Markets staged a powerful rebound on Monday as traders embraced renewed optimism about U.S.-China trade negotiations, sending equities soaring to their best session since May while precious metals extended their record-breaking rally.
The risk-on shift followed President Trump’s conciliatory weekend social media post about China, temporarily easing fears about escalating tariffs. Gold’s relentless advance continued with fresh all-time highs above $4,090, while oil bounced back sharply from recent weakness.
Check out the headlines and economic updates you may have missed in the latest trading session!
Check out the headlines and economic updates you may have missed in the latest trading session!
Headlines & Data:
- President Trump posted on Truth Social Sunday: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”
- Trump visited Middle East to celebrate Gaza ceasefire deal, with food and aid beginning to flow into the region
- China Balance of Trade for September 2025: 90.45B (96.0B forecast; 102.33B previous)
- China Imports for September 2025: 7.4% y/y (3.5% y/y forecast; 1.3% y/y previous)
- China Exports for September 2025: 8.3% y/y (5.2% y/y forecast; 4.4% y/y previous)
- Gold futures reach fresh record high above $4,096 per ounce on safe-haven demand and Fed rate cut expectations
- Federal Reserve Bank of Philadelphia President Anna Paulson signaled she favors two more quarter-point rate cuts this year, looking through tariff impacts on inflation
- Bank of England policymaker Megan Greene suggested holding rates until at least March 2026 on inflation persistence concerns
- Germany Wholesale Prices for September 2025: 0.2% m/m (-0.1% m/m forecast; -0.6% m/m previous); 1.2% y/y (0.9% y/y forecast; 0.7% y/y previous)
- New Zealand Services NZ PSI for September 2025: 48.3 (50.4 forecast; 47.5 previous)
- Treasury Secretary Bessent said he expects Trump-Xi meeting “will still be on” with staff-level meetings expected this week
Broad Market Price Action:
Monday’s session delivered a dramatic reversal from Friday’s selloff as markets seized on President Trump’s weekend olive branch to China, triggering a powerful rally across risk assets that extended throughout the trading day.
The S&P 500 surged 1.6% in its best single-day performance since May, closing at 6,647.5 and extending a bull market that has now added $28 trillion in value over three years. The index gapped higher at the Asia open following Trump’s conciliatory social media post and maintained its upward momentum throughout the session. Technology shares led the advance, with chipmakers jumping nearly 5% as a key semiconductor index posted its strongest performance in months. The rally came despite ongoing questions about earnings sustainability and elevated valuations, with the S&P 500 now trading around 22 times forward earnings.
Gold continued its extraordinary run, climbing 2.3% to establish yet another record high above $4,109 per ounce during the session. The precious metal’s relentless advance reflected multiple supportive factors: expectations for further Federal Reserve rate cuts, ongoing concerns about central bank independence, rising global fiscal strains, and persistent demand for safe-haven assets amid trade and geopolitical uncertainty. Silver maintained its momentum above $51, trading at levels not seen since 2011.
WTI crude oil rebounded forcefully, surging 2.67% to $59.20 as improved risk sentiment and easing trade tensions overshadowed ongoing supply concerns. The recovery came after oil had tumbled on reports that OPEC+ might consider additional production increases. The bounce reflected both short covering and renewed optimism about demand prospects if U.S.-China tensions continue to de-escalate.
Bitcoin posted solid gains of 1.08%, climbing above $115,500 as the cryptocurrency continued to benefit from its emerging role as an alternative asset amid traditional market volatility. The digital asset remained well below its early October record high of $126,223 but showed resilience after weekend weakness that had seen prices drop as low as $104,782.
The 10-year Treasury yield rose 0.57% to trade around 4.1% as the risk-on move reduced demand for safe-haven bonds. The increase came despite Fed policymaker Paulson’s dovish remarks about supporting two more rate cuts this year, suggesting that improved risk sentiment outweighed monetary policy considerations in the bond market.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The greenback experienced dramatic swings at the Asian open as markets digested President Trump’s weekend social media post about China. The conciliatory tone toward Beijing initially triggered dollar volatility as traders unwound Friday’s reaction to negative rhetoric on tariffs from the U.S.. The dollar found its footing as the Asian session progressed, with volatility gradually subsiding.
During the London session, the dollar established clearer upward momentum, gaining against most major currencies as European traders reassessed the fundamental backdrop. While Trump’s softer rhetoric on China eased immediate trade war fears, ongoing uncertainties about tariff policies, global fiscal sustainability, and the timing of central bank policy adjustments continued to support defensive positioning in the greenback.
The dollar’s strength persisted through the U.S. session, though with a more mixed character. The currency maintained gains against European currencies and the yen, while giving back some gains against the Aussie and Kiwi. Fed policymaker Paulson’s comments supporting two more rate cuts in 2025 had limited impact on dollar trading, suggesting markets had already priced in or are fatigued of this dovish stance.
The dollar’s ability to post net gains despite improved risk appetite and dovish Fed commentary suggests underlying support from trade policy uncertainty and relative growth concerns in other major economies, though the mixed performance indicates markets remain cautiously positioned ahead of key data releases and speeches, as well as any potential surprises on the tariff front.
Upcoming Potential Catalysts on the Economic Calendar
- New Zealand Electronic Card Retail Sales for September 2025 at 9:45 pm GMT
- U.K. BRC Retail Sales Monitor for September 2025 at 11:01 pm GMT
- Australia NAB Business Confidence for September 2025 at 12:30 am GMT
- Australia RBA Meeting Minutes at 12:30 am GMT
- Germany Inflation Rate Final for September 2025 at 6:00 am GMT
- U.K. Employment Situation Update for August 2025 at 6:00 am GMT
- Swiss Producer & Import Prices for September 2025 at 6:30 am GMT
- China Monetary Developments for September 2025
- Germany ZEW Economic Sentiment Index for October 2025 at 9:00 am GMT
- U.S. NFIB Business Optimism Index for September 2025 at 10:00 am GMT
- U.K. BoE Taylor Speech at 12:00 pm GMT
- Canada Building Permits for August 2025 at 12:30 pm GMT
- U.S. Fed Bowman Speech at 12:45 pm GMT
- Canada BoC Rogers Speech at 4:10 pm GMT
- U.S. Fed Chair Powell Speech at 4:20 pm GMT
- U.K. BoE Gov Bailey Speech at 5:00 pm GMT
- U.S. Fed Waller Speech at 7:25 pm GMT
- U.S. Fed Collins Speech at 7:30 pm GMT
Tuesday’s calendar features several high-impact events that could drive significant market volatility. The UK employment situation update arrives at a critical juncture, with markets closely watching wage growth data following BOE policymaker Greene’s hawkish Monday comments about holding rates into 2026. Any stickiness in wage increases could support sterling while reinforcing expectations for a cautious BOE easing path. For a more detailed analysis on the event check out our Event Guide!
Germany’s ZEW economic sentiment index will provide insight into how investor confidence is evolving amid persistent Eurozone growth concerns and France’s ongoing political crisis. A weaker-than-expected reading could add pressure to the euro and reinforce divergence between Fed and ECB policy paths.
China’s monetary developments data will be scrutinized for signs of credit growth and policy support effectiveness as Beijing navigates trade tensions with the U.S. The data takes on added significance following Monday’s stronger-than-expected trade figures and ongoing questions about whether stimulus measures are gaining traction.
The marquee event is Fed Chair Powell’s speech at 4:20 pm GMT, which could provide crucial guidance on the central bank’s thinking as it navigates the tension between cooling labor markets and elevated inflation expectations from tariffs.
Following Philadelphia Fed President Paulson’s Monday dovish remarks supporting two more cuts this year, markets will parse Powell’s language for confirmation of the easing path or any pushback against aggressive rate cut pricing. Any comments on the Fed’s approach to tariff-induced inflation or the narrow base of economic growth highlighted by Paulson could trigger short-term moves across asset classes.
Stay frosty out there forex friends and don’t forget to check out our Forex Correlation Calculator when taking any trades!
