DBG Markets: Market Report for Oct 28, 2025

Global Markets Rally as Risk Appetite Grows; FOMC and Diplomacy in Focus

Market Overview

Global risk assets extended their rally on Monday, driven by softer U.S. CPI data that reinforced expectations for monetary easing and improved optimism over global trade relations.

All three major U.S. indices set new historical highs, with the S&P 500 closing above 6,800 for the first time. Asian and European markets followed the U.S. lead with broad-based gains, although intraday profit-taking emerged in the tech sector amid stretched valuations.

· Gold Correction: Safe-haven outflows and continued profit-taking weighed on Gold, which briefly dipped below the key $4,000 psychological level during Mondays U.S. session. This confirmed a significant technical correction, with the market now searching for its next fundamental support zone.

· Core Event: The two-day Federal Reserve FOMC meeting officially begins today, marking the main macro focus for global investors.

Macro Outlook: Diplomatic Tailwinds Meet Policy Headwinds

Global sentiment is being shaped by active high-level diplomacy, which has provided short-term confidence boosts — though persistent policy uncertainty remains a key overhang.

U.S. President Donald Trump‘s Asian diplomacy tour continues to underpin market optimism. 

On Monday, Trump departed for Japan, where he is scheduled to meet new Prime Minister Sanae Takaichi. Markets are closely monitoring this high-level visit and the upcoming APEC meetings, viewing them as critical for consolidating U.S.–Asia alliances and easing global trade tensions.

However, these positive developments are partly offset by renewed U.S.–Canada trade frictions, as Washington announced a 10% tariff hike on Canadian imports and rejected calls to reopen trade negotiations. This reinforces the view that the Trump administration continues to use tariffs as a standard foreign-policy tool, keeping global trade uncertainty elevated and unpredictable.

Corporate & Policy Risks Ahead of the Fed

Despite broadly positive sentiment, markets remain vulnerable to sudden shifts if negative headlines emerge. Key near-term risks include:

· Corporate Headwinds: According to Reuters, Amazon plans to lay off up to 30,000 office employees — around 10% of its white-collar workforce. This raises concerns about potential cost-cutting trends among major tech firms and could temporarily weigh on risk appetite.

· FOMC Meeting: The market has fully priced in a 25-basis-point rate cut, meaning investor focus is squarely on Chair Powells post-meeting guidance due Wednesday. Any unexpectedly cautious or noncommittal tone could trigger volatility and dampen sentiment.

Gold Corrective Deepen Ahead Fed

Gold extended its corrective move on Monday, briefly breaking below the key $4,000 psychological level as markets positioned cautiously ahead of this weeks Federal Reserve meeting. The metal continues to face selling pressure, with traders testing the lower boundary of the recent range during the early session.

XAU/USD, H1 Chart

Currently, Gold is hovering around the $4,000 zone, with the $4,010–$3,975 area serving as the key short-term pivot range.

A decisive break below this zone could pave the way for a deeper correction heading into the Fed meeting. Conversely, a sustained recovery above $4,010 would help reestablish near-term support and potentially return Gold to its broader consolidation range.

XAU/USD, H4 Chart

USD/JPY – Policy Divergence Fuels Upside Risk

The USD/JPY remains one of the most directional and volatile pairs in the FX market, driven mainly by the widening policy gap between the U.S. and Japan.

While the Federal Reserve is preparing to ease policy, Japans new Prime Minister Sanae Takaichi continues to support ultra-loose fiscal and monetary measures in line with Abenomics, creating a strong foundation for further upside in the pair.

· In the short term, a Fed rate cut—already well priced in—could lead to brief USD weakness if policymakers sound overly dovish. However, the yen remains fundamentally weak due to persistently low yields and continued policy accommodation.

· If the Fed adopts a more cautious tone or signals a slower pace of easing, the dollar could strengthen again, pushing USD/JPY higher and reinforcing its bullish trend.

USDJPY, H4 Chart

Technically, the pair is facing resistance near the 153.00 level. Unless the Fed delivers an unexpectedly dovish message, a sharp reversal in USD/JPY seems unlikely. Any pullback is likely to attract dip-buying interest.