Closing Recap (Week Ending October 17th) 

U.S. stocks finished a choppy week with a modest Friday rally as President Trump softened his rhetoric on China tariffs, allowing dip-buyers to step in. In currency markets, the US Dollar saw a volatile week, ending with a slight gain as EUR/USD eased from two-week highs, GBP/USD also retreated, and USD/JPY clawed back early losses. Gold saw a massive reversal, tumbling from record highs after reaching them mid-week, oil finished the week lower, and Bitcoin’s bearish trend continued. 

With the U.S. data void extending into a third week, the market’s attention will be almost entirely on international developments. A massive slate of top-tier data from China will provide the most important snapshot of global economic health, while critical inflation reports from the UK and Canada will drive central bank policy expectations.

Key Takeaways 

• Stocks End Volatile Week Higher: Major indices recovered from early-week selling to post modest gains, but underlying sentiment worsened significantly. The Fear & Greed Index plunged to “Extreme Fear” as small caps lagged and market breadth deteriorated. 
• Currency Pairs Reflect Dollar Recovery: After a dovish start, the US Dollar recovered; EUR/USD retreated from two-week highs to 1.1663, GBP/USD pulled back to 1.3415, and USD/JPY rebounded to 150.65 as risk aversion eased. 
• “Abenomics 2.0” Trade Unwinds as Japan’s Coalition Fractures: A political crisis in Japan caused the ruling coalition to collapse, evaporating confidence in future fiscal stimulus. The news triggered a powerful “risk-off” rally in the Japanese Yen, unwinding weeks of weakness.
• Gold Reverses Sharply: After hitting a new record high of $4,392/oz this Friday on shutdown fears, gold tumbled to settle at $4,253/oz as Trump’s softer trade talk sparked massive profit-taking. 
• Bitcoin Bleeds Lower, Decoupling From Gold:: Bitcoin’s price took another hit, dropping over 4% to $106K and extending its weekly decline to ~7%, with the market portraying a very bearish image. The “digital gold” narrative was severed as Bitcoin sold off while physical gold soared.
• Government Shutdown Enters Third Week: The US government shutdown is now forecast to be the longest in history, delaying key economic data and adding to Fed uncertainty. 
• US-China Trade Rhetoric Softens: Stocks and risk sentiment were boosted Friday after President Trump stated his 100% tariff threat was “not sustainable” and that he expects to meet with President Xi. 
• Week Ahead Focus – Key Risk Events: Geopolitics and politics are paramount, with the CCP’s 4th Plenum in China (Mon-Thu) and the Japanese parliamentary vote for a new PM (Mon). Key data includes Chinese Q3 GDP (Mon) and Global Flash PMIs (Fri). 

Looking Ahead

After a week where markets were whipsawed by conflicting trade headlines and a historic gold reversal, the focus now shifts to a heavy slate of political and geopolitical events. Looking ahead, the market faces a week dominated by politics and geopolitics, with a lighter economic calendar. In China, the Communist Party’s Central Committee will hold its Fourth Plenum (Monday-Thursday), which will set the framework for the next five-year plan. Also on Monday, China will release Q3 GDP and September activity data, which will be crucial for gauging the economy’s health amid trade tensions. In Japan, a parliamentary vote on Monday will select the next Prime Minister, a pivotal event following the collapse of the ruling coalition that has thrown the “Abenomics 2.0” trade into question. 

With the US government shutdown continuing, the economic data schedule is sparse and subject to delays. The main data point will be the preliminary “flash” PMIs for October from the US, UK, and Eurozone on Friday, which will offer the first real-time glimpse into global economic activity for the month. Key inflation data from the UK and Canada (Wednesday and Tuesday) will also be on the docket.

Market Overview

It was a week of profound contradiction in the U.S. stock market. U.S. equity markets navigated a choppy and headline-driven week, ultimately finishing with modest gains after a late Friday rally. The mood shifted early in US trading on Friday after President Trump and his deputies repeatedly stated they expected a positive outcome with China, with Trump calling his 100% tariff threat “not sustainable.” This “TACO trade” (Trump Administration Calming Offensive) was enough to encourage dip-buyers, though trading remained volatile. The market is contending with significant crosscurrents: a prolonged U.S. government shutdown, which is now forecast to become the longest in U.S. history, is delaying key economic data and creating uncertainty for the Fed. At the same time, Q3 earnings season is off to a solid start, with 86% of companies beating expectations so far. However, overall market sentiment remains deeply pessimistic, with the Fear & Greed Index lodged in “Extreme Fear.” 

Index	Last Closing Level	Friday’s Change	Friday’s Change (%)	Weekly Change (%)
DJ Industrials	46219	228.25	0.0052	1.22%
S&P 500	6664	34.94	0.0053	1.70%
Nasdaq	22679	117.44	0.0052	2.46%
Russell 2000	2452	-14.85	-0.006	1.46%

The digital asset space continued its bearish trend. Bitcoin’s price took another hit, dropping over 4% to $106K and bringing its weekly decline to about 7%. The recent sell-off has upended the “bitcoin-as-safe-haven” narrative and severed its correlation with gold. In a dramatic reversal, gold exploded to a new record high of $4,392/oz mid-week as the shutdown forecast worsened, but then saw a massive $120 retracement on Friday as Trump’s softer trade talk triggered a rush of profit-taking.

Economic Data Calendar (Week of October 20th)

MON (Oct 21): 

• CCP 4th Plenum Begins (China): Meeting to set medium-term policy priorities. 
• Chinese Q3 GDP & Activity Data (Sep – Retail Sales, Industrial Production): GDP exp. 4.7% Y/Y. Crucial look at China’s economy. 
• Japanese Parliamentary Vote for New PM: Lawmakers vote to select the next Prime Minister following the collapse of the ruling coalition, a key political risk event for the Yen. 
• PBoC Loan Prime Rate (LPR) Setting: Expected to hold rates steady. 

TUE (Oct 22):

• Canadian CPI (Sep): The last inflation report before the Bank of Canada’s October meeting, where markets are pricing a 64% chance of a rate cut. 
• UK Public Sector Net Borrowing (PSNB – Sep): UK fiscal data. 

WED (Oct 23): 

• UK CPI (Sep): Headline CPI exp. to rise to 4.0% Y/Y, a potential headache for the BoE. 

THU (Oct 24): 

• Central Bank Decisions (CBRT, BoK): Turkey and South Korea’s central banks announce their latest monetary policy decisions. 
• European Council Meeting: EU leaders meet in Brussels.
• Australian Flash PMIs (Oct): Early look at Australian business activity. 

FRI (Oct 25): 

• Global Flash PMIs (EZ, UK, US): The first look at economic activity in October from major economies will be closely watched for signs of slowing momentum. 
• Japanese National CPI (Sep): Key inflation data for Japan. 
• UK Retail Sales (Sep): Expected to show a flat M/M reading. 
• US CPI (Sep – TENTATIVE): The BLS is aiming to release the delayed September inflation report, which would be a major market mover ahead of the Fed’s meeting.

Commodities, Currencies, and Treasuries 

The escalating U.S. government shutdown fears ignited a fire under Gold, sending it parabolic to a new record high of $4,392 an ounce early in the week. However, the precious metal experienced a violent reversal on Friday, tumbling over 2% after President Trump’s softer China rhetoric eased immediate trade-war fears sparked a wave of profit-taking. Despite the sharp pullback, gold still closed with its ninth consecutive weekly gain and is up over 65% year-to-date. Crude oil prices (WTI) settled slightly higher on Friday at $57.15/bbl but finished the week lower on concerns of a supply surplus and easing geopolitical risks in the Middle East. 

Asset	Last Level	Friday’s Change	Unit / % Change
WTI Crude	57.15	0.16	USD/bbl
Brent Crude	61.29	0.23	USD/bbl
Gold (Dec Fut.)	4213.3	-91.3	USD/oz
EUR/USD	1.1668	-0.002	Rate
USD/JPY	150.48	0.08	Rate
10-Year Note Yield	0.04	0.00031	Yield (%)
Bitcoin	106,554	-0.0175	USD

In the currency markets, the US Dollar had a volatile week, beginning on a strong footing before a dovish speech from Fed Chair Powell sent it tumbling. It then rebounded Friday on Trump’s softer trade comments.The U.S. Dollar ended the week with a loss of over 0.4%, driven down by dovish comments from Fed Chair Powell that reinforced aggressive rate cut expectations:

•  USD/JPY: This was the most important story of the week, as the popular “Abenomics 2.0” trade violently unwound. The pair plunged from a nine-month high near 153.29 to finish the week down 0.35% near 150.65. The Yen rallied hard as a safe-haven asset after Japan’s ruling LDP-Komeito coalition fractured, evaporating market confidence in future fiscal stimulus and creating immense political uncertainty. The Yen, which had been weakening for weeks on the prospect of endless stimulus, rallied hard as a safe-haven asset amid the newfound political uncertainty, causing USD/JPY to fall for the week. The easy “short the Yen” trade is over. 
• EUR/USD: The pair snapped a losing streak to finish the week with a modest gain of 0.25%, trading around 1.1663. The Euro found support from broad U.S. Dollar weakness after Fed Chair Powell’s dovish remarks and an easing of immediate political risk in France, after the Prime Minister survived two no-confidence votes. 
• GBP/USD: The GBP/USD pair also pulled back on Friday but Sterling was a standout performer, with buyers finally stepping in to drive a firm rebound from 11-week lows. The pair finished the week with an impressive 0.49% gain above 1.3415. The technical picture has improved, with the daily RSI recovering, though the upcoming UK inflation report will be a major test.