Forecasts suggest annual CPI will accelerate from 2.0% to 2.2%, while the core reading may remain at 2.3%. Earlier German data, released the day before, showed inflation rising from 2.2% to 2.4% y/y versus a 2.3% forecast, and from 0.1% to 0.2% m/m. The harmonized index also climbed from 2.1% to 2.4% and from 0.1% to 0.2%, beating expectations of 2.2% and 0.1%. This confirms accelerating price pressure across the euro area, lowering the likelihood of another ECB rate cut in the near term. Analysts expect, at most, one more adjustment of 25 basis points this year, but keeping policy unchanged remains a strong possibility. Additional support for the euro comes from the weakening dollar as the U.S. government faces a shutdown due to the lack of an approved budget. Congress is not even holding talks to extend funding temporarily, which could delay the release of key macro data, including labor market reports. Still, the Fed remains cautious and unlikely to shift policy abruptly. Meanwhile, the latest JOLTS data showed job openings rising from 7.208M to 7.227M in August, slightly above expectations of 7.200M. Later today, at 14:15 (GMT+2), investors will focus on ADP’s private payrolls report, expected to show a decline from 54K to 50K.

GBP/USD

The pound is trading higher against the dollar in the GBP/USD pair, recovering ground lost in midweek. The pair is testing 1.3465 to the upside, with traders weighing the looming U.S. government shutdown as Congress fails to reach a budget deal. President Donald Trump blamed Democrats for refusing concessions on healthcare spending, including coverage for undocumented immigrants. Senate Minority Leader Chuck Schumer highlighted “very significant” disagreements. The House had earlier approved temporary funding through November 21, but the measure stalled in the Senate, where Republicans hold 53 out of 100 seats but need at least 60 votes. If a shutdown occurs, key U.S. labor data could be delayed, influencing Fed policy outlook. In September, the Fed cut rates by 25 bps to 4.50% and left the door open for further easing, though Chair Jerome Powell later warned against premature expectations. Support for sterling also came from UK GDP figures: growth slowed to 0.3% q/q versus 0.7% in Q1, but annual growth accelerated to 1.4%, topping forecasts of 1.2%. At 10:30 (GMT+2), UK manufacturing PMI is due, expected at 46.2 points. U.S. PMIs will follow at 15:45 and 16:00, with forecasts of 52.0 for S&P Global and a slight uptick in ISM from 48.7 to 49.0.

AUD/USD

The Australian dollar is gaining in the AUD/USD pair during the Asian session, extending a short-term corrective rally. Market activity remains high as traders discuss the U.S. government shutdown and domestic Australian data. S&P Global’s manufacturing PMI slipped from 51.6 to 51.4 in September, while AiG’s August manufacturing index improved from –20.9 to –13.2, but the industrial sector reading weakened from –13.9 to –16.0. In the U.S., failure to pass a budget has again forced a government shutdown, though markets remain calm given the limited near-term economic impact. The longest shutdown in U.S. history lasted 34 days under Trump’s first term. Tomorrow at 03:30 (GMT+2), Australia will publish August trade data, with the surplus expected to narrow from AUD 7.31B to AUD 6.50B. On Tuesday, the RBA left rates unchanged at 3.60% as expected, noting persistent inflation risks.

USD/JPY

The U.S. dollar is weakening against the yen, extending its bearish streak and updating lows from September 24. Japan’s Tankan survey showed the services index unchanged at 34, while the large manufacturers’ index rose from 13.0 to 14.0, below expectations of 15.0. Overall, the large manufacturers’ activity index improved from 11.5% to 12.5%. Markets remain focused on U.S. political tensions, with another shutdown looming as Trump blames Democrats for blocking the budget over healthcare funding. Historically, shutdowns have had limited economic impact, but they could delay key data, including the September jobs report. Meanwhile, Japan prepares for LDP leadership elections on October 4, which will decide the party’s next leader, though not guaranteed to become prime minister.

XAU/USD

Gold continues its rally in XAU/USD, holding near $3860.00 and refreshing record highs. Safe-haven demand is rising as the U.S. edges toward a government shutdown. This could delay key data releases like the U.S. labor report, though the Fed remains cautious and unlikely to accelerate easing. Recent U.S. JOLTS data showed job openings at 7.227M versus expectations of 7.200M, while the Chicago PMI slipped from 41.5 to 40.6, below the 43.0 forecast. In the long term, gold is supported by rising U.S. government debt and heightened geopolitical risks, with Trump emphasizing Middle East policy shifts and potential Taiwan tensions. Many analysts expect gold to break the $4000 level, with Goldman Sachs projecting this milestone by mid-2026, and possibly $4500–$5000 if geopolitical strains intensify