Key Points

• Asia Markets Mixed as Shutdown Begins: Asian equities diverged as Japan’s Nikkei extended losses, while India and Korea posted gains; gold hit a fresh record amid resilient sentiment despite the U.S. government shutdown.
• Gold Surges to Record on Safe-Haven Demand: Spot gold touched $3,875 as U.S. shutdown risks and soft labor data bolstered expectations of Fed rate cuts, with traders eyeing $3,900–$4,000 as the next target.
• Dollar Slips on Shutdown and Data Risks: The dollar index dropped to a one-week low as the shutdown raised uncertainty around key economic data, reinforcing market bets on a Fed rate cut later this month.
• Yuan Nears Sterling in Global FX Rankings: The yuan’s share of daily FX turnover climbed to 8.5%, closing in on the British pound’s 10.2%, highlighting Beijing’s progress in currency internationalization.

Asia Markets Mixed Amid U.S. Shutdown Calm

Asian equities traded mixed as investors looked past the U.S. government shutdown, with sentiment shaped by central bank updates and sector moves. Japan’s Nikkei 225 fell 0.85% and the Topix lost 1.37% after the Bank of Japan’s Tankan survey showed manufacturing sentiment improving modestly but below expectations.

India’s RBI held rates steady at 5.5%, lifting the Nifty 50 and Sensex by 0.74% and 0.83%, respectively.

South Korea’s Kospi gained 0.91%, while Taiwan’s index rose 0.63% on strength in TSMC after Nvidia’s surge past $4.5 trillion in market value. Gold hit a record $3,875.32, underscoring safe-haven demand.

Gold Surges to Record as Shutdown Fuels Fed Cut Bets

Gold prices climbed to a record $3,875.32 per ounce as investors sought safe-haven assets amid the U.S. government shutdown and weakening labor market signals.

The dollar index slipped to a one-week low, enhancing gold’s appeal, while traders priced in a 25-basis-point Fed rate cut this month and another in December. U.S. futures also eased, reflecting uncertainty as the shutdown delays key economic data releases.

Analysts see upside targets near $4,000, with risks tied to dollar strength and potential hawkish Fed pivots. Silver followed gold’s rally, reaching a 14-year high, while platinum and palladium retreated.

Dollar Slips as Shutdown Clouds Fed Outlook

The dollar index fell to 97.635, its lowest in a week, as the U.S. government shutdown threatened to delay critical economic data, including Friday’s nonfarm payrolls. Investors now rely more heavily on private-sector indicators such as the ADP report, due later today. Markets are pricing a near-certain quarter-point Fed cut on October 29, with odds at 95%.

The euro touched $1.1767, while the yen strengthened to 147.46. In Japan, the BoJ’s Tankan survey showed improving sentiment, reinforcing hawkish signals ahead of policy speeches later this week, with traders assigning 40% odds to an October rate hike.

Yuan Nears Sterling in Global FX Rankings

The Chinese yuan’s share of global currency transactions rose to 8.5% in 2025, up from 7% in 2022, with daily turnover hitting $817 billion, according to the Bank for International Settlements. That puts it within striking distance of the British pound, whose market share fell to 10.2% from 12.9%. The shift highlights Beijing’s push to internationalize the yuan, though restrictions on capital flows still limit broader adoption.

Meanwhile, the Swiss franc surged to become the sixth most-traded currency, underscoring evolving dynamics in global FX markets as investors diversify beyond traditional majors.

Conclusion

The U.S. government shutdown has so far left equity sentiment largely intact, but its potential to delay critical economic data adds uncertainty to monetary policy signals.

Gold’s record highs and a weaker dollar underscore persistent demand for safe-haven assets, while Asian markets reflect diverging regional dynamics.

At the same time, the yuan’s growing role in global FX points to a gradual reshaping of currency flows.

Markets are entering October with a complex mix of resilience and caution.

Investors should prepare for volatility as fiscal, monetary, and geopolitical factors converge in the weeks ahead.

Investment Insights

• The U.S. government shutdown may heighten short-term volatility: Delayed data complicates Fed decision-making and increases reliance on private indicators.
• Record gold prices highlight investor demand for hedges: Political and economic uncertainty reinforces the case for strategic allocation to precious metals.
• A softer dollar and potential Fed rate cuts suggest opportunities: Non-USD assets, particularly select Asian equities and currencies, may benefit.
• The yuan’s rising share in global FX markets signals a long-term diversification trend: Implications for global reserve management and multinational portfolio strategies are growing.

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