Markets in Holding Pattern Ahead of Key Fed Decision

Asia-Pacific Markets

Trading volumes remained thin across the Asia-Pacific region due to public holidays in Japan (Children’s Day), South Korea, and China (Labour Day). Despite the quiet session, sentiment held firm, supported by cautious optimism surrounding U.S.-China trade relations.

Australia’s services PMI slightly underperformed, falling to 51.0 versus the expected 51.4, adding a modest headwind to local risk assets. Still, the Australian and New Zealand dollars outperformed in FX markets, with AUD/USD up 0.7%.

Europe Markets

The euro found some footing early in the week, with EUR/USD rebounding toward the mid-1.1300s after last week’s slide to around 1.1265.
This recovery is partially driven by a softer U.S. dollar. The pair’s performance will likely hinge on upcoming U.S. central bank commentary and broader global risk sentiment.

Gold

Gold continues to hold its ground heading into the European open, trading with a mildly bullish tone despite lacking strong upside momentum.

Investors appear to be in wait-and-see mode ahead of the Fed’s two-day policy meeting, which could clarify the timing and scale of future rate cuts.

Meanwhile, ongoing geopolitical uncertainty—from U.S. trade unpredictability to conflicts in Ukraine and the Middle East—is reinforcing gold’s role as a safe-haven asset.
The U.S. dollar’s retreat from recent highs has further underpinned XAU/USD, even as traders remain cautious about chasing further gains without clearer policy signals.

US Markets

President Trump rejected speculation about removing Federal Reserve Chair Jerome Powell or pursuing a third term in office, helping to cool some political nerves.
Still, the broader market focus remains locked on this week’s FOMC decision, especially as mixed economic signals and rising bets on Fed easing weigh on the dollar’s near-term outlook.