Closing Recap

U.S. stock futures indicate a positive open, continuing the “buy the dip” trend as investors await the first major U.S. inflation report (CPI) in a month, following weeks of data delays from the government shutdown; gold is pulling back from all-time highs, oil saw a strong rebound, and the dollar is firming ahead of the release. In the currency markets, the U.S. dollar is firming after recent weakness, with the EUR/USD pair easing below 1.1650 and the British Pound slipping, while the Japanese Yen is under renewed pressure as traders focus on the widening U.S.-Japan policy divergence. Bitcoin is also showing strength, nearing $112,000. 

Key Takeaways 

• Futures Point Higher Ahead of CPI: Equities are set for a positive start, with the “buy the dip” mentality still intact as markets brace for the release of the September U.S. Consumer Price Index (CPI), the first key inflation data since the shutdown began. 
• Government Shutdown Enters Day 24: The ongoing U.S. government shutdown continues to create an information vacuum, placing even greater importance on today’s CPI release. 
• Trade Tensions Simmer: President Trump’s threat of new software export curbs on China and the termination of trade talks with Canada are keeping trade policy in focus, even as a Trump-Xi meeting is confirmed. 
• Gold Bounces, But Set for Weekly Loss: Gold saw a strong rebound, rallying nearly 2% after two days of heavy losses. However, the precious metal is still on track for its first negative week since mid-August after a historic nine-week winning streak.
• Dollar Holds Steady as Trade Hopes Persist: The U.S. dollar is firming, with the EUR/USD pair easing and the Japanese Yen weakening as USD/JPY rallies towards 153, driven by a hawkish Fed outlook and a dovish BOJ. 
• Bitcoin Recovers as Trade Jitters Ease: The cryptocurrency is showing signs of life, climbing back above $111,000 as the confirmation of the Trump-Xi meeting eases the immediate trade war fears that had weighed on risk assets. 
• Oil Surges Over 5% on Sanctions News: WTI Crude Oil was the standout performer, rocketing higher by over 5.6% after the U.S. Treasury launched direct sanctions against Russia’s two largest oil companies. 
• Yields & Currencies Volatile: Treasury yields are steady ahead of the CPI, while currency markets have seen significant moves driven by political news in Japan and France, and economic data in the UK and Australia. 

Market Overview

U.S. equity markets are poised for a higher open, with futures pointing to gains as investors look to buy the dip after yesterday’s modest pullback. The market’s focus is squarely on this morning’s release of the September U.S. Consumer Price Index (CPI), which will be the first major piece of U.S. economic data released in weeks due to the ongoing government shutdown. The BLS is making an exception for this release due to its importance for calculating social security payments. The data will be critical in shaping expectations for the Federal Reserve’s upcoming policy meeting. 

Index	Last	Change	% Change
S&P 500	6738	39.01	0.0058
Nasdaq	22941	201.4	0.0089
Dow Jones	46734	144.2	0.0031
Russell 2000	2482	31.1	0.0127

The market has been in a holding pattern, grappling with a mix of positive and negative catalysts. A strong start to the Q3 earnings season and dovish Fed expectations have been providing a tailwind for stocks. However, the prolonged U.S. government shutdown, now in its 24rd day, and renewed U.S.-China trade tensions are creating significant uncertainty. President Trump’s threat of new software export curbs on China and the termination of trade talks with Canada have added to the cautious mood. 

In global news, Japan’s September CPI came in hot, but the Yen weakened as the new Prime Minister’s pro-stimulus stance is seen as keeping the Bank of Japan on a dovish path. China’s exports showed surprising resilience in September. In Europe, political turmoil in France continues to weigh on the Euro.

Economic Calendar

The U.S. economic calendar is dominated by the release of the September Consumer Price Index (CPI). Overnight data from Japan showed inflation remains stubbornly high, while this morning’s UK and French data has been mixed. 

• Japan National CPI (Sep): Headline inflation came in at +2.9% year-over-year, with the core reading (ex-food & energy) at +3.0%, both well above the Bank of Japan’s 2% target. 
• UK Retail Sales (Sep): A solid beat, with sales rising +0.5% month-over-month versus a -0.2% forecast. 
• French Flash PMIs (Oct): Showed a deepening contraction in the composite reading to 46.8, a worrying sign for the Eurozone’s second-largest economy. 
• U.S. Data: The government shutdown continues, but the Bureau of Labor Statistics is making an exception to release the CPI data today.

After weeks of waiting, the market finally gets a top-tier U.S. economic data point. 

• 07:15-08:30 GMT – Flash PMIs for Germany, Eurozone, and UK. 
• 12:30 GMT – US CPI (Sep) (Headline YoY exp: +3.1%, Core YoY exp: +3.1%). 
• 13:45 GMT – US Flash PMIs (Oct).

Commodities, Treasuries and Currencies 

Gold prices posted a strong rebound, with August futures gaining $80.20 (+1.93%) to settle at $4,145.60 per ounce. The move came after two consecutive sessions of losses and ahead of today’s key CPI report but it is still on track for its first weekly loss in ten weeks. The big story in commodities is the explosive rally in WTI Crude Oil prices which jumped to two-week highs, with WTI surging $3.29 (+5.62%) to settle at $61.79/bbl. The spike was a direct reaction to new U.S. Treasury sanctions targeting Russia’s largest oil companies, which also led Chinese state oil majors to suspend purchases of seaborne Russian oil. 

Asset	Change	Unit	Last
WTI Crude	3.29	USD/bbl	61.79
Gold	80.2	USD/oz	4145.6
EUR/USD	0.0001	USD	1.1611
USD/JPY	0.59	JPY	152.56
US 10-Yr Yield	+4.8 bps	%	0.04

In the currency markets, the U.S. Dollar Index (DXY) is firming, recovering from recent weakness. The EUR/USD pair is hovering just above 1.1600, while the Japanese Yen is under renewed pressure, with USD/JPY rallying towards 153.00. The currency market is in a holding pattern ahead of the U.S. CPI release, with the U.S. Dollar consolidating its recent gains. 

• USD/JPY: The pair is rallying back towards 152.80, its highest level since October 9th. The Japanese Yen has resumed its downtrend as the market prioritizes new PM Takaichi’s pro-stimulus agenda over the hot inflation data. A massive $2.5B options expiry at the 150.00 level provides a significant psychological support level below the current price. 
• EUR/USD: The Euro is trading with a slight negative bias just above 1.1600. The pair is weighed down by the weak French PMI data and is on track for a weekly loss. A notable $782M options expiry at the 1.1700 level could cap any potential upside rallies today. 
• GBP/USD: Sterling is on track for its fifth straight day of losses, testing the waters just above the 1.3300 handle. The pair has been steadily declining after failing to break above its 50-day moving average.

U.S. Treasury yields are steady ahead of the CPI report, with the 10-year yield holding around 4.00%. Bitcoin is showing signs of life, climbing back above $111,000 as immediate trade war fears recede.

Looking Ahead 

The market’s reaction to today’s U.S. CPI report will be the primary driver of the session. The data will be critical in confirming or challenging the market’s high conviction in a Federal Reserve rate cut next week. Any significant surprises could lead to substantial volatility in equities, bonds, and the U.S. dollar. The ongoing U.S. government shutdown and any progress (or lack thereof) in funding negotiations will also be a key focus. Q3 earnings season continues to ramp up, with several large-cap companies set to report next week.What to watch: 

• The CPI Inflation Litmus Test: This is the only game in town. The market is fully priced for a 25bps Fed cut next week. A hot inflation print, particularly in the core goods component which could be impacted by tariffs, would challenge the market’s aggressive pricing for further cuts and could trigger a significant hawkish repricing, boosting the dollar and pressuring stocks and gold. A soft number would validate the dovish narrative. 
• Oil’s Geopolitical Surge: The sanctions on Russian oil giants are a major new development. Traders will be watching for any signs of retaliation from Moscow or impacts on global supply flows, which could keep a strong bid under crude prices. The 
• Unwind in Japan vs. Intervention Risk: The Yen’s weakness is back in focus. While the fundamental story is bearish for the currency, the speed of the decline will be monitored by Japanese officials. The market is now caught between the “Abenomics 2.0” narrative and the ever-present threat of FX intervention. 
• Gold at an Inflection Point: After a sharp two-day correction, gold’s strong bounce shows underlying demand remains. The reaction to today’s CPI data will be a crucial test. A hot number could trigger another wave of selling, while a soft print could see it quickly re-challenge its all-time highs.