The U.S. federal government has entered another partial shutdown due to a failure to approve the budget for the new fiscal year. Unlike past closures, the president has warned of permanent layoffs for many “non-essential” employees, not just temporary furloughs. Already, about 150,000 federal workers have accepted buyout packages. The longest government shutdown on record stretched 35 days during President Trump’s first term, and there is concern that this disruption may also drag on. Financial markets show mixed reactions: the dollar is fluctuating narrowly, stronger versus many emerging-market currencies, while gold has reached a historic high above $3895. U.S. crude prices continue to fall, sliding below $62 after briefly exceeding $66 last week.

Asia Pacific Markets

In Asia, the yen has continued to strengthen, marking the dollar’s fourth straight day of losses against it. The currency fell to around JPY146.90, its weakest level since mid-September, after overshooting key retracement levels. Japan’s latest Tankan survey revealed only minor changes, though capital expenditure forecasts rose sharply. Manufacturing data, however, slipped to its lowest point since March 2024. Market expectations now suggest a nearly two-thirds chance of a rate hike by the Bank of Japan this month.
In Australia, the central bank’s hawkish stance has boosted the local dollar to around $0.6620, close to important resistance levels. Despite a small dip in the manufacturing PMI to 51.4, Australia remains one of the few G10 economies still above the 50 growth threshold.

European Markets

The euro advanced to near $1.1780, marking its highest level in five days. Analysts point to retracement targets near $1.1815 as the next test, while immediate support lies around $1.1730–1.1750. Eurozone data offered little surprise: inflation edged up just 0.1% in September, bringing the annual pace to 2.2%, while core inflation held steady at 2.3%. Manufacturing PMI slipped under 50, confirming contraction after a brief improvement in August.
Sterling also strengthened, rising to $1.3480 and extending a four-session rally. UK housing data surprised with a modest uptick, while the manufacturing PMI remained stuck below the 50 level, its weakest reading since March. Despite inflation concerns, the Bank of England has signaled patience on further rate cuts, with markets not pricing in another move until mid-2026.

American Markets

The U.S. dollar index has been under pressure, retreating after a three-day pullback and testing retracement levels near 97.40. With much of the government closed, investors rely heavily on private-sector reports for guidance. Data due today include mortgage applications, final PMI readings, auto sales, and the ADP employment report, which often provides a closer gauge of labor trends than official statistics. On average, ADP estimated about 80,400 private jobs were added monthly so far this year, compared to 74,000 in revised government figures. In 2024, private job creation averaged significantly higher, above 130,000. Auto sales are expected to maintain momentum, with forecasts calling for a pace near 16.2 million annually, slightly above the year’s earlier average