Risk-On Rally Extends on Trade Truce; But U.S. Shutdown Underscores Data Risk

Daily Market Insights for November 3, 2025, brought to you by Ultima Markets.

The new trading week opens with pronounced “Risk-On” momentum, driven by the U.S.-China trade truce and continued strength in Tech earnings. However, the ongoing U.S. Government Shutdown casts a long shadow over the economic calendar, including the status of Friday’s crucial Non-Farm Payroll (NFP) report.

Macro Theme: Trade Truce vs. U.S. Shutdown

The core driver of the current market rally remains the breakthrough between Presidents Trump and Xi Jinping — a one-year pause on new tariffs and a mutual agreement to ease restrictions on rare-earth exports.

• Geopolitical Relief: The suspension of tariff escalations has removed a major tail risk for global growth, supporting risk appetite and fuelling flows into cyclical and emerging market assets.
• Caution Ahead: Despite the optimism, the rally remains heavily concentrated in a handful of Big Tech stocks, creating a narrow market breadth. This concentration raises vulnerability to sharp corrections should any of the major leaders disappoint.

Meanwhile, the U.S. Government Shutdown is now stretching to its 34th Day, closing to its highest record of 35 days. With critical official data (GDP, Retail Sales, NFP) halted, the market’s attention is focused entirely on private sector surveys to gauge economic health.

The political impasse creates fundamental uncertainty and acts as a softening factor for the broader economy, subtly supporting the Fed’s stance that policy easing may still be required to counter these non-monetary risks.

ISM Manufacturing PMI (Today’s Key Focus): The ISM is the single most important report today. As the government cannot provide official statistics, this private sector report is crucial for assessing the industrial sector’s health. The market is hoping the report will show stabilization following the de-escalation of trade war threats.

Outlook: While the sentiment from the trade truce remains overwhelmingly positive, the U.S. Shutdown and subsequent uncertainty over U.S. growth data pose a clear headwind for the market today and into this week.

US Dollar: Bullish Continuation Confirmed, But in Test

The US Dollar has successfully broken out of its key resistance of 99 earlier, and is now in a clear short-term uptrend, fuled by the “hawkish cut” from the Fed and policy divergence against the BoJ/ECB.

USDX, H4 Chart | Ultima Market MT5

The U.S. Dollar Index (USDX) is trading near the 99.60 level, confirming the continuation of its mid-October rally. Momentum remains positive, but the index is now approaching a key technical hurdle between 100.00 – 100.30.

A decisive daily close above this zone would confirm a broader bullish breakout and potentially signal a long-term trend reversal, opening the door for further upside beyond the 100.00 mark. For now, this zone acts as the immediate ceiling for the dollar’s recent advance.

On the downside, the first layer of support sits near 99.25, followed by the psychological 99.00 handle — a crucial short-term floor. As long as losses remain contained above 99.00, the near-term bullish bias for the USD remains intact.

U.S. Stock Indices: Near-Term Vulnerability at Record Highs

U.S. indices, particularly the Nasdaq and S&P 500, rallied to fresh record highs last week, but the rally is showing concerning technical fatigue.

SP500, Daily Chart | Ultima Market MT5

The S&P 500 is currently hovering just below a major technical confluence zone near 6900, which capped the upside last week. This 6900–6930 range serves as a critical pivot area — aligning with both horizontal resistance and the upper boundary of the medium-term trend channel.

A failure to break and hold above 6900 may trigger a corrective pullback, though any retracement is likely to remain limited as long as prices stay above 6775.

Maintaining support above this level would preserve the broader bullish structure and suggest the rally is consolidating rather than reversing.

Daily Key Takeaways

Market sentiment opened the week firmly in “risk-on” mode following the U.S.-China trade truce, but optimism now faces a key test as the prolonged U.S. government shutdown disrupts critical data flow and clouds growth visibility.

The U.S. Dollar remains in a short-term uptrend, supported by policy divergence and a hawkish Fed tone, though momentum could stall near the 100.00 resistance zone if private data fail to confirm economic resilience.

Meanwhile, U.S. equities continue to show strength but are beginning to display signs of fatigue at record highs. The S&P 500’s 6900–6930 resistance zone is pivotal — a breakout would reaffirm bullish continuation, while rejection could trigger a healthy pullback toward 6775.

In short, risk appetite remains intact but fragile, hinging on how today’s key data and the ongoing U.S. government shutdown evolve through the week.

Disclaimer

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