Investor attention remains fixed on the looming risk of a U.S. government shutdown on Wednesday. Yesterday’s meeting between President Donald Trump and Democratic leaders failed to produce a budget compromise, and Vice President J.D. Vance admitted that a partial shutdown of federal agencies is a real possibility. Analysts warn that such an outcome could weigh on markets, as the collection and release of key macroeconomic data would be suspended during the closure. The Labor Department, for instance, would not be able to publish the September jobs report on Friday, complicating the Federal Reserve’s monetary policy decisions. Recent Fed comments highlight the cautious stance: St. Louis Fed President Alberto Musalem said he remains open to further rate cuts in the future but stressed the need to keep borrowing costs high enough to restrain inflation, which is still well above the 2.0% target. Meanwhile, the New York Fed President called the most recent rate cut a “reasonable step” to ease restrictions while still containing price pressures. Fed Vice Chair Philip Jefferson added that U.S. GDP growth could hold around 1.5% through year-end, though the labor market may face stress if not supported by the Fed.
Eurozone
The euro is gaining against the U.S. dollar and pound but weakening against the yen.
Preliminary September inflation data from Germany showed CPI rising from 0.1% to 0.2% m/m and from 2.2% to 2.4% y/y, above forecasts of 2.3%. The harmonized index also increased from 2.1% to 2.4%. This marks the sharpest price pressure since February, which could accelerate overall eurozone inflation, though analysts do not expect it to force the ECB into another rate cut this year. ECB President Christine Lagarde commented that the region is weathering U.S. tariff headwinds better than expected, keeping risks “fairly limited.”
United Kingdom
The pound is strengthening against the U.S. dollar but retreating versus the yen and euro.
Q2 GDP data showed growth slowing to 0.3% q/q from 0.7%, but accelerating to 1.4% y/y, beating forecasts of 1.2%. The UK economy posted the strongest H1 growth among G7 nations, largely due to a surge in exports ahead of U.S. tariff implementation. However, analysts warn the second half may weaken amid global trade uncertainty and new taxes expected in the autumn budget. Additionally, September’s BRC retail price index rose from 0.9% to 1.4%, the highest since February, surpassing forecasts of 1.2%.
Japan
The yen continues to strengthen against the euro, pound, and U.S. dollar.
The Bank of Japan’s Summary of Opinions revealed growing discussion about raising borrowing costs. Some board members said the timing for a hike is approaching, citing reduced uncertainty around U.S. tariffs and external risks. One official noted Japan’s rate remains low by global standards, with a 60% probability of an October adjustment. However, August industrial production and retail sales data disappointed, falling 1.2% and 1.1% respectively, against forecasts for smaller declines or modest growth.
Australia
The Australian dollar is gaining against all major peers — the euro, pound, yen, and U.S. dollar.
The Reserve Bank of Australia kept rates steady at 3.60%, as expected, but its statement surprised markets. Officials warned that inflation in Q3 may be higher than anticipated and noted recovering private demand, raising risks of persistent price pressure. These comments reduced bets on further easing this year: markets now see only a 36% chance of a November cut, down from 55%, and 50% odds for December, down from 70%.
Oil
Crude prices continue to correct lower.
Pressure comes from expectations that OPEC+ may approve another output hike at its meeting on Sunday. Sources suggest production could rise by at least 137,000 barrels per day, while Goldman Sachs forecasts a 140,000 bpd increase. At 22:30 (GMT+2), the American Petroleum Institute (API) will release its weekly inventory report. Last week’s 3.821M barrel drawdown offered some temporary support, and another decline could slow the downward move in prices.