Markets navigated the first US government shutdown in seven years with surprising resilience on Wednesday, as equities posted a fourth consecutive gain despite the political dysfunction in Washington. The shocking negative ADP payrolls print intensified Fed rate cut expectations, sending Treasury yields lower while gold and Bitcoin marched higher.
Check out the headlines and economic updates you may have missed in the latest trading sessions!
Headlines & Data:
- Japan’s ruling Liberal Democratic Party elected Sanae Takaichi as leader, viewed as supportive of loose fiscal and monetary policy, triggering sharp yen weakness
- French Prime Minister Sebastien Lecornu resigned after less than a month in office, throwing France into deeper political crisis as budget negotiations remain deadlocked
- OPEC+ agreed to modest 137,000 barrel/day production increase for November, below market fears of larger boost
- U.S. government shutdown enters second week with no breakthrough in sight, delaying key economic data releases
- ECB officials signal little urgency to change rates, with VP de Guindos calling current levels “appropriate”
- Australia TD-MI Inflation Gauge for September 2025: 0.4% m/m (0.0% forecast; -0.3% previous)
- Swiss Unemployment Rate for September 2025: 2.8% (2.7% forecast; 2.8% previous)
- Sentix Economic Index for October 2025: -5.4 (-9.2 previous)
- Euro area HCOB Construction PMI for September 2025: 46.0 (48.7 forecast; 46.7 previous)
- U.K. New Car Sales for September 2025: 13.7% (5.0% forecast; -2.0% previous)
- U.K. S&P Global Construction PMI for September 2025: 46.2 (45.3 forecast; 45.5 previous)
- Euro area Retail Sales for August 2025: 0.1% m/m (0.2% forecast; -0.5% previous); 1.0% y/y (2.0% forecast; 2.2% previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Monday’s session was characterized by unusual and notable gains across asset classes as political developments in Japan and France, as well as no positive updates surrounding the US government shutdown, drove significant capital flows.
Gold was of note once again, climbing past the $3,900 mark for the first time ever, with spot gold rising 1% to briefly touching $3,970.00 per ounce after setting a new all-time record high. The metal saw strong demand as a safe investment due to the weaker Japanese yen and the ongoing US government shutdown, with growing expectations that the Federal Reserve may cut interest rates again also boosting gold’s appeal.
Bitcoin boomed higher today, now trading around $125,300 after hitting $126,300 on the session. Many experts are calling the move into both gold and cryptocurrencies the “debasement trade” as investors use them to protect wealth against excessive government spending and political instability.
The S&P 500 gained 0.30% to end the day at 6,740.28, while the tech-heavy Nasdaq advanced 0.71% with the help of a big move higher in AMD after AMD and OpenAI announced a multibillion-dollar strategic partnership.
WTI crude rose after OPEC+ agreed to raise production by a modest amount, with crude oil futures breaking above $62.00 a barrel following a 7.4% slump last week. The relief rally reflected traders’ fears being allayed that the oil cartel might announce a much larger production increase.
The 10-year Treasury yield rose modestly to 4.16% as bond markets likely continued to price in potential economic damage and falling confidence in U.S. bonds as the government shutdown continues, and continued move in capital to alternatives like gold and bitcoin for safety. Japan’s Pro-Stimulus election outcome may have been a contributor as well, a scenario that tends to support equities.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The U.S. dollar exhibited a distinct intraday pattern on Monday, building strength through the Asian and early London sessions before reversing course during U.S. trading hours to close mixed against major currencies.
The Japanese yen saw a dramatic drop, hitting its biggest one-day slide against the US dollar in five months, with the yen sinking 1.9% to trade at 150.35 per dollar, completely wiping out its gains from the last two months. This sharp weakness reflected market expectations that incoming Prime Minister Takaichi would pursue looser fiscal and monetary policies.
The dollar’s early strength during Asian hours was amplified by the yen’s collapse and safe-haven flows amid French political uncertainty. The greenback topped out during the morning London session as European traders digested ECB officials’ relatively hawkish commentary about the appropriateness of current rate levels.
During the U.S. morning session, the dollar trended lower as traders likely took profits and reassessed positions with the government shutdown showing no signs of resolution. The lack of official economic data due to the shutdown left markets somewhat rudderless, contributing to the afternoon drift.
By the close, the dollar ended arguably neutral to slightly weaker on a net basis, with the day’s dramatic moves in the yen and political developments overshadowing typical fundamental drivers.
Upcoming Potential Catalysts on the Economic Calendar
- New Zealand NZIER Business Confidence for September 30, 2025 at 9:00 pm GMT
- Japan Household Spending for August 2025 at 11:30 pm GMT
- Australia ANZ-Indeed Job Ads for September 2025 at 12:30 am GMT
- Australia Westpac Consumer Confidence for October 2025 at 12:30 am GMT
- Germany Factory Orders for August 2025 at 6:00 am GMT
- U.K. Halifax House Price Index for September 2025 at 6:00 am GMT
- New Zealand Global Dairy Trade Price Index for October 7, 2025
- Canada Balance of Trade for August 2025 at 12:30 pm GMT
- U.S. Balance of Trade for August 2025
- Canada Ivey PMI s.a for September 2025 at 2:00 pm GMT
- U.S. Fed Bostic Speech at 2:00 pm GMT
- U.S. Fed Bowman Speech at 2:05 pm GMT
- U.S. Fed Miran Speech at 2:30 pm GMT
- U.S. Fed Kashkari Speech at 3:30 pm GMT
- Euro area ECB President Lagarde Speech at 4:10 pm GMT
- U.S. Fed Miran Speech at 8:05 pm GMT
- U.S. API Crude Oil Stock Change for October 3, 2025 at 8:30 pm GMT
Tuesday’s calendar features multiple Federal Reserve speakers who will likely address monetary policy amid the ongoing government shutdown that continues to delay critical economic data releases. The Senate is scheduled to vote again today on a stopgap spending measure, although it’s not expected to pass as Democrats insist on addressing healthcare policy demands while Republicans want those issues debated after the government reopens.
With the shutdown now in its second week and showing no signs of resolution, Fed officials’ commentary will be closely scrutinized for insights into how policymakers are interpreting the economic landscape without access to official statistics. Any hints about the central bank’s tolerance for operating without key data or shifts in their policy outlook could drive significant market moves across currencies and bonds.
Stay frosty out there forex friends and don’t forget to check out our Forex Correlation Calculator when taking any trades!
