Markets Today: US Dollar on Course for Worst Week Since July, Gold Steady, DAX eyes Retracement Ahead of Bullish Continuation

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Asia Market Wrap - Asian Stocks on Course for Solid Week

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Asian stock markets were heading for solid weekly gains on Friday, largely because of growing expectations that the Federal Reserve will cut US interest rates soon. This positive outlook helped calm market nerves surrounding the US government shutdown, which has simultaneously pushed gold prices to record highs and caused the US dollar to weaken.

Investors have mostly ignored the shutdown, which is the 15th since 1981, even though it has resulted in the suspension of financial oversight and delayed the release of crucial economic data, including the jobs report scheduled for Friday. This lack of market concern is partly because, historically, government shutdowns have not had a lasting impact on economic growth or market performance.

The MSCI index of Asia-Pacific shares rose 0.3%, hitting a record high for the second day in a row. The index is set for a 2.3% gain for the week and has surged about 23% so far this year.

Meanwhile, Japan's Nikkei index jumped 1.5%, nearing the record high it achieved last month. Japanese investors are focused on the important vote this weekend that will determine the country's next prime minister and set the direction for future fiscal and monetary policy.

However, trading volumes in the region are expected to be light as markets in China and parts of Asia are closed for a long holiday.

European Session - STOXX 600 Hits New Record High

European stock markets are looking strong this week, with the main STOXX 600 index hitting a new record high. On Friday, the index rose by 0.3%, putting it on track for its best weekly performance since late April.

This overall positive momentum is largely due to expectations that the US Federal Reserve will cut interest rates soon. Leading the gains on Friday were two sectors: banks and mining companies (basic resources).

Banks in the Eurozone saw a 1% rise, with Austria's Raiffeisen Bank soaring after news suggested the EU might lift some sanctions to help the bank. Separately, Dutch bank ABN Amro climbed after getting a positive rating upgrade from Goldman Sachs.

The mining sector gained 1.3% as the prices of base metals increased. A key US jobs report, which was expected today, will not be released because of the ongoing US government shutdown. Traders are now almost certain the Fed will cut rates later this month, a belief strengthened by a recent weak US private jobs report. Later in the day, investors will be looking at new economic data on services activity from across Europe.

On the FX front, the Japanese yen was slightly weaker on Friday, falling 0.3% against the dollar, but it is still heading for a strong week, marking its best gain since May.

Traders are carefully watching for any signals about future interest rate increases from the Bank of Japan, as well as a major political leadership election happening this weekend.

Meanwhile, the US dollar became a little stronger against a group of other major currencies, with the dollar index rising 0.1%. The euro was also up slightly, increasing 0.1% against the dollar, while the British pound remained steady.

The Canadian dollar struggled and was trading near a four-month low against the US dollar.

This weakness followed a more than 2% drop in oil prices on Thursday, which made investors nervous, along with ongoing concerns about the renewal of a major trade agreement between the US, Mexico, and Canada.

Currency Power Balance

Source: OANDA Labs

Gold prices were stable on Friday, continuing a trend that puts them on track for their seventh week in a row of gains.

Spot gold was trading at $3,859.69 per ounce, just shy of the record high of $3,896.49 it hit the day before. The precious metal has already risen by 2.7% over the course of this week.

Meanwhile, US gold futures for December delivery also saw a slight increase, rising 0.4% to trade at $3,883.

Oil prices saw a small increase on Friday, but they are still headed for a significant weekly loss of about 7% to 8%. This expected drop is mainly due to news that the OPEC+ group of oil producers might increase their supply.

Specifically, Brent crude oil gained 0.67%, reaching $64.54 a barrel, while US West Texas Intermediate (WTI) crude rose 0.76% to trade at $60.94 a barrel.

However, when looking at the entire week, Brent is down by 8% and WTI is set to finish 7.3% lower.

Economic Calendar and Final Thoughts

Looking at the economic calendar, the European session will be quiet moving forward.

A host of PMI data was released this morning for the Euro Area with mixed messaging. French and German PMI numbers came in below estimates while PMI numbers from Spain and Italy beat estimates.

Moving to the US session, the absence of the US NFP release means ISM services data will be the major data release from the US. A number of influential central bankers will be speaking at a farewell event in Amsterdam, including the Federal Reserve's John Williams. We will also hear from a very dovish (favoring low interest rates) Fed official, Stephen Miran, who is scheduled to speak twice today.

The discussion about who will be the next Federal Reserve Chair has quieted down for now, but it will certainly come back up. The current top candidates, according to betting odds, are Christopher Waller (12%), Kevin Warsh (10%), and Kevin Hassett (9%).

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Day - DAX Index

From a technical standpoint, the DAX index has finally broken above the channel which had been in play since early August.

This sets the DAX up for a potential 900 point rally to the upside.

Of course a pullback could materialize before the rally gains pace, but this may also depend on the global stock rally and Wall Street in particular.

A short-term pullback to retest the breakout of the channel could provide would be bulls with a better risk to reward opportunity.

Support rests at 24200 before the confluence level at 24000 comes back into focus. Below that we have the 20-day MA which may come into play and rests at the 23746 handle.

On the upside resistance may be found at 24500 before the start of the channel high at 24665 comes into focus.

DAX Index Daily Chart, October 3. 2025

Source: TradingView.com (click to enlarge)

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