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News
Wednesday, October 01, 2025
What’s happening: The US dollar continued a tepid rise despite the federal government’s partial shutdown.
What happened: The Democrats and Republicans failed to reach a funding agreement on Tuesday.
The US federal government has partially shut down for the first time in around seven years.
Why it matters: The Democrats voted down the Republican bill to extend federal funding for seven more weeks. The Republicans had only 54 seats in the Senate and needed 60 votes to pass the bill.
The temporary funding agreement received only 55 votes, with 45 members of the Senate voting against it. With this, the bill failed to pass the legislation. President Donald Trump’s last-minute threats of “cutting vast numbers of people out, cutting things that they like, cutting programs that they like” did not work to move votes from Democrats in favour of the bill.
Democrats were looking to negotiate an extension of health subsidies before US citizens faced premium hikes next year. They had also demanded the Medicaid cuts to be reversed.
The temporary shutdown could lead to thousands of federal employees being laid off. It would also lead to monthly economic data releases being delayed.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose 0.03% to 97.81 this morning.
While the US dollar recorded small gains versus most major currencies, the EUR/USD forex pair rose 0.09% to $1.1745.
The US dollar index still ended September down 0.35% and has lost almost 10% year to date.
What to watch: Investors will keep an eye on talks related to US government slowdown.
The ISM Manufacturing PMI is scheduled to be released today (1930 UAE Time). The US manufacturing PMI, which had risen to 48.7 in August from 48.0 in July, is expected to improve to 49.0 in September.
Context: European equity markets closed higher on Tuesday as investors monitored the ECB’s monetary policy outlook.
Details: The European Central Bank is widely expected to keep rates unchanged for the rest of the year, as the latest CPI reports from France, Germany and Spain signalled higher inflation.
The annual inflation rate in France rose to 1.2% in September, from 0.9% in the previous month, marking its highest reading since January. Germany’s inflation accelerated to 2.4% in September.
Industrial giants were among the top performers during the session, with shares of Siemens, Wolters Kluwer and Schneider settling higher. Bank stocks, including Santander and UniCredit, also recorded gains on Tuesday.
The STOXX Europe 600 Index rose 0.48% to settle at 558.18 on Tuesday, while UK’s FTSE 100 gained 0.54% to close at 9,350.43. Germany’s DAX 40 and France’s CAC 40 added 0.57% and 0.19%, respectively.
What to watch: Data on HCOB manufacturing PMI (1200 UAE Time) and inflation rate (1300 UAE Time) from the Eurozone will be released today. Analysts expect the Eurozone consumer price inflation to accelerate to 2.2% in September from 2.0% in August, while the HCOB manufacturing PMI is expected to decline to 49.5 in September from August’s 38-month high reading of 50.7.
Other Markets: US trading indices closed higher on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.18%, 0.41% and 0.28%, respectively.
Russia’s Ministry of Defence said its forces struck aviation repair enterprises and many temporary military bases in Ukraine. The news sent the RUB/USD pair higher in forex trading this morning.
Taiwan’s S&P Global manufacturing PMI declined to 46.8 in September, from 47.4 in the previous month, exerting pressure on the TWD/USD forex pair.
Malaysia’s S&P Global manufacturing PMI slipped to 49.8 in September, from 49.9 in the previous month, which sent the MYR/USD pair lower in forex trading this morning.
Vietnam’s S&P Global manufacturing PMI remained at 50.4 in September. The data indicating expansion in manufacturing lent support to the VND/USD forex pair.
Indonesia’s S&P Global manufacturing PMI declined to 50.4 in September, from August’s five-month high of 51.5, which sent the IDR/USD pair lower in forex trading this morning.
Eurozone’s 12-month Bill auction (1410 UAE Time), 3-month Bill auction (1410 UAE Time) and 6-month Bill auction (1410 UAE Time), South Africa’s ABSA manufacturing PMI (1300 UAE Time), UK’s Index-linked Treasury Gilt 2035 auction (1300 UAE Time), Germany’s 10-year Bund auction (1330 UAE Time), US MBA mortgage applications (1500 UAE Time), ADP employment change (1615 UAE Time), S&P Global manufacturing PMI (1745 UAE Time), ISM manufacturing PMI (1800 UAE Time), construction spending (1800 UAE Time), EIA crude oil stocks change (1830 UAE Time), EIA gasoline stocks change (1830 UAE Time), EIA Cushing crude oil stocks change (1830 UAE Time), EIA distillate stocks change (1830 UAE Time), EIA heating oil stocks change (1830 UAE Time) and 17-week Bill auction (1930 UAE Time), India’s M3 money supply (1530 UAE Time), Mexico’s business confidence (1600 UAE Time), Brazil’s S&P Global manufacturing PMI (1700 UAE Time), Canada’s S&P Global manufacturing PMI (1730 UAE Time) and 5-year Bond auction (2000 UAE Time), Mexico’s S&P Global manufacturing PMI (1900 UAE Time), as well as Russia’s unemployment rate (2000 UAE Time), business confidence (2000 UAE Time), real wage growth (2000 UAE Time) and retail sales (2000 UAE Time).
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