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07/10/2025 - 07:14 UTCThe USDX showed little change on Monday, despite the index's current extension of gains into the Asian hours on Tuesday, trading around the 98.20 level. The primary catalyst for the US Dollar's stability was the hawkish commentary delivered by Kansas City Fed President Jeffrey Schmid on Monday. Schmid emphasized that inflation remains too high and that monetary policy is appropriately calibrated. However, the Dollar's upward momentum is significantly tempered by strong market expectations for forthcoming Federal Reserve rate cuts, especially amid the ongoing US government shutdown. The CME FedWatch Tool currently suggests that markets are pricing in a high 94% probability of a rate cut at the October meeting, with an 84% chance of another reduction in December.
In US political news, the shutdown appears likely to extend into its seventh day after the Republican-led Senate rejected a fifth attempt at passing funding measures. The White House walked back President Donald Trump’s earlier claim on Monday that federal employees were already being laid off, but cautioned that job losses remain a possibility as the impasse continues.
Gold is holding steady near the new record high of $3,977.5 per ounce, which it touched early in the Asian session on Tuesday. This surge follows a massive move on Monday where the metal gained over 1.5%, underpinned by the market's expectation that the Federal Reserve will lower borrowing costs two more times this year. Further strengthening Gold’s safe-haven appeal are the persistent US government shutdown and lingering geopolitical tensions globally. Traders are now focused on upcoming FOMC meeting on Wednesday that will be closely watched for any additional insight into the interest rate cut trajectory.
Asian stock indices broadly advanced on Tuesday, continuing the momentum from a strong Wall Street performance, with the tech sector leading gains across the region. Trading volumes were notably light due to market holidays across major China SSE and China SZSE markets. The optimism was fueled by persistent global interest in artificial intelligence following reports of significant deals involving US chipmakers.
Japanese equities continued their significant run, with the Nikkei 225 index hitting a fresh record high, reaching as much as 48,731.0 points. This outperformance stems from the recent election of Sanae Takaichi as the leader of the ruling Liberal Democratic Party. Investors are betting that the pro-stimulus politician will pursue expansionary fiscal policies and maintain pressure on the Bank of Japan to delay raising interest rates. This dovish expectation has tempered speculation of monetary tightening and boosted indices, with industrials and chipmakers leading the advance.
The main US equity indices moved to record highs on Monday, led by technology and chip companies, as investors looked past the US government shutdown. The continued focus remains on the Federal Reserve, with several officials, including Chair Jerome Powell, scheduled to deliver speeches later this week. This follows reports that the USDX dipped slightly, with its near-term path heavily reliant on policy cues and the progression of the US fiscal impasse.
In China, despite the mainland markets being closed for a holiday, the Hong Kong 50 was under pressure, following a sharp pullback in technology shares. Meanwhile, individual chip stocks saw mixed trading following the strong sector performance. Taiwan’s TSMC rose by 3.48%, and Japan’s Advantest Corp. gained 1.08%, reflecting continued strength in the AI supply chain. However, Japan’s Tokyo Electron moved against the trend, falling 1.42%.
Looking ahead, the crypto space remains supported, with Bitcoin steadying after hitting an all-time high of $126,186.0 on Monday. The world’s largest cryptocurrency continues to be buoyed by strong inflows into U.S. spot exchange-traded funds and the market narrative of a "debasement trade" fueled by the prolonged U.S. government shutdown, all contributing to the strong "Uptober" sentiment.
The euro came under renewed pressure on Monday after French Prime Minister Sebastien Lecomu announced his resignation, rattling investors and reviving concerns over political stability within the Eurozone. At the same time, the ongoing U.S. government shutdown, now entering its sixth day, has added to market uncertainty and bolstered demand for the U.S. dollar.
Market participants are closely watching for signs of movement between the White House and congressional Democrats as the impasse threatens to trigger government layoffs, according to remarks from President Donald Trump.
Fresh Eurozone data offered a mixed picture of the region’s economic momentum. Retail sales rose 1.0% year-on-year in August, slowing from 2.2% in July, though largely in line with expectations. On a monthly basis, sales increased 0.1%, rebounding slightly from a 0.5% contraction in July.
Meanwhile, the Sentix investor confidence index improved to -5.4 in October, up from -9.2 in September, suggesting a modest recovery in sentiment after months of pessimism.
Attention now turns to upcoming U.S. economic data, with Friday’s University of Michigan Consumer Sentiment Index expected to provide clues about household confidence amid the shutdown.
Gold prices surged to fresh record highs above $3,900 per ounce on Monday as expectations of further U.S. interest rate cuts and a wave of geopolitical uncertainty spurred investors toward the traditional safe haven.
The Federal Reserve delivered its first rate cut of 2025 in September, and markets are pricing in two additional cuts before year-end. Lower interest rates tend to boost gold by reducing the opportunity cost of holding non-yielding assets and weakening the U.S. dollar.
Ongoing conflicts in the Middle East, the Russia-Ukraine war, and renewed questions about the Fed’s independence have further heightened safe-haven demand. Political instability in Europe added to the volatility, after France’s Prime Minister Sebastien Lecornu and his government resigned just hours after taking office. Meanwhile, the U.S. government shutdown entered its sixth day, compounding investor unease.
Momentum in gold’s rally has also been driven by robust central bank purchases and renewed inflows into gold-backed exchange-traded funds (ETFs).
Oil prices rose on Monday after OPEC+ announced a smaller-than-expected production increase for November, easing some supply concerns even as a subdued demand outlook limited further gains.
On Sunday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, agreed to raise production by 137,000 barrels per day (bpd) in November, matching October’s output increase. The restrained move helped temper fears of a potential supply glut.
Meanwhile, a drone attack on Russia’s Kirishi refinery—one of its largest—halted its main crude processing unit on October 4. Repairs are expected to take about a month, two industry sources said.
Refinery maintenance season in the Middle East, due to begin soon, may help limit near-term price declines.
Despite supply-side factors, expectations of weaker global demand continue to cap oil’s upside.
The U.S. Energy Information Administration (EIA) reported last week that crude, gasoline, and distillate inventories rose more than expected in the week ending September 26, reflecting softer refining activity and consumption.
The US 500 and US Tech 100 new record closes on Monday, lifted by a surge in Advanced Micro Devices (AMD) shares following the chipmaker’s landmark deal with OpenAI, which fueled optimism across the technology sector and overshadowed ongoing concerns over the U.S. government shutdown.
The partial shutdown of the U.S. government entered its sixth day, delaying the release of critical economic data, including the nonfarm payrolls report. The absence of official figures has forced investors to rely on private-sector indicators. Despite the data void, traders remain confident that the Federal Reserve will deliver additional rate cuts at its October policy meeting, according to the CME FedWatch Tool.
Shares of Advanced Micro Devices surged more than 23% after the company unveiled a multi-year agreement to supply artificial intelligence (AI) chips to OpenAI, a deal projected to generate tens of billions of dollars in annual revenue.
The partnership includes an option for OpenAI to acquire up to 10% of AMD’s equity, positioning the chipmaker at the center of the booming AI infrastructure market.
Tesla climbed more than 5% after reports indicated the automaker may receive a tariff exemption under President Trump’s proposed relief measures for domestic manufacturers. The company also released a new promotional video, fueling speculation that a new vehicle model could be unveiled soon.
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