The U.S. government shutdown has dragged down the foreign exchange market. Analysis of the short-term trends of spot gold, silver, crude oil, and foreign exchange on October 22

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all fell, with the Dow futures falling 0.00%, the S&P 500 futures falling 0.04%, and the Nasdaq futures falling 0.27%. Germany's DAX index fell by 0.21%, Britain's FTSE 100 index rose by 0.90%, France's CAC40 index fell by 0.33%, and Europe's Stoxx 50 index fell by 0.21%.

2. Interpretation of market news

The U.S. government shutdown has dragged down the sudden drop in foreign exchange market volatility and hidden mysteries

⑴ The U.S. federal government shutdown has lasted for 22 days, becoming the second longest shutdown in history after the 2018-19 shutdown. ⑵ With no clear www.xmh100.compromise plan emerging this week, market expectations for a near-term agreement have gradually faded. ⑶ Forecast market data shows that the probability of the shutdown continuing until November 16 has increased from 29% to 39%. ⑷The data release process continues to be blocked, and the September CPI data originally scheduled to be released on Friday has been postponed. ⑸The lack of key economic data weakens the volatility and directional risk of the foreign exchange market. This feature is clearly reflected in the options market. ⑹ Institutional reports pointed out that option pricing clearly reflects the special conditions of the current foreign exchange market ⑺ The premium of EURUSD call options has significantly subsided, indicating that the market's expectations for a breakthrough market have weakened.

Saudi Arabia’s crude oil exports hit a new high in June, and the supply and demand balance accelerated to tilt

⑴ Saudi Arabia’s crude oil exports increased to 6.407 million barrels per day in August, an increase of 41% from July.3 million barrels, the highest level in six months. ⑵ Crude oil production simultaneously climbed to 9.722 million barrels per day, an increase of 521,000 barrels month-on-month, indicating that the supply side continues to relax restrictions. ⑶Refinery crude oil processing volume dropped to 2.902 million barrels/day, a month-on-month decrease of 2.6%, and direct www.xmh100.combustion volume dropped slightly to 607,000 barrels/day. ⑷ Analysts pointed out that the falling temperature in the Middle East will release more export space, and the scale of exports is expected to further expand in September. ⑸OPEC+ announced that it will continue to increase production by 137,000 barrels per day starting from November. The International Energy Agency warned that the global market may face a supply surplus of 4 million barrels per day next year.

U.S. mortgage loan applications fell for four consecutive weeks

⑴ As of the week of October 17, U.S. mortgage loan applications fell slightly by 0.3% month-on-month, marking the fourth consecutive week of decline. ⑵ Although benchmark mortgage rates fell 5 basis points along with long-term Treasury yields, application volume has not improved. ⑶Mortgage Bankers Association economist Joel Kan said the refinance index rose 4%, mainly driven by a 6% increase in traditional refinancing and a 12% increase in Federal Housing Administration refinancing applications. ⑷The Department of Veterans Affairs' refinancing alone fell by 12%, and the home purchase loan application index fell by 5% that week. ⑸ Applications for adjustable-rate mortgages increased by 16% weekly, with market share rising to 11%, and their interest rates are more than 80 basis points lower than the 30-year fixed interest rate.

The yield on Italian government bonds is approaching an 11-month low

⑴The yield on Italian 10-year government bonds fell to 3.34%, the lowest level since December last year. ⑵Global borrowing costs have generally fallen as investors expect major central banks to implement interest rate cuts. ⑶ The European Central Bank will enter a pre-meeting quiet period on Thursday to prepare for next week's policy decision. ⑷Although interest rates are expected to remain unchanged, the market is paying attention to policy outlook guidance and is currently fully pricing in a 25 basis point interest rate cut by July 2026. ⑸On the third anniversary of taking office, Italian Prime Minister Meloni emphasized that the government will put national stability above economic growth. ⑹ Despite the weak economic performance, the Prime Minister still pointed out that stability is a core policy goal.

Although Waller, the popular candidate for Fed chairman, advocates cutting interest rates, he is not convinced by Trump

When Fed officials met last month, investors were convinced that the first interest rate cut this year was www.xmh100.coming. But many are wondering, what would Fed Governor Christopher Waller do? To outsiders, Waller is in a difficult situation. A close ally of President Donald Trump has just joined the Federal Reserve and is almost certain to vote for aggressive interest rate cuts as Trump wishes. As one of the presidential candidates, Waller may also feel the pressure to take similar actions to improve his chances of being elected. But he didn't do that. While newly appointed Trump governor Stephen Millan dissented and voted for a 50-basis-point rate cut, Waller sided with the majority, supporting a 25-basis-point cut.

The Bank of England will actually raise interest rates next. Market pricing is seriously out of touch with the reality of inflation

⑴The British inflation rate unexpectedly remained at 3.8% in September, pushing the FTSE 100 index up 0.9%, significantly better than the pan-European Stoxx index. ⑵ Schroders senior economist George Brown pointed out that the Bank of England may keep interest rates unchanged until the end of 2026, and the next step may even be to raise interest rates. (3) An inflation rate close to 4% should serve as a warning to the market. The market is still pricing in two interest rate cuts next year, which is in sharp contrast to the reality of inflation. ⑷ Disappointing productivity and stubborn wage growth are putting the UK at risk of entrenched inflation, and there are variables in the path of monetary policy. ⑸ The market is currently pricing in a 40% probability of an interest rate cut at the Bank of England meeting on November 6, and expects a cumulative interest rate cut of nearly 70 basis points by December next year.

Financial stability risks overwhelm the euro's gains and encounter a sniper

⑴ European Central Bank chief economist Lane warned that if U.S. dollar funds dry up, the euro zone banking industry will face pressure, highlighting financial stability risks. ⑵ Lane pointed out that the Eurozone banking industry has huge risk exposure to the US dollar, leaving it in a fragile situation, which directly restricts the trend of the euro. ⑶ Analysts believe that the euro's recent rising potential is limited, mainly due to the double suppression of weak growth in the euro zone and fragile market sentiment. ⑷ Institutional data showed that the euro fell 0.1% to a one-week low of $1.1582 on Tuesday, and financial stability concerns were turning into actual selling pressure.

The UK is stuck in the quagmire of stagnant inflation and its fiscal space continues to shrink

⑴The annualized inflation rate in the UK remained at 3.8% in September, the same as in July and August. Although it was lower than economists expected, it was still at a high level. ⑵Service industry, core www.xmh100.commodity and food price increases did not meet expectations, but the slow fall in inflation continued to suppress consumer confidence. ⑶ Finance Minister Rachel Reeves will release the autumn budget on November 26. The falling cost of inflation-linked debt will create space for her to implement fiscal rules. ⑷The market generally expects that the UK will implement tax increases, but the independent fiscal watchdog may lower its productivity growth forecast. ⑸BoE policymakers will use this data to decide whether to cut interest rates in November and December. The current inflation deadlock is www.xmh100.compressing policy flexibility.

European Central Bank's interest rate deadlock hangs on a thread until 2027

⑴ All 88 economists predict that the European Central Bank will keep the deposit interest rate unchanged at 2.00% on October 30. This will be the third consecutive time to keep the policy unchanged. ⑵ Nearly 72% of the respondents (63/88) expect interest rates to remain stable this year, and 57% (45/79) believe that the current interest rate level will be maintained by the end of 2026, www.xmh100.compared with less than half last month. ⑶ The euro area economic growth is expected to remain stable, with growth of 1.2% in 2025, 1.1% in 2026, and 1.4% in 2027, which is www.xmh100.completely consistent with the September forecast. ⑷The inflation path remains stable, and the median forecast shows that the inflation rate will always hover around the 2% target until 2027, providing support for the central bank to suspend interest rate cuts. ⑸Despite the overall stable outlook, most of the 24 economists believe that the euro zone’s economic growth in the next year is more likely to be lower than expected, and Germany’s growth rate this year is only 0.2%, France 0.6%.

The Swiss National Bank’s reserves have shifted significantly, and the rise of the euro has shaken the foreign exchange market.

⑴ The www.xmh100.composition of the Swiss National Bank’s foreign exchange reserves has changed significantly, and the allocation ratio of the euro has increased. ⑵ The euro’s share of reserves increased from 37% to 39%, while the dollar’s ​​share dropped from 39% to 37%. ⑶The euro-dollar exchange rate rose from 1.0125 to 1.1918 from February to September, a considerable increase. ⑷ A stronger euro may encourage other central banks to adjust their reserve www.xmh100.composition in a similar way. ⑸The 1.20 mark constitutes an important psychological and technical level, and the 200-day moving average is located at 1.1977. ⑹ If it can continue to break through the Fibonacci resistance level of 1.2016, it may stimulate further demand for the euro. ⑺The Swiss National Bank’s foreign exchange intervention will have a knock-on impact on multiple currencies. ⑻The safety of bonds has improved www.xmh100.compared with the past, which may have an increasing influence on currency exchange rates.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 20:23 Beijing time, EUR/USD fell and is now at 1.1585, a decrease of 0.13%. The price of EUR/USD (EURUSD) fell in the latest intraday trading before the New York market opened, as the main bearish trend dominated in the short term and its price fluctuated along the trend line while continuing to be pressured by trading below the EMA50. Additionally, the Relative Strength Index has seen a negative crossover, which further strengthens the possibility of a continuation of losses in future trades after pricing in some oversold conditions.

GBP/USD: As of 20:23 Beijing time, GBP/USD fell, now trading at 1.3332, a decrease of 0.28%. Before the New York session, (GBPUSD) price showed weaker volatility at its recent intraday levels, as it relied on support from the EMA50, while positive signals emerged on the Relative Strength Index, after touching oversold levels, limiting the negative impact of the negative technical pattern represented by the bullish wedge pattern in the short term, all in an environment where the main bearish trend dominates.

Spot gold: As of 20:23 Beijing time, spot gold fell, now trading at 4042.50, a decrease of 2.00%. Prices fell in the latest intraday session in New York pre-market, dominated by a strong bearish swing and a short-term negative technical pattern represented by a double top pattern. Price continues to trade below the EMA50 moving average, creating dynamic resistance and reducing the likelihood of a near-term price recovery after the Relative Strength Index priced in oversold conditions.

Spot silver: As of 20:23 Beijing time, spot silver fell, now trading at 48.101, a decrease of 1.05%. Before the New York market opened, the price of (silver) fell in the last day of intraday trading, erasing most of the gains in early trading today, and was preparing to fall below the key support level of 47.8. $0. In the short term, negative pressure persists as it trades below the EMA50, which makes it likely to continue recording more losses in the short term. src="/uploads/2025/10/nfv5q52qti0.jpg" />

Crude oil market: As of 20:23 Beijing time, U.S. crude oil rose, currently trading at 58.490, an increase of 2.22%. In the latest intraday trade before the New York session, (crude oil) prices rose after it successfully broke through the negative pressure of the EMA50 and was supported by the positive signals emerging from the Relative Strength Index, attacking the main bearish trend line in the short term, further strengthening the positive pressure.

4. Institutional view

Goldman Sachs: The Bank of England is expected to cut interest rates in February next year, but there is a possibility of an earlier rate cut

Goldman Sachs economists issued a report saying that although British inflation data were lower than expected, increasing the possibility of an earlier interest rate cut, the Bank of England's next interest rate cut is expected to be in February next year. British inflation recorded 3.8% in September, lower than the 4.0% consensus forecast by economists in a Wall Street Journal survey. The bank believes that this data increases the likelihood that the Bank of England will cut interest rates again in the fourth quarter of 2025. risk. "Beyond February next year, we continue to expect gradual rate cuts on a quarterly basis, ultimately bringing rates down to a terminal level of 3%," Goldman Sachs said.

The above content is all about "[XM Foreign Exchange Platform]: The U.S. government shutdown drags down the foreign exchange market, analysis of short-term trend of spot gold, silver, crude oil, and foreign exchange on October 22". It is carefully www.xmh100.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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