Trade Progress and Fed Hopes Lift Global Markets

Trade Deal Framework & Risk-On Sentiment

Over the weekend, trade tensions — previously the biggest downside risk — eased dramatically, fueling a broad cross-asset risk rally.

U.S. Treasury Secretary Scott Bessent announced that a “very substantial framework” had been reached during high-level talks with Chinese Vice Premier He Lifeng in Kuala Lumpur, Malaysia.

The framework is expected to prevent the U.S. from imposing 100% tariffs on Chinese goods and may also defer China’s rare-earth export controls. The goal is to pave the way for Presidents Trump and Xi Jinping to finalize a trade deal at the upcoming APEC Summit in South Korea this week.

This positive development has triggered a strong risk-on wave across global markets:

• Equities: Asian markets surged today (Japan, South Korea up $\sim 2\%$). S&P 500 and Nasdaq futures are pointing higher.
• Commodities: Global demand proxies like Oil and Copper rallied sharply.
• Safe-Havens:Gold and Treasuries fell as demand for safety declined.

CPI Reports Point to a Dovish Fed

Trade optimism coincides with a pivotal week dominated by major central bank policy meetings, starting with the Federal Reserve.

Last Friday’s delayed U.S. CPI report came in cooler than expected, with Core CPI (MoM) undershooting forecasts. This reinforced expectations of a dovish Fed, with markets now fully pricing in a 25-basis-point rate cut at this Wednesday’s FOMC meeting (Oct 29).

Investor focus will shift to the Fed’s statement and forward guidance, as traders look for hints about a potential third rate cut in December and the longer-term policy outlook into 2026.

Market Drivers on Monday: Position-Setting Ahead of the Fed

Monday’s session is likely to be driven by position adjustments ahead of the FOMC decision and other key data releases later this week.

While markets may remain relatively quiet move, technical setups suggest continued follow-through momentum from the trade optimism, especially across risk assets.

Dollar Index Outlook

USDX, 2-H Chart Analysis | Source: Ultima Market MT5

For the U.S. Dollar Index (USDX), last week’s softer-than-expected CPI triggered a brief sell-off, though the dollar later rebounded from the 98.00 support level. It is currently holding above 98.50, but recent price action indicates potential downside risk if this level fails to hold.

From a macroeconomic perspective, expectations for a dovish Fed this week could further pressure the dollar, though the extent of any decline will depend on how dovish the Fed’s tone and guidance turn out to be.

Gold Outlook: Demand for Safety Plummets, $4,000 Under Test

The sharp shift to a risk-on environment, fuelled by substantial progress in U.S.–China trade talks and reinforced by a cool U.S. CPI print, has undermined Gold’s (XAU/USD) primary safe-haven drivers. The metal is now in a clear corrective phase following its recent historic rally.

The announcement of a “very substantial framework” between the U.S. and China in Malaysia has significantly reduced geopolitical risk premiums, accelerating the profit-taking wave that began last week and putting heavy downside pressure on Gold.

XAU/USD, H2 Chart | Source: Ultima Market MT5

Still, the $4,000 psychological level remains the critical near-term pivot:

• If $4,000 holds: It suggests that long-term investors (including central banks and institutional hedgers) view the correction as a healthy reset, likely leading to a sideways consolidation in the short term.
• If $4,000 breaks decisively: It would signal a major technical breakdown, opening the path for further liquidation toward the next key supports.

While a dovish Fed continues to offer long-term fundamental support, the current risk-on sentiment from trade optimism will likely cap near-term recovery. The $4,000 level remains the battlefield between bearish profit-taking and resilient long-term demand.

Daily Market Insights

Markets are entering the week with a strong risk-on tone, driven by optimism over a U.S.–China trade framework and expectations of a dovish Fed.

While equities and commodities extend gains, safe-haven assets like gold and the dollar face near-term downside pressure.

All eyes now turn to Wednesday’s FOMC meeting, which will determine whether the current optimism evolves into a sustainable rally — or gives way to renewed volatility if the Fed disappoints market expectations.

Disclaimer

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