The market’s risk tone stayed slightly positive early Monday, as optimism surrounding a potential United States–China trade deal balanced easing worries over the Federal Reserve’s December rate-cut outlook. Softer Russia–Ukraine tensions, mixed headlines from Gaza and Venezuela, and a public holiday in Japan also shaped early sentiment.
Global markets opened quietly, with major foreign exchange pairs moving in tight ranges as Japan’s Culture Day kept Tokyo markets closed. Gold initially fell to around US$3,965 after China scrapped its long-standing gold tax incentive, before rebounding above US$4,010 as traders reassessed the demand outlook and the overall market reaction.
Oil opened the week with a strong gap-up in Sunday’s Globex session, supported by weekend headlines from OPEC+, which agreed to raise output by 137,000 barrels per day — the same pace as last month and in line with expectations. However, the group unexpectedly decided to pause output hikes for Q1 2026 to avoid a potential oversupply in the northern winter. The pause, seen as a sign of supply caution, helped boost crude oil prices further at the start of the week.
Federal Reserve commentary remained a central driver. Fed Governor Christopher Waller said the central bank should cut interest rates again in December, citing labour-market weakness and moderating inflation despite the “data fog” caused by the government shutdown. In contrast, Kansas City Fed President Jeffrey Schmid maintained a hawkish stance, dissenting against the last rate cut and pointing to continued economic momentum. Atlanta Fed President Raphael Bostic and Cleveland Fed President Elizabeth Morgan Hammack both resisted recent cuts before eventually backing the October move, suggesting they may prefer a December pause. Dallas Fed President Lorie K. Logan also signalled she would have preferred to hold rates steady. Market pricing now assigns a 68% probability of a December rate cut, down from the previous week, supporting U.S. Dollar strength and Treasury yields, while pressuring cryptocurrencies.
U.S. President Donald Trump generated multiple geopolitical headlines over the weekend. He ruled out sending Tomahawk missiles to Ukraine, hinted at “secret plans” for Venezuela, and said U.S. troops could be deployed in Nigeria, though without specific details. He confirmed holding regular meetings with Nvidia Chief Executive Officer Jensen Huang and reiterated that the U.S. will not share Nvidia’s Blackwell AI chips with other countries. Trump also said he would not attend upcoming Supreme Court arguments related to tariff policies, aiming to avoid influencing the decision.
In Asia, China’s private Manufacturing Purchasing Managers’ Index (RatingDog PMI) eased to 50.6 in October from 51.2, as export demand weakened under tariff pressure even as domestic orders improved. Employment rose for the first time in seven months, but sentiment remained cautious, and Beijing is expected to maintain fiscal support to stabilise growth through year-end. South Korea’s Manufacturing PMI slipped back into contraction at 49.4, down from 50.7 in September.
In Australia, data ahead of the Reserve Bank of Australia (RBA) meeting painted a mixed picture. The Melbourne Institute’s October Consumer Price Index (CPI) rose 3.1% year-on-year, up slightly from 3.0% and keeping inflation just above the RBA’s 2–3% target band. Household spending rose 0.2% month-on-month, below expectations, while building approvals jumped 12%, and ANZ job ads fell 2.2%, marking a fourth consecutive monthly decline. The data suggest patchy domestic demand, softening labour conditions, and persistent inflation pressures — leaving the RBA widely expected to hold its cash rate steady on Tuesday.
New Zealand’s September building permits climbed 7.2% month-on-month, while the Reserve Bank of New Zealand’s Financial Stability Review indicated that large banks remain well-positioned to withstand severe solvency and liquidity shocks from geopolitical risks.
In Europe, Deutsche Bank noted that the European Central Bank’s firmer tone and improving growth outlook reduce the odds of renewed rate cuts, reinforcing expectations for a prolonged policy pause that keeps euro sentiment underpinned.
Russian Prime Minister Mikhail Mishustin begins a two-day visit to China, meeting Premier Li Qiang and possibly President Xi Jinping, underlining the depth of Russia–China cooperation and consistent high-level communication.
In the broader market landscape, the U.S. Dollar Index (DXY) consolidates near a three-month high after a three-day winning streak, while crude oil extends its Friday recovery. EURUSD drops to a three-month low, and GBPUSD trades near its weakest since early April, whereas USDJPY holds near its highest since February amid Japan’s market holiday. AUDUSD and NZDUSD both snap three-day losing streaks as traders position ahead of the RBA decision, while USDCAD stalls after a two-day rally, struggling to capitalise on stronger oil prices, Canada’s key export. Cryptocurrencies also snap a three-day winning streak, facing mixed sentiment. Across equities, Asia-Pacific stocks trade slightly higher, tracking Wall Street’s Friday gains, as the data-heavy week begins.
EURUSD slid to a three-month low, while GBPUSD fell to its weakest level since mid-April, weighed down by a stronger U.S. Dollar and soft sentiment across Europe and the United Kingdom. In contrast, USDJPY traded without a clear direction, hovering near its highest level since February, a level revisited last week. The pair’s muted moves come as Japan’s markets remain closed for holidays and mixed signals from the Bank of Japan circulate under the country’s new leadership in Tokyo.
AUDUSD and NZDUSD both snapped a three-day losing streak, while USDCAD struggled for direction as traders reassessed expectations for a Federal Reserve rate cut in December and awaited key employment and activity data from ISM and ADP later this week. At the same time, reports of additional stimulus measures from China and renewed optimism over the United States–China trade deal helped ease earlier pessimism toward the commodity-linked currencies of Australia, New Zealand, and Canada. Traders in AUDUSD appeared to be positioning ahead of Tuesday’s Reserve Bank of Australia (RBA) meeting, where no rate change is expected following a run of mostly positive domestic data. Meanwhile, NZDUSD shrugged off the Reserve Bank of New Zealand’s mixed bank stress test results, and USDCAD remained weighed by uncertainty over the United States–Canada trade relationship.
Crude oil started the week on a positive note, extending Friday’s recovery with a gap-up, after weekend news from the OPEC+ meeting showed that policymakers would continue rolling back the previous output cut by 134,000 barrels per day in November but plan to pause further increases in early 2026. Supporting oil’s rise were geopolitical headlines, including concerns that the U.S. might take military action in Venezuela, deploy forces to Nigeria, and scale back support for Ukraine while seeking a resolution with Russia, signaling a potential for a prolonged conflict.
Gold found renewed buying interest, reversing the previous day’s pullback from the 21-day Exponential Moving Average (EMA) resistance. Asia-Pacific equities traded slightly higher, following Friday’s positive close on Wall Street. However, Bitcoin (BTC) and Ethereum (ETH) both broke a three-day winning streak, sliding more than 2.0% intraday as sentiment weakened across the digital asset market.
Looking ahead, the October ISM Manufacturing PMI, Q3 earnings from Palantir Technologies Inc., and ongoing Federal Reserve commentary are likely to shape intraday market moves. The spotlight will be on Wednesday’s U.S. ISM Services PMI and ADP Employment Change. Current risk sentiment and Fed talk favor the U.S. Dollar, which could weigh on risk assets such as the Australian and New Zealand dollars and cryptocurrencies, while equities may rise, especially if earnings reports are positive. Crude oil, however, is less likely to sustain its recent gains amid concerns over weaker demand and higher supply, despite OPEC+’s production decisions.
May the trading luck be with you!
