The week of September 29 – October 3 will keep global markets on edge as investors balance the risk of a potential U.S. government shutdown with high-impact economic releases. In the U.S., focus will fall on ISM/PMI data midweek and Friday’s nonfarm payrolls (NFP), both critical for shaping Fed expectations. In Asia, Japan’s policy debates and China’s factory activity will drive yen moves and broader EM sentiment, while developments from the Swiss National Bank (SNB) and Australian data will test local central bank outlooks.

Key Points to Watch

• Risk of a U.S. government shutdown could delay data, distort sentiment, and add to dollar volatility.
• U.S. payrolls (NFP) on Friday, Oct 3, is the main event; job figures will guide near-term Fed expectations.
• ISM / S&P Global Manufacturing PMI early October provides a gauge of U.S. industrial health.
• BoJ dissent signals hawkish shift, leaving the yen sensitive ahead of Japan’s Oct 4 LDP leadership election.

Post-Fed Environment

Markets enter the week still digesting the Fed’s September rate cut and forward guidance. While the central bank framed the move as risk management, expectations remain divided on further easing. Money markets now price an 86% chance of another 25 bps cut in October. The added risk of a U.S. government shutdown further clouds the outlook, with potential delays in data releases, reduced liquidity, and higher risk premia.

U.S. Data Drives the Week

The key release is Friday’s NFP report. A strong print would challenge dovish expectations, pushing the dollar and yields higher. Conversely, weak job growth would reinforce hopes for additional Fed cuts. Earlier in the week, ISM/PMI data (Oct 1) will provide insights into factory activity and price pressures. Softer results could raise concerns over slowing U.S. growth momentum.

China’s Factory Activity and U.S. Trade Tensions

China’s manufacturing sector remains under pressure. A Reuters poll points to September PMI edging up to 49.6, still below the 50 threshold. Persistent weakness, coupled with intensifying U.S.–China trade tensions, weighs on EM sentiment. Any policy missteps or escalation risks could amplify volatility across regional markets.

Japan: BoJ Dissent and Political Risk

Two dissenting votes at the BoJ have fueled speculation that a rate hike is back on the table, heightening sensitivity to the Tankan survey and upcoming speeches. Political uncertainty adds to the backdrop, as the LDP prepares to elect a new leader on October 4. Intraday volatility in USD/JPY may increase as candidates position ahead of the vote.

SNB Policy Outlook

The SNB, having left rates at 0%, is expected to maintain a cautious stance. President Schlegel has reiterated that negative rates remain an option should inflation stay subdued. Markets will test the SNB’s dovish signals, with USD/CHF vulnerable to further downside pressure.

Australia: Early Indicators Ahead of CPI

Although full Q3 CPI data arrives later in the month, PMI and high-frequency indicators due this week will provide early signals for the RBA outlook. A stronger-than-expected print could ease rate-cut expectations, offering short-term support for the AUD.

Conclusion

This week combines political risks and pivotal macro data, leaving little room for complacency. The U.S. NFP and ISM/PMI will likely dominate direction, but policy signals from Asia and Europe may trigger sharp moves in FX and fixed income. Market volatility remains a high probability.

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