Market Digest:

The US dollar index remained volatile on Monday, ultimately closing slightly higher by 0.06% at 98.60.
The 10-year US Treasury yield closed at 3.9850%, while the 2-year US Treasury yield, which is more sensitive to the Federal Reserve’s policy rate, closed at 3.4640%.

Spot gold prices surged by more than 2.5%, not only recovering Friday’s losses but briefly reaching a record high of $4,381.29 per ounce, before settling at $4,356.26 per ounce.
This sharp rebound was fueled by strong investor expectations for further Fed rate cuts, sustained safe-haven demand, and potential uncertainties in US-China trade negotiations.

As the US government shutdown entered its 20th day, key economic data releases were delayed, leaving markets in a highly sensitive state.
Meanwhile, oil prices closed near multi-month lows due to oversupply concerns. WTI crude closed down 0.56% at $56.92 per barrel, and Brent crude closed down 0.62% at $60.95 per barrel.

Technical Analysis:

GBP/USD – Struggling Below Mid-Range Resistance

GBP/USD remains range-bound below 1.3480, with momentum indicators suggesting fading bullish pressure.

• Major Resistance: 1.3480, then 1.3640

• Major Support: 1.3290, then 1.3200

Technical Indicators:

• RSI (14): 47 – Neutral, possible bearish reversal

• MACD: MACD line below Signal line – Bearish momentum increasing

• Moving Averages: Price approaching EMA 20 & 50 – Medium-term resistance

EUR/GBP – Holding Above Support with Fading Momentum

EUR/GBP trades just above key support at 0.8680, with momentum fading as sellers struggle to extend downside pressure.

• Major Resistance: 0.8710, then 0.8740

• Major Support: 0.8680, then 0.8640

Technical Indicators:

• RSI (14): 48 – Neutral, potential bearish reversal

• MACD: Bearish crossover, momentum declining

• Moving Averages: EMA 100 & 200 indicate long-term bullish trend

USOIL – Extending Decline Below $57 Amid Rising Supply Pressure

WTI crude remains under strong bearish pressure, trading below 57.00 as oversupply concerns and a softer demand outlook weigh on sentiment.

• Major Resistance: 57.20, then 60.70

• Major Support: 53.70, then 52.10

Technical Indicators:

• RSI (14): 31 – Bearish, extended weakness

• MACD: Bearish crossover, momentum increasing

• Bollinger Bands widening – High volatility forming

• Moving Averages: Price below EMA 20, 50, 100 & 200 – Long-term bearish trend

Economic News Highlights:

1. Gold (XAU/USD):

   • Rebounded over 2% on Monday, retracing Friday’s drop.

   • Benefited from lower yields, higher Fed cut expectations, and safe-haven demand.

   • Spot gold broke 4,300 and hit 4,381 before consolidating above 4,300.

2. Oil (USOIL):

   • Extended last week’s slide to a 5–6 month low due to oversupply fears.

   • Contango in Brent and WTI reinforced bearish near-term sentiment.

3. China (CNH):

   • Q3 GDP +1.1% q/q, slightly above forecasts.

   • PBOC keeps LPR steady; Yuan stabilizes near 7.12.

4. UK (GBP):

   • Sterling weakens ahead of CPI data and amid fiscal uncertainty.

   • CPI expected 4.0% y/y; market anticipates BoE to delay rate cuts until 2026.

5. Eurozone (EUR):

   • EUR/USD holds near 1.165, supported by eased US-China trade tensions.

   • Fiscal concerns in France limit sustained gains.

6. Canada (CAD):

   • BoC business survey signals muted confidence; recession concerns rise.

   • Market anticipates potential rate cut at month-end amid weak oil prices.

7. US Dollar (USD):

   • Gains capped despite improved US-China trade sentiment due to government shutdown and record deficit ($1.78T FY2025).

   • Market still prices near-certain Fed cuts for October and December.

Upcoming Economic Indicators – October 21

Canada (CAD) – Consumer Price Index (CPI)

• YoY forecast: 2.2% | Previous: 1.9%

• MoM forecast: −0.1% | Previous: −0.1%

• Core YoY forecast: 2.7% | Previous: 2.6%

Impact Assessment:

• Actual higher than forecast: Positive for CAD

• Actual lower than forecast: Negative for CAD

• Actual in line with forecast: Neutral impact