Insights 
VT 
The USD/CNH pair has strengthened above the 7.1200 mark. This move comes amidst a softer-than-anticipated China manufacturing PMI for October, which slipped to 50.6 from 51.2, and was below the consensus of 50.7.
Despite the weaker PMI, the outlook for China’s manufacturing sector remains improved due to the ongoing US-China trade truce. The change in trade relations continues to support the yuan, according to analysts.
Aud Usd Decline
In related market movements, AUD/USD has declined as the US dollar firms, with the Reserve Bank of Australia’s policy meeting being closely watched. The US ISM manufacturing PMI also showed a decline, falling to 48.7 in October from the expected 49.5.
The GBP/USD started the week soft but bounced back to 1.3130, staying near its lowest levels since April. Meanwhile, Gold is trading above $4,000 per troy ounce, recovering from recent corrections but facing challenges from rising US Treasury yields.
The US dollar is gaining against the Chinese yuan, pushing above 7.12 as China’s manufacturing activity shows signs of stalling. This isn’t a one-off event; we’ve seen this pattern of sluggish PMI readings, like the 50.8 figure from late 2024, which points to a persistent slowdown. Traders could look at buying USD/CNH call options to gain exposure to further yuan weakness while keeping their risk defined.
However, the dollar’s strength is complicated by weakness at home, with US manufacturing now in its fourth consecutive month of contraction, as the latest ISM PMI reading of 48.7 confirms. This suggests the dollar is primarily acting as a safe haven rather than a reflection of a robust American economy. We could consider buying puts on the Dollar Index as a hedge in case this weak US data starts to outweigh global fears.
Gold As A Safe Haven
The flight to safety is most obvious in gold, which is holding firm near the $4,000 level. This valuation is supported by the massive gold purchases made by central banks over the 2022-2024 period, which hit record levels as a hedge against inflation and geopolitical risk. Continuing to buy call options on gold futures seems like a sound strategy to capitalize on ongoing economic uncertainty.
This risk-off sentiment is also visible in the crypto markets, where speculative assets like meme coins are falling sharply. This retreat from riskier assets suggests broader market anxiety is building. We should watch for rising market volatility, and buying VIX call options could be a cheap way to protect portfolios against a potential equity market downturn in the coming weeks.
Looking ahead, central bank meetings for Australia and the UK will introduce significant event risk, particularly for the Pound. The Bank of England is facing a difficult choice between tackling stubborn inflation and supporting a fragile economy. This uncertainty makes options strategies like straddles on GBP/USD attractive for playing the expected volatility without betting on a specific direction.
