Closing Recap

U.S. stocks finished broadly lower as the official start of a partial government shutdown overshadowed recent market optimism, leading to concerns about potential economic data delays; gold surged to another record high on safe-haven demand, while oil prices plunged and the dollar weakened further. In the currency markets, the U.S. dollar fell for a fourth straight day, hitting a one-week low as the government shutdown and dovish Fed bets weighed on sentiment, allowing the Euro to firm above 1.17 and the Japanese Yen to rally on safe-haven flows. 

Key Takeaways 

• Government Shutdown Hits Markets: Equities are lower as a partial U.S. government shutdown began at midnight after Congress failed to pass a funding bill, raising uncertainty and the prospect of delayed economic data, including Friday’s NFP report. 
• Markets Enter Information Vacuum: With the shutdown in effect, the release of critical data, including tomorrow’s Jobless Claims and Friday’s Non-Farm Payrolls report, is now in limbo, forcing traders to navigate without a clear economic map.
• Gold Surges to New Record High: Gold prices climbed to a new all-time high of $3,875.53 per ounce as investors flocked to safety amid the shutdown and ongoing policy uncertainty. 
• Seasonality and Key Levels: October is historically a bullish month for EUR/USD and GBP/USD. For USD/JPY, the key support level to watch is the convergence of its year-to-date trend line and the 100-day moving average near 147.00.
• Oil Prices Plunge on Supply Fears: WTI crude fell sharply after reports that OPEC+ is considering a larger-than-expected production hike for November, adding to oversupply concerns. 
• Focus on Private Sector Data: With official government data releases now in limbo, investor focus will shift to private sector reports like today’s ADP employment and ISM Manufacturing PMI for economic clues. 
• Dollar Slides: The U.S. dollar index fell to a one-week low, pressured by the shutdown and expectations of further Fed rate cuts, while the Euro held firm and the safe-haven Japanese Yen gained for a fourth consecutive day. 
• Bitcoin Rally Stalls: Bitcoin prices stalled their recent rally, hovering around $114,000 as the risk-off mood from the government shutdown weighed on the crypto market. 
• Global Markets Mixed: European indices opened slightly lower on the U.S. shutdown news, while Chinese markets are closed for the Golden Week holiday. 
• Hawkish RBA, Dovish Fed: Central bank divergence continues, with the RBA adopting a more hawkish tone on inflation, contrasting with the market’s high conviction in Fed rate cuts. 

Market Overview

U.S. equity markets are starting the new month and quarter on a negative note, with futures pointing to a lower open as a partial U.S. government shutdown officially began at midnight. The curtain has officially fallen in Washington. The U.S. government has entered a partial shutdown after Congressional deadlock snapped the funding mechanism, furloughing around 750,000 federal employees. For traders, the primary damage is not the immediate economic hit, but the sudden information vacuum. Markets thrive on a constant stream of data, and with government agencies like the Bureau of Labor Statistics now closed, that tap has run dry. This introduces a significant layer of uncertainty into a market that has been highly data-dependent in its assessment of future Federal Reserve policy. 

Index	Last	Change	% Change
S&P 500	6688	27.25	0.0041
Nasdaq	22660	68.86	0.003
Dow Jones	46398	81.82	0.0018
Russell 2000	2436	1.24	0.0005

The risk-off sentiment is palpable across markets this morning. Safe-haven assets are in high demand, with gold prices surging to a new all-time high above $3,875 per ounce. The U.S. dollar is under pressure for a fourth consecutive day, falling to a one-week low as investors fret about the shutdown’s impact. European indices are also trading lower, taking their cue from the negative tone in U.S. futures. 

With official government data now on hold, investors will be forced to rely more heavily on private sector reports for economic insights. Today’s ADP employment data and ISM Manufacturing PMI will be even more closely watched than usual. The shutdown drama is overshadowing other developments, such as a more hawkish-than-expected statement from the Reserve Bank of Australia overnight, which highlighted persistent inflation concerns. President Trump’s defense of the shutdown, suggesting it will allow for “irreversible” actions and spending cuts, signals a potentially prolonged standoff.

Economic Calendar

Yesterday’s U.S. data painted a mixed picture of the economy just before the shutdown, showing a weaker consumer but a resilient labor market. 

• U.S. JOLTS Job Openings (Aug): Edged up slightly to 7.227M, roughly in line with the 7.2M consensus. 
• U.S. Consumer Confidence (Sep): Slid to 94.2 from 97.8, missing the 96.0 forecast and signaling growing consumer pessimism. 
• U.S. Chicago PMI (Sep): Dropped to 40.6, well below the 43.0 estimate, indicating a contraction in regional manufacturing activity.

The U.S. economic calendar today is highlighted by private-sector data, which will take on greater importance due to the government shutdown.

• U.S. ADP Employment Change for September (Expected: +50K, Prior: +54K)
• U.S. ISM Manufacturing PMI for September (Expected: 49.0, Prior: 48.7) 
• Flash Eurozone CPI (Expected: 2.2% y/y). 
• Final PMIs for Eurozone economies and the UK. 
• Central Bank Speakers (Today): Fed’s Barkin (non-voter), ECB’s Elderson, de Guindos, Rehn, BoC’s Rogers. 

Commodities, Treasuries and Currencies 

Gold prices are surging, with December futures up $18.00 (+0.47%) to settle at $3,873.20, having hit a new record high of $3,875.53 earlier. The rally is a direct response to the U.S. government shutdown, which is fueling safe-haven demand. Crude oil prices are falling sharply, with WTI down -1.7% to $62.37/bbl. The decline is driven by reports that OPEC+ is considering a larger-than-expected production hike for November, with some sources suggesting a 500,000 bpd increase is being discussed. 

In the currency markets, the U.S. Dollar Index (DXY) is down -0.35% to a one-week low near 97.50, falling for a fourth consecutive day pressured by the shutdown and continued bets on Fed rate cuts. The EUR/USD pair is firming above 1.1750 capitalizing on the dollar’s slide, with large options expiries likely to keep it range-bound. This move aligns with historical tendencies, as October is a seasonally bullish month for EUR/USD, with an average return of +0.30% over the last 50 years.

Asset	Change	Unit	Last
WTI Crude	-1.08	USD/bbl	62.37
Brent	-0.95	USD/bbl	67.02
Gold	18	USD/oz	3873.2
EUR/USD	0.0011	USD	1.17
USD/JPY	-0.67	JPY	147.92
US 10-Yr Yield	+0.7 bps	%	0.04148

The Japanese Yen is rallying for a fourth straight day on strong safe-haven bids, with USD/JPY slipping below 147.50. This price action aligns perfectly with its seasonal pattern, as October is historically a modestly bearish month for USD/JPY (average fall of -0.25%). The divergent policy outlook, with a hawkish BoJ and dovish Fed, provides a strong fundamental headwind.The British Pound is also gaining as traders price in a 97% chance of a Fed cut in October. Like the euro, the British pound enters a historically positive month, with October seeing average gains of +0.26% since 1971.

U.S. Treasury yields are little changed, with the 10-year yield steady at 4.148%. Bitcoin is trading cautiously, stalling its recent rally above $114,000 as the risk-off mood from the government shutdown weighs on the crypto market.

Looking Ahead 

The market will be entirely driven by developments in Washington regarding the government shutdown. The duration of the shutdown will be key; a short-lived impasse may be quickly shrugged off, but a prolonged closure could begin to have a real economic impact and increase market volatility. With official government data on hold, private reports like today’s ADP and ISM will be the primary sources for economic insights. Speeches from numerous Fed officials this week will also be closely watched for any reaction to the shutdown. A significant cluster of options is set to expire today, with $2.5B at the 1.1750 strike and $1.9B at the 1.1800 strike. With price currently trading near the 200-hour moving average (∼1.1744), this zone is a major technical and options-related battleground that could keep price action contained.