Market Overview:
Global markets witnessed a strong rebound in risk sentiment on Tuesday as optimism over a potential U.S.–China trade deal and progress toward ending the U.S. government shutdown lifted investor confidence. The U.S. dollar surged, Treasury yields firmed slightly, and safe-haven assets such as gold experienced sharp profit-taking.

The U.S. Dollar Index (DXY) advanced 0.36% to 98.95 — a six-day high — supported by improved risk appetite and easing political tensions. The 10-year Treasury yield rose to 3.974%, while the 2-year yield settled at 3.463%, reflecting stronger expectations of near-term stability in Federal Reserve policy.

Gold, which recently touched a record above $4,300, fell sharply by 5.3% — its largest single-day decline since August 2020 — closing at $4,124/oz. The drop was driven by investor profit-taking, weaker safe-haven demand, and the dollar rebound. Despite this correction, analysts see the broader uptrend intact while prices remain above $4,000.

Meanwhile, crude oil prices edged higher after the U.S. announced plans to buy 1 million barrels for its Strategic Petroleum Reserve. WTI climbed 1.14% to $57.57, and Brent gained 1.03% to $61.58 amid short-covering and supportive policy expectations.

Technical Highlights

USD/CAD – Holds Above 1.40 as BoC Decision Looms
The pair remains steady above 1.40, supported by firm momentum and bullish EMAs. A sustained break above 1.4050 could open the path to 1.4260, while a dip below 1.3980 may trigger limited correction toward 1.3910.

EUR/JPY – Rebounds From 175.00 as Risk Appetite Returns
EUR/JPY recovered from key support at 175.00, with buyers targeting resistance at 177.50. A breakout above this level may lead toward 186.60, while holding above 175.00 keeps the bias constructive.

XAU/USD – Gold Pulls Back Toward $4,100 After Record Surge
Gold’s strong rally paused near $4,400, with profit-taking pushing prices back to $4,100. As long as $4,100 holds, buyers may re-enter, aiming to retest $4,400–$4,500, though a break below $4,100 risks deeper correction to $3,900.

Economic Developments

• Gold (XAU/USD): Biggest one-day drop since 2020 as trade optimism and USD strength triggered profit-taking.

• Oil (USOIL): Stabilized near $57 as SPR purchases and Fed-cut expectations balanced oversupply risks.

• JPY: Fell sharply after Sanae Takaichi became Japan’s first female PM, reviving fiscal stimulus hopes.

• EUR: Softened toward 1.1600 as the dollar firmed and ECB officials maintained cautious guidance.

• CAD: Strengthened after inflation rose to a seven-month high, trimming expectations of a BoC rate cut.

Key Economic Indicators to Watch (22 October)

• Japan: Trade Balance, Exports & Imports – expected recovery could support JPY if data beats forecasts.

• UK: CPI & Core Inflation – stronger readings may lift GBP ahead of November’s BoE decision.

• South Africa: Inflation Data – higher CPI could delay SARB cuts and support ZAR stability.