Last week seemed destined to be a turning point for financial markets, as the longest shutdown in US history finally ended. That being said, the market reacted to this event with surprising calm. Traders’ focus shifted to mixed signals from the Canadian labor market and, of course, to gold, which continued its impressive rise amid general economic concerns and mixed statements from Federal Reserve officials.
🔑Key factors:
Shutdown ends without effect:
On November 12, President Donald Trump signed H.R. 5371, officially ending the longest government shutdown in US history. Despite the significance of the event, markets barely reacted. Traders had already priced in the likely resolution, leaving no room for a surge in volatility. The shutdown’s conclusion was widely expected, and its actual occurrence became a non-event for price movements.
Severe data shortage:
The most pressing issue for the dollar remains the lack of fresh macroeconomic data. The US administration has warned that critical October indicators, such as employment figures and inflation data, may either be delayed or not released at all. This lack of visibility hampers analysts’ and policymakers’ ability to assess the true state of the economy.
Dollar index declines amid uncertainty:
Even though the shutdown ended, investor sentiment remains cautious. The US Dollar Index (USDX) edged down slightly, hovering near 99.25. The decline reflects growing concerns over slowing economic activity and the possibility of rate cuts from the Federal Reserve.
Fed contradictions:
The Federal Reserve is showing internal disagreement regarding monetary policy direction. Stephen Miran has argued that current monetary policy is too restrictive, citing weak housing inflation. Meanwhile, Raphael Bostic advocates holding rates steady until inflation convincingly returns to 2%. This divergence is contributing to market volatility. The probability of a December rate cut has declined to 54%, down from 63% the previous day and 69% the week before.
Bottom line:
The US dollar ended the week without any sharp moves. The shutdown’s resolution failed to move the needle, while the absence of crucial economic data and mixed messaging from Fed officials is fostering continued market uncertainty. Markets are now fully focused on the upcoming data releases, which economists expect will reveal slower GDP growth and bolster the argument for rate cuts.
🔑Key factors:
Impressive job growth:
Canada’s labor market posted strong results in September and October, with 66,600 new jobs added, well above expectations. The unemployment rate also improved, declining from 7.1% to 6.9%. On the surface, this seemed to confirm the resilience of the Canadian economy.
Pitfalls of the statistics:
However, a deeper look reveals underlying concerns. The majority of the job gains—85,000 positions—were in the temporary and part-time categories, while full-time employment actually fell by 19,000. This raises doubts about the sustainability and quality of the labor market recovery.
Wage growth and inflation risks:
Meanwhile, average hourly earnings rose notably from 3.6% year-over-year to 4.0%, indirectly adding pressure on inflation.
Contradiction with the business activity index:
The labor market report contrasts with the Ivey Business Activity Index, which dropped from 59.8 to 52.4 in October. This indicates that while employment continues to grow, business activity is slowing. This statistical inconsistency complicates a clear assessment of the economy’s overall health.
Bank of Canada’s position:
Despite the mixed data, the Bank of Canada (BoC) is likely to interpret the report positively. With the key rate already lowered to 2.75%, the regulator will probably consider its target reached and pause additional cuts. The BoC will now have to weigh the easing of inflationary pressure from a weak domestic economy against the renewed inflation risks tied to US tariffs and shifting global supply chains.
Bottom line:
The Canadian dollar strengthened ever so slightly after the release but lacked momentum for a sustained rally. Although the report looks strong on the surface, its mixed signals and weakening business activity make it hard to confirm a solid economic recovery in Canada. The Canadian dollar will likely remain steady, awaiting further data.
🔑Key factors:
Strong growth following shutdown:
Gold extended its upward momentum on Thursday, surpassing $4,240 per ounce and marking its fifth straight day of gains. The metal recovered a large portion of October’s losses, when it fell from an all-time high near $4,380. Traders link this recovery to the end of the prolonged shutdown and rising expectations for Fed monetary easing.
Uncertainty and safe-haven demand:
Although the shutdown is now over, lingering risks of another budget crisis (as funding is only secured until the end of January 2026) continue to weigh on the US dollar and support gold’s rise. The metal remains a preferred safe-haven asset in times of economic instability.
Fed conflicts and expectations of rate cuts:
As mentioned, the Fed remains divided on its future policy direction. That being said, growing expectations of a slowing US economy and potential rate cuts are boosting gold’s appeal. Historically, rate cuts tend to support gold prices since the metal does not yield interest.
JP Morgan Private forecasts:
JP Morgan Private expects gold prices to keep climbing sharply, projecting levels above $5,000 per ounce next year and reaching $5,200–$5,300 by the end of 2026. The primary catalyst is increased gold accumulation by central banks in emerging markets, aiming to diversify reserves and preserve value. Despite current elevated prices, gold’s share in many central banks’ reserves remains quite modest, sustaining long-term demand.
BottBottom line:
Gold concluded the week with solid gains, reaffirming its bullish trend. The mix of persistent economic uncertainty, potential Fed easing, and ongoing central bank demand in emerging markets continues to create a favorable environment for the metal. Even at elevated levels, experts believe there is still significant room for further growth.
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