Markets surged on Monday as optimism over a potential US-China trade breakthrough dominated sentiment, with stocks hitting record highs while safe-haven assets retreated amid renewed risk appetite.
Gold slid below $4,000 for the first time in two weeks as traders positioned for diplomatic progress between Washington and Beijing, while equities rallied on expectations of further Federal Reserve rate cuts this week.
Check out the forex news and economic updates you may have missed in the latest trading session!
Headlines & Data:
- Over the weekend Chinese and US trade negotiators announced diplomatic wins for Trump and Xi to unveil at upcoming summit
- China Industrial Profits (YTD) for September 2025: 3.2% (0.8% forecast; 0.9% previous)
- Germany Ifo Business Climate for October 2025: 88.4 (87.0 forecast; 87.7 previous)
- Germany Ifo Expectations for October 2025: 91.6 (89.1 forecast; 89.7 previous)
- Euro area Monetary Developments:
- M3 Money Supply for September 2025: 2.8% (2.9% forecast; 2.9% previous)
- Euro area Loans to Households for September 2025: 2.6% y/y (2.6% y/y forecast; 2.5% y/y previous)
- Euro area Loans to Companies for September 2025: 2.9% y/y (3.2% y/y forecast; 3.0% y/y previous)
- U.K. CBI Distributive Trades for October 2025: -27.0 (-28.0 forecast; -29.0 previous)
- Canada Wholesale Sales Prel for September 2025: 0.0% m/m (-0.8% m/m forecast; -1.2% m/m previous)
- U.S. Dallas Fed Manufacturing Index for October 2025: -5.0 (-2.0 forecast; -8.7 previous)
- Argentina’s President Milei secured victory in midterm elections
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Monday’s session was characterized by strong risk-on sentiment from the opening bell in Asia, driven by weekend announcements of progress in US-China trade negotiations ahead of the leaders’ summit later this week.
The S&P 500 surged approximately 1.3% to close above 6,879, reaching fresh all-time highs as investors embraced the improved trade outlook and positioned ahead of this week’s Federal Reserve policy decision. The “Magnificent Seven” technology stocks led the advance, jumping as traders anticipated strong earnings reports from Microsoft, Alphabet, Meta, Amazon, and Apple due later this week.
Gold experienced significant selling pressure throughout the session, falling 3.0% to close near $3,987 per troy ounce after dropping below the psychologically important $4,000 level for the first time since October 12. The precious metal’s decline reflected reduced safe-haven demand as diplomatic progress between the US and China eased geopolitical concerns. Despite the pullback, gold remains up more than 50% year-to-date.
Bitcoin demonstrated strong performance, rising 3.6% to trade above $114,787 as the risk-on environment and expectations for continued Federal Reserve rate cuts supported the cryptocurrency. The digital asset benefited from improving market sentiment and growing institutional participation throughout the year.
WTI crude oil posted choppy trading, ending up with a slight gain on the day to settle around $61.20 per barrel. After initially showing strength in Asian trading, oil dipped during the London morning session before rebounding somewhat during US hours. The mixed performance likely reflected competing pressures from improved trade sentiment versus concerns about demand and potential OPEC+ production increases.
Treasury yields climbed early on across the curve as demand for safe-haven assets diminished. The 10-year yield rose approximately to 4.03%, before pulling back slightly during the U.S. session to back a touch under 4.00% The yield movements reflected reduced risk aversion and ongoing expectations for a 25 basis point Fed rate cut on Wednesday, with markets pricing a 97% probability of that outcome.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The US dollar traded with a mixed bias on Monday, experiencing selling pressure through much of the Asian and London sessions before staging a slight recovery during US trading hours, ultimately closing as a net underperformer against most major currencies with only marginal gains versus the Japanese yen & Loonie.
The greenback opened the Asian session under pressure as traders digested the weekend’s positive developments on US-China trade negotiations. Risk-on sentiment reduced demand for the dollar’s safe-haven characteristics, while expectations that the Federal Reserve would deliver another 25 basis point rate cut on Wednesday kept the currency on the defensive.
During the morning London session, the dollar’s weakness persisted as European trading got underway. Better-than-expected German Ifo business climate data, which rose to 88.4 versus forecasts of 87.0, provided some support to the euro, likely drawing some capital flows away from the dollar. The Ifo expectations component showed a particularly strong improvement to 91.6 from 89.7, suggesting German businesses are growing more optimistic ahead of fiscal stimulus measures expected in 2026.
The US session brought a temporary reversal as the dollar mounted a modest rebound, likely reflecting some position squaring and profit-taking on earlier dollar shorts. However, this strength proved short-lived, with the greenback giving back some of its intraday gains heading into the close. The Dallas Fed Manufacturing Index came in better than expected at -5.0 versus forecasts of -2.0, but failed to provide sustained support given ongoing concerns about tariff impacts on manufacturing sentiment.
The dollar’s relative weakness across the board reflected several key factors: the improved US-China trade outlook reducing haven demand, expectations for Fed easing this week while the European Central Bank is anticipated to keep rates unchanged, and positioning adjustments ahead of Wednesday’s FOMC decision.
Upcoming Potential Catalysts on the Economic Calendar
- Germany GfK Consumer Confidence for November 2025 at 7:00 am GMT
- Euro area ECB Consumer Inflation Expectations for September 2025 at 9:00 am GMT
- U.S. House Price Index for August 2025 at 1:00 pm GMT
- U.S. S&P/Case-Shiller Home Price for August 2025 at 1:00 pm GMT
- U.S. CB Consumer Confidence for October 2025 at 2:00 pm GMT
- U.S. Richmond Fed Manufacturing Index for October 2025 at 2:00 pm GMT
- U.S. Dallas Fed Services Index for October 2025 at 2:30 pm GMT
- U.S. Money Supply for September 2025 at 5:00 pm GMT
- U.S. API Crude Oil Stock Change for October 24, 2025 at 8:30 pm GMT
Tuesday’s calendar features key consumer confidence readings and housing data that could influence expectations ahead of Wednesday’s Federal Reserve decision. Any further positive developments in US-China trade negotiations ahead of Thursday’s Trump-Xi summit could extend Monday’s risk-on sentiment. German consumer confidence data will provide insight into whether improved business sentiment is translating to household optimism.
US housing data and the Conference Board’s U.S. consumer confidence index will be scrutinized for signs of how tariffs and the ongoing government shutdown are affecting economic sentiment. With markets pricing in a 97% probability of a Fed rate cut on Wednesday, Tuesday’s data would need to show significant surprises to materially shift those expectations, though it could influence views on the December meeting and the broader easing path into 2026.
Stay frosty out there forex friends and don’t forget to check out our Forex Correlation Calculator when taking any trades!
