Primary Market Movers: Trade, The Fed, and a Data Void
The trading week was dominated by a tug-of-war between strong domestic earnings and escalating global risks, with market movements dictated by three primary forces:
- U.S. Data Vacuum: The ongoing U.S. government shutdown caused a critical information void by delaying key economic data, most notably the September Consumer Price Index (CPI) report, which was rescheduled from October 15 to October 24. This absence of hard data forced investors to rely heavily on qualitative factors, amplifying the impact of central bank commentary.
- Powell’s Hawkish Warnings: In this data-scarce environment, a speech by Federal Reserve Chair Jerome Powell on October 14 became the week’s main event. Powell’s direct warning that “equity prices are fairly highly valued” and his acknowledgment that tariffs could fuel higher inflation sent a ripple of caution through the markets, contributing to a sell-off in technology stocks and a slide in the U.S. Dollar Index (DXY).
- U.S.-China Trade War Re-escalation: The fragile truce in the trade war was shattered by reports of President Trump threatening 100% tariffs on new Chinese goods and the implementation of retaliatory port fees. This development was the primary catalyst for risk-off sentiment, directly punishing sectors with global supply chains and fueling a flight to safety.
U.S. Equity Market Performance: A Divided Market
U.S. equity markets delivered a split performance, perfectly reflecting the week’s conflicting themes. The blue-chip Dow Jones Industrial Average showed resilience, closing up 0.44% on October 14, buoyed by a strong start to the Q3 earnings season from banking giants like Wells Fargo and JPMorgan. This suggested underlying health in the domestic economy. In stark contrast, the tech-heavy Nasdaq Composite came under heavy selling pressure, closing down as the semiconductor sector was identified as a direct casualty of the renewed trade hostilities. Shares of Nvidia and Intel both fell by more than 4%. The benchmark S&P 500 was caught in the middle, closing marginally lower and reflecting the market’s indecision.
- Key Technical Levels: For the S&P 500, critical medium-term support rests at the 3132 level; a break below this would signal a more significant correction. The Nasdaq 100 found support at the 24,000 mark and now faces immediate resistance around 24,800. A failure to hold 23,900 on the downside would be a significant bearish development.
Gold (XAU/USD): The Ultimate Safe Haven
Gold was the week’s standout performer, surging to a new all-time intraday high of $4,179.71 on October 14. The rally was fueled by a powerful confluence of factors, including its role as a hedge against the escalating U.S.-China trade war, concerns over rising government debt, and its appeal in a potential stagflationary environment of slowing growth and persistent inflation, as highlighted by the IMF’s latest World Economic Outlook. - Key Technical Levels: While the medium-term uptrend is intact, the rally appears overstretched. A corrective pullback is favored, with the key short-term pivot at $4,012. A break below this level would expose critical support in the $3,834/$3,819 zone. The all-time high of $4,179 serves as the ultimate resistance.
Foreign Exchange & Key Technical Levels
- U.S. Dollar Index (DXY): The dollar consolidated around the 99.03 level, caught between safe-haven demand and shifting Fed expectations. For the bullish trend to resume, a daily close above key resistance at 98.94 is required. Critical support is located at the 97.71/76 zone.
- EUR/USD: The Euro remained weak, weighed down by its own political and economic concerns, trading around 1.1608. The trend is bearish, with rallies expected to be capped by key resistance at 1.1686. The most critical support zone is at 1.1505/14.
- GBP/USD: Sterling was the G10’s biggest loser, tumbling to a two-month low around 1.3250 after a surprisingly weak UK labor report signaled a cooling economy and shifted the Bank of England’s outlook to a more dovish stance. The breakdown below 1.3360 turned that level into primary resistance, with the next major downside target for sellers being the 1.3150 support zone.
- USD/JPY: The pair’s movement was dictated by risk sentiment, with the safe-haven Yen gaining ground as the pair was rejected from a key long-term resistance level, trading down to 151.79. The primary resistance to watch is 153.40. On the downside, a break below support at 150.90 could trigger a deeper correction.
