High volatility has overtaken the financial markets at the start of European trading on Wednesday (10/1/2025) following a government shutdown in the United States.
Attention now shifts to how swiftly the US Senate, from both the Republican and Democratic parties, can agree on a government budget proposal to minimize the duration of the shutdown.
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This sentiment continues to affect market movements this evening, alongside the release of various economic data from the US. Here are the details from Trading Central:
- US labor data per ADP for September at 19:15 WIB; forecast 40K versus previously 54K
- US ISM manufacturing PMI for September at 21:00 WIB; forecast 49 compared to 48.7 previously
GOLD
The price of Gold (XAUUSD) surged, reaching a record high of around $3,895 per troy ounce. Compared to Tuesday’s close, Gold rose by more than $37 or 370 pips.
From the beginning of the week to this record, Gold has climbed more than $135 and is now nearing the $3,900 per troy ounce mark.
The appeal of Gold as a safe haven asset has intensified due to the ongoing shutdown in the United States. The economic data released tonight holds the potential to push prices even higher, as ADP’s labor data is expected to show only 40,000 jobs, signaling a weakening labor market.
Moreover, the manufacturing purchasing managers’ index (PMI) is predicted to remain below 50, indicating contraction (a figure below 50 denotes a decline in activity).
If these two data points are released worse than expected, it will further bolster positive sentiment for Gold.
OIL
Oil prices (CLS10) have plummeted to $61.62 per barrel at the beginning of European trading. Oil has been under pressure since the start of the week due to concerns about an oversupply, as OPEC+ plans to increase production once again. Additionally, oil exports from Iraqi Kurdistan have resumed through Turkey.
On another note, China’s manufacturing PMI remains below 50, indicating contraction. This suggests that oil demand will likely remain weak, contributing to negative sentiment surrounding oil. The negative sentiment has been amplified due to the US government shutdown. These factors will continue to influence oil price movements this evening.
EURUSD
EURUSD fell to 1.17159 at the start of European trading after previously rising to 1.17787. This currency pair had increased following the release of inflation data that matched market expectations.
Nonetheless, the focus remains on the US shutdown, which has become a negative sentiment for the dollar. Furthermore, if tonight’s economic data from the US is released worse than predicted, expectations that the Fed will aggressively cut interest rates are likely to strengthen, exerting further pressure on the dollar. Thus, EURUSD could potentially rebound.
GBPUSD
GBPUSD increased at the beginning of European trading, hitting a daily high of 1.34799. The rise of GBPUSD reflects significant pressure on the US dollar.
This pressure is expected to intensify if the ADP labor data and US manufacturing PMI released tonight fall short of forecasts. A favorable sentiment for GBPUSD could strengthen further.
USDJPY
USDJPY dropped 956 points (95.6 pips) to 148.899 at the start of European trading. This decline indicates substantial pressure on the dollar due to the US government shutdown.
Negative sentiment for USDJPY could increase further if the US economic data released tonight is worse than forecast.
NASDAQ
The Nasdaq index fell to 24,633 at the start of European trading. Compared to Tuesday’s closing, Nasdaq is down more than 200 index points.
The US government shutdown has triggered profit-taking actions in Nasdaq, which still stands not far from its all-time high. There’s potential for further profit-taking to continue during tonight’s trading session.
