The United States government is officially undergoing a shutdown (temporary closure or limited services). The U.S. Congress was unable to reach a temporary budget agreement that would fund the government until November 21.
The House of Representatives did pass this temporary budget. However, it failed in the Senate, where 60 votes were necessary, while only 55 Senate members approved it. The Democratic senators rejected the temporary budget proposal, consequently leading to the government shutdown starting October 1 local time.
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The Congressional Budget Office estimates that around 750,000 government employees will be furloughed. As a result, the release of economic data may be postponed, making it challenging for market players to gauge the U.S. economy’s performance.
This sentiment is likely to influence the market on Wednesday (10/01/2025), alongside the release of several economic indicators. Below are the statistics from Trading Central:
- Eurozone inflation (year-on-year/Sept); forecast 2.2% vs previous 2%
- Core Eurozone inflation (year-on-year/Sept); forecast 2.3% vs previous 2.3%
- U.S. labor data by ADP (Sept); forecast 40K vs previous 54K
- U.S. manufacturing PMI by ISM (Sept); forecast 49 vs previous 48.7
GOLD
Gold prices (XAUUSD) have once again reached a historic high of $3,875.24 per troy ounce, increasing by over $17 or 170 pips compared to Tuesday’s trading close.
This week, leading up to this record, Gold has surged more than $115. The allure of Gold as a safe haven has intensified due to the official shutdown of the U.S. government. Given the current adverse economic conditions in the U.S., particularly with a weakening labor market, the shutdown may further exacerbate matters.
The Congressional Budget Office estimates that around 750,000 government employees will be furloughed. This situation once again serves as an advantage for Gold, indicating that prices may continue to rise.
OIL
Oil prices (CLS10) fell by $0.74 to $62.42 per barrel during Tuesday’s trading. Oil faced pressure due to concerns about a potential oversupply after OPEC+ announced plans to increase production once more. Additionally, oil exports from Iraqi Kurdistan have resumed via Turkey.
On another note, the purchasing managers’ index (PMI) for China remains below 50, indicating a contraction. This suggests that demand for oil is likely to remain weak, adding negative sentiment towards oil prices— a further hit from the ongoing U.S. government shutdown.
EURUSD
EURUSD registered a slight increase to 1.17312 during Tuesday’s trading. Despite the slow growth of retail sales data from Germany, which hints at a weakening U.S. dollar, EURUSD managed to climb.
The release of Eurozone inflation data is expected to be a driving factor at the start of the European trading session. Should inflation accelerate and exceed forecasts, EURUSD may receive positive sentiment. An increase in inflation would reduce the likelihood of the European Central Bank (ECB) cutting interest rates again.
GBPUSD
GBPUSD recorded gains for three consecutive days, closing Tuesday’s trading at 1.34383. The pressure on the dollar resulting from the U.S. shutdown has been a catalyst for GBPUSD’s rise.
In the absence of significant economic data releases from the UK, the implications of the U.S. shutdown will likely continue to influence GBPUSD’s movements during the European trading session.
USDJPY
USDJPY plummeted by 659 points (65.9 pips) to 147.855 during Tuesday’s trading. This currency pair has declined for three days, totaling 186 pips, indicating the substantial pressure faced by the U.S. dollar due to the shutdown situation.
This pressure is expected to persist during the European trading session.
NASDAQ
The Nasdaq index exhibited volatility within a narrow range, closing without much change at 24,837.
The Nasdaq remains close to its all-time high, posing a risk for profit-taking actions due to the ongoing U.S. shutdown.
