Published: 10/1/2025

Overall Market Sentiment: Cautious risk-off to start Q4 as the U.S. government shutdown muddies the data calendar, while rising BoJ hike odds and softer oil complicate the dollar’s setup. A shutdown can delay BLS releases like nonfarm payrolls, which keeps traders leaning on private surveys and Fed rhetoric.

Currency Outlooks

🔻 USD: Futures imply about a 95% probability of a 25 bp Fed cut at the late-October meeting. The curve is modestly positive with the 10-year ~4.16% and 2-year ~3.60% (2s10s ~+56 bp), a configuration that often caps USD upside when growth worries flicker. Core PCE (Aug) printed +0.2% m/m and 2.9% y/y, consistent with a gentle disinflation glide. Shutdown-related data delays reinforce easing expectations, but a quick deal plus firm ISM would temper USD selling. DXY focus: 97.5 support, 98.5 resistance.

🔺 EUR: The euro benefits from softer USD and stable ECB expectations into Oct 30. Flash HICP is expected to tick to ~2.2–2.3%, keeping near-term ECB cut odds contained. EURUSD trades in the 1.17s; sustained closes above 1.1840–1.1900 open higher, while 1.1725–1.1760 should act as first support. The 50-day MA ~1.168 and 200-day ~1.118 are helpful anchors.

🔺 JPY: Odds of an October BoJ hike are ~50–60%, helped by a stronger Tankan and prior board dissent. USDJPY ~147.1 sits in the intervention-sensitive zone as 150 looms. Resistance 148.8–150.0, support 146.5–146.8. A softer U.S. data run plus BoJ hawkish hints would push USDJPY lower quickly.

⚖️ CAD: Oil softness keeps CAD rallies shallow while BoC watchers debate another cut by year-end. Market chatter centers on small staged OPEC+ increases into November, with many desks talking ~140k bpd and OPEC refuting larger 500k bpd leaks. USDCAD: 1.3850 support, 1.4000 resistance. BoC decision Oct 29 stays data-dependent.

⚖️ AUD: The RBA held at 3.60% on Sep 30, and markets lean to another hold in November unless Q3 CPI forces the issue. AUD trades cleanly on global risk and China tone; 0.6500 support, 0.6670 resistance near term.

🪙 Gold: Momentum remains firm after a fresh record near $3,875, supported by lower real-rate expectations and shutdown uncertainty.

🛢 Oil: Bearish skew persists while markets price incremental OPEC+ supply and balances tilt toward small Q4 surplus risk. Without a quick reclaim of the low-70s in Brent, energy beta FX underperforms.

📈 Stocks: Shutdown caution and USD softness favor defensives and quality growth early in the week. A clean DC resolution plus firmer ISM would pivot back toward cyclicals.