Market sentiment improved slightly after traders digested a wave of news from Wednesday and early Thursday. Positive drivers included China–U.S. tensions, China’s stimulus measures, and dovish central bank comments. However, concerns over the Ukraine–Russia war, Israel–Hamas tensions, and U.S. plans to fire 10,000 federal workers during the shutdown weighed on optimism.
The U.S. Empire State Manufacturing Index jumped to 10.7, far above the forecast of -1.8 and the prior -8.7. Fed Governor Stephen Miran backed market expectations for two more rate cuts this year.
CNBC confirmed the Trump administration plans to cut 10,000 federal jobs. Fed Chair Jerome Powell’s dovish tone and balance sheet comments added to dollar pressure. Markets now expect cuts in both November and December.
Treasury Secretary Scott Bessent said the U.S. wants to help China but warned its coercive tactics would hurt its own economy. He flagged possible U.S.–China decoupling if needed, though Washington prefers to de-risk. Bessent criticized China’s Russian oil imports, supported tariffs, and confirmed recent U.S.–China talks. He offered to lift fentanyl-related tariffs under IEEPA if China acts for six months, but said soybean tariffs will stay unless the U.S. moves first.
The Fed’s Beige Book showed flat economic activity and modest growth, with layoffs and hiring freezes in weak sectors. Labor shortages continue in areas like hospitality and manufacturing. Inflation remains, driven by input costs and tariffs, but varies by region.
Talking about stimulus, Shenzhen launched a 5-billion-yuan semiconductor fund to boost China’s chip sector.
Japan’s Finance Minister Shunichi Kato and Bessent agreed to monitor FX markets. Bessent said yen will stabilize if the Bank of Japan stays on course. He also urged Japan to stop importing Russian energy. BoJ’s Toyoaki Tamura backed rate hikes, while an IMF official advised keeping loose policy. Japan’s machinery orders rose 1.6% y/y vs 4.8% expected.
Sterling is under pressure from rate cut risks and fiscal concerns.
In Australia, weak jobs data raised the chances of more rate cuts. The jobless rate rose to 4.5% vs 4.3% expected. RBA Governor Michele Bullock was cautious, while Assistant Governor Christopher Kent said financial conditions are easing. Net jobs rose just 14,900 vs 17,000 forecast.
New Zealand’s Food Price Index fell 0.4% m/m in September, while the U.S. API data showed a big crude oil build, versus an expected draw, adding to pressure on oil prices.
The U.S. Dollar Index (DXY) fell for a third day. EURUSD, GBPUSD, and NZDUSD rose, while USDJPY dropped to its lowest since October 7. AUDUSD struggled. USDCAD fell again. Gold hit new all-time highs, and crude remained weak.
Crude oil fell to $58.20 despite record global demand, down 18% year-to-date. OPEC+ oversupply is dragging prices.
Gold jumped $63 to $4,206 and silver rose $1.62 to $53.07, both nearing record closes. U.S. stocks were mixed; the Dow gave back gains. Asia-Pacific shares rose. Bitcoin (BTC) and Ethereum (ETH) ended two-day losing streaks.
EURUSD climbed to a weekly high early Thursday, supported by stronger-than-expected Eurozone Industrial Production and a broadly weaker U.S. Dollar. The pair is nearing key resistance around 1.1700, where a five-month ascending trendline and an old support from August now act as barriers. Concerns over worsening U.S. job conditions, an extended government shutdown, and dovish Fed signals continue to weigh on the dollar, keeping EURUSD firm—even as ECB officials remain cautious and not particularly hawkish.
GBPUSD broke a month-old resistance to reach a weekly high, extending its two-day winning streak despite weak UK jobs and activity data, as well as concerns over November’s budget. The move comes even as Bank of England officials maintain a dovish tone amid ongoing economic challenges.
At the same time, USDJPY extended its three-day slide to a weekly low, with bears staying in control. This comes despite Japan's political uncertainty, mixed data, and unclear U.S.-Japan trade prospects—factors that might have slowed the drop. But a softer U.S. Dollar and speculation around rate hikes in Japan outweighed those risks, keeping pressure on the pair.
While the softer USD and China stimulus news allowed NZDUSD to remain firmer and USDCAD to extend its pullback, the AUDUSD drops as downbeat Aussie employment data raised concerns about the RBA’s further rate cuts. Also, mixed statements from the RBA officials weighed on the Aussie prices. That said, the softer New Zealand Food Price Index and concerns about the U.S.-Canada trade deal challenged the NZD and CAD buyers, but were ignored. It should be noted that the latest updates suggest that the U.S.-Canada trade talks are back on the table, which in turn led to a corrective bounce in crude oil, weighing on the USDCAD prices.
Gold extended its rally for a fifth day, hitting a new record in the mid-$4,200s before easing to $4,225, supported by a weaker U.S. Dollar, rate cut expectations, and safe-haven demand amid global trade and geopolitical tensions.
Crude Oil, meanwhile, couldn’t gain despite a large U.S. inventory build reported by API, as the softer dollar and concerns over conflicts in Gaza and Ukraine kept markets cautious. Still, pressure from OPEC+ supply and high inventories remains ahead of today’s official U.S. stockpile data.
Cryptocurrencies struggled despite a weaker U.S. Dollar, as fears of technical breakdowns and forced liquidations weighed on sentiment. Delays in ETF approvals due to the U.S. government shutdown added pressure, overshadowing positive industry news.
Equities edged higher on rate cut hopes and strong earnings. Bank of America and Morgan Stanley posted strong Q3 results, lifting Wall Street early Wednesday. But concerns over Trump’s planned mass layoffs during the shutdown and rising global uncertainty later dragged the Dow into the red, while the S&P 500 and Nasdaq managed modest gains.
Looking ahead, Thursday is set to be eventful with several central bank speakers and key U.S. economic data releases. Traders will focus on the U.S. Dollar, which is testing a key support level and could rebound if risk sentiment worsens or data surprises to the upside.
This potential dollar rebound may challenge Gold’s rally and add pressure on cryptocurrencies, while equities could edge higher if Q3 earnings continue to impress.
Uncertainty around the timing of U.S. data releases due to the government shutdown keeps markets cautious. On the schedule are September’s Retail Sales and Producer Price Index (PPI), the Philadelphia Fed Manufacturing Index for October, and weekly Jobless Claims—offering fresh clues on the health of the U.S. economy.
May the trading luck be with you!
