile as the US government shutdown stretches into its sixth week, heightening concerns over the broader economic outlook. Political gridlock persists, with lawmakers deadlocked over a Republican-backed funding bill and no resolution in sight.
On the European front, ECB policymakers struck a cautiously balanced tone. Francois Villeroy de Galhau stated that the central bank is in a “good position” following its October decision but stressed the need for “full optionality” amid ongoing risks from financial markets. He underscored the importance of “agile pragmatism” guided by data and forecasts at future meetings.
Gold prices extended its intraday gains on Monday, rising past the $4,000 psychological mark during Asian trading hours. The advance was supported by renewed safe-haven demand after U.S. President Donald Trump signaled potential restrictions on advanced artificial intelligence (AI) hardware exports to China, heightening geopolitical tensions between the world’s two largest economies.
Lingering concerns over the prolonged U.S. government shutdown, now entering its 33rd day, further underpinned demand for the precious metal. The political stalemate continues amid congressional gridlock over a Republican-backed funding bill, with President Trump urging GOP senators to end the impasse by abolishing the filibuster rule—an idea party leaders have so far resisted.
However, gold’s upside remains capped as the U.S. Dollar (USD) stays firm near its highest level since early August, supported by the Federal Reserve’s hawkish tone.
Looking ahead, attention turns to the U.S. ISM Manufacturing PMI due later Monday, along with remarks from key Fed officials, which could offer fresh direction for both the dollar and gold prices.
Oil prices advanced in Asian trading on Monday after OPEC+ agreed to pause its ongoing production hikes in the next quarter, easing concerns over a potential supply glut. Additional support came from reports of Ukrainian attacks on Russian energy infrastructure, which fueled worries about possible supply disruptions.
The coalition of oil producers—comprising the Organization of the Petroleum Exporting Countries (OPEC) and its allies—announced a modest 137,000 barrels per day production increase for December, matching the pace of hikes in October and November. However, the group said it will pause further increases during the first quarter of 2026, citing concerns about sluggish demand and oversupply risks.
Oil prices also drew support from escalating tensions in the Russia-Ukraine conflict. Ukraine reportedly launched a drone attack on one of Russia’s key Black Sea oil ports over the weekend, part of Kyiv’s strategy to disrupt Moscow’s war efforts by targeting critical energy infrastructure.
The strike followed Russian attacks on Ukraine’s Zaporizhzhia region, which caused widespread power outages. Meanwhile, U.S. sanctions imposed in October on major Russian oil firms have raised expectations of tighter global supply, though traders remain cautious given Moscow’s history of circumventing restrictions.
U.S. stock futures ticked higher on Sunday evening as Wall Street entered November with momentum, following a strong October performance driven by optimism around artificial intelligence (AI), upbeat tech earnings, and signs of easing U.S.–China trade tensions.
All three major indexes ended October higher, extending a six-month winning streak.
The rally was underpinned by investor enthusiasm for AI-related stocks and strong quarterly results from several major technology firms. Amazon.com surged nearly 10% after robust growth in its cloud division and an improved outlook. Microsoft, Alphabet, and Meta Platforms also advanced following better-than-expected earnings.
Market sentiment was further buoyed by the Federal Reserve’s 25-basis-point rate cut last week, lowering the benchmark rate to a 3.75%–4.00% range. While Fed Chair Jerome Powell cautioned that future cuts are not assured, investors viewed the move as a sign the central bank remains focused on supporting growth amid moderating inflation. Hopes of easing trade frictions between Washington and Beijing also lifted confidence.
Investors now turn their focus to another busy earnings week, with about 130 S&P 500 companies set to report.
Advanced Micro Devices headlines Tuesday’s schedule as investors look for updates on AI chip demand following strong results from peers. Uber Technologies and McDonald’s will post results on Wednesday, offering insight into consumer spending and service-sector trends.
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