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The AUD is sitting at the top of the 1-day G10 FX performance table this morning on the back of the bounce back in risk sentiment.

Headlines:

• Dollar fades Friday drop in trading today
• Gold stretches into a new all-time high despite the positive risk sentiment: what’s next?
• Gold back at the highs again amid US-China kerfuffle
• Bessent: We have aggressively pushed back against China export controls
• China urges US to promptly correct “wrong practices” with regards to tariffs
• Trump: This is the historic dawn of a new Middle East
• BoE’s Greene: Activity is stronger than thought a year ago
• Germany September wholesale price index +0.2% vs -0.6% m/m prior
• Reminder: It is a long weekend in the US

Markets:

• AUD leads, JPY lags on the day
• European equities higher; S&P 500 futures up 1.0%
• Gold up 1.5% to $4,078.43
• WTI crude oil up 3.0% to $59.98
• Bitcoin down 0.8% to $114,137

There weren’t much meaningful headlines on the session as Trump is in Tel Aviv to mark his victory lap on the Gaza peace agreement. And that means he will be distracted from stirring up trade issues with China, at least for the time being.

He tried to cool down the rhetoric with Beijing at the end of the weekend and that’s feeding into some optimism that the latest tariffs threat will eventually result in another TACO scenario.

That is helping risk trades bounce back with the dollar also returning to favour a little on the day. USD/JPY is seen trading back up to above 152.00 but off earlier highs of 152.45 earlier in the session. Meanwhile, EUR/USD is down 0.3% to 1.1582 while USD/CHF is up 0.5% to 0.8033 currently.

In the major currencies space, the aussie is the lead gainer after slumping hard on Friday amid the US-China commotion. AUD/USD is trading with a gap up by 0.6% today to 0.6511, falling short of breaching its 100-day moving average of 0.6531 earlier.

In other markets, equities are seen bouncing back a little and posting a modest bounce after the sharp selloff on Friday. European indices are holding slight gains, with some of the optimism being slowly chipped away during the session. And even though it is a US holiday, the stock market will stay open in the day ahead. US futures are sitting higher but also off earlier highs, with S&P 500 futures seen up 1.0% currently after a modest opening gap up.

As for commodities, it’s a brand new week but same old story. Gold is once again shining as it jumps up to a fresh record high in eclipsing the highs last week around $4,060. The precious metal is trading up by 1.5% to $4,078 now as the hot streak continues. Likewise, silver is also seen up over 2% in hunting for a firm break above $51.

And we also have oil prices bouncing back strongly amid the better risk appetite today, with WTI crude oil recovering around 3% to near $60.

This article was written by Justin Low at investinglive.com.

Fundamental
Overview

The USD came under some
pressure on Friday as the risk-off sentiment caused by Trump’s threat of
substantially increasing tariffs on China weighed on Treasury yields. Over the
weekend, we had more soothing comments from Trump and other US officials which
triggered a recovery in risk sentiment.

The positive mood is
weighing a bit on the greenback amid lack of bullish catalysts. Domestically,
nothing has changed for the US dollar as the US government shutdown continues
to delay many key US economic reports. The dollar “repricing trade” needs strong
US data to keep going, especially on the labour market side, so any hiccup on
that front is likely to keep weighing on the greenback.

The market pricing shifted
more dovish with 47 bps of easing by year-end and 115 bps cumulatively by the
end of 2026. The BLS announced last week that it will release the US CPI report
despite the shutdown on October 24, so that’s going to be a key risk event. In
case we get hot data, we will likely see a hawkish repricing in interest rates
expectations with the December cut being priced out. Conversely, a soft report
shouldn’t change much in terms of pricing, but it will likely weigh on the
greenback anyway.

On the AUD side, the
commodity currency sold off aggressively across the board on Friday following
Trump’s tariffs threat on China. Given the close link between China and
Australia on the trade side, the market increased the dovish bets on the RBA
given the new risk. Today, the AUD bounced back strongly given the soothing
comments from Trump and other US officials during the weekend.

On the monetary policy
side, nothing has changed as we continue to wait for the next employment and
quarterly inflation report. The RBA kept everything unchanged at the last
meeting with RBA Governor Bullock not offering much in terms of forward
guidance other than the usual data dependency and meeting by meeting approach
to interest rate decisions.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD broke below the recent low at 0.6520 and extended the drop into
the 0.6472 level before bouncing back above the 0.6520 level again today. From
a risk management perspective, the sellers will have a better risk to reward
setup around the trendline to position for a drop into the 0.6350 level. The
buyers, on the other hand, will want to see the price breaking above the
trendline to open the door for a rally into the 0.67 handle next.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price is now consolidating around the 0.6520 level. This is where
we can expect the sellers to step in with a defined risk above the most recent
high to position for a drop back into the 0.6471 low. The buyers, on the other
hand, will likely pile in around this level to extend the pullback into the
major trendline.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the price is now trading below the 0.6520 level. The sellers will likely pile in here with a defined risk above the high to keep pushing into new lows, while the buyers will want to see the price rising back above the level to start targeting new highs. The red lines
define the average daily range for today.

Upcoming Catalysts

This week is going to be very light again in terms of data
releases given the US government shutdown. Data like Retail Sales and Jobless
Claims won’t be released. We will have lots of Fed speakers though with Fed
Chair Powell scheduled for tomorrow. Given the lack of key US data though, it’s
very unlikely to see a change in stance. On Thursday, we also get the
Australian employment report. For now, we know that only the US CPI will be
published despite the shutdown, which is scheduled for Friday October 24.

This article was written by Giuseppe Dellamotta at investinglive.com.

EUR/USD has returned below 1.1600 in the early European session on Monday and is trading at 1.1590 at the time of writing.

All that glitters is fear: Gold’s ascent toward $5,000/oz seems increasingly inevitable: Last week, Gold prices reached $4,042/oz, just $276/oz below the bullish $4,318/oz Q426 forecast published just one month ago. As of this morning, prices have risen to $4,072/oz.

The tax extension deadline is Oct. 15. Here’s what to know about filing your return amid the government shutdown and IRS furloughs.

President Trump has said he might give Ukraine long-range cruise missiles called Tomahawks. Russia said that would be seen as a “serious escalation” in the war.

The US Dollar found support at the 98.80 area after retreating from the mid-range of the 99.00s on Friday, following Trump’s threat to impose 100% tariffs on China.

• Inflation and wage growth is also stronger
• I have concerns that the disinflationary process might be slowing
• BoE thinks underlying growth is weak, and the labour market is weakening
• There’s uncertainty around forecasts
• Core inflation has gone sideways for the past year
• I think there is a concern particularly in the UK about inflation expectations
• Rates are probably still on a downward path but monetary policy is less restrictive
• There is a case for higher for longer rates and skipping a cut

There’s been a refocus on inflation recently from the BoE members. That’s what they should focus on given that they’ve been much above target for five years now and they also have consumer inflation expectations rising steadily.

This article was written by Giuseppe Dellamotta at investinglive.com.