Insights 
VT 
On Thursday, October 9, attention will be on comments from US central bank officials, with Fed Chair Jerome Powell expected to speak. Due to the ongoing US government shutdown, key data releases have been delayed, affecting market observers’ focus.
The US Dollar (USD), after gaining for three consecutive days, remains steady against other major currencies. It showed the most strength against the Japanese Yen, with a 2.39% increase. Comments from various Fed officials and minutes from the September meeting suggest further rate cuts might be considered this year.
Government Shutdown Continues
The US Senate has once again failed to advance a funding bill to end the government shutdown, with President Trump promising back pay for affected workers. Meanwhile, an agreement between Israel and Hamas over a peace plan is on the horizon, potentially releasing hostages and withdrawing troops.
In currency trades, the EUR/USD is declining towards 1.1600, while GBP/USD stays below 1.3400. USD/JPY is continuing its upward trend, trading above 153.00. Gold slightly declined early Thursday but remains above $4,000 amid reduced geopolitical tensions.
The Federal Reserve shapes US monetary policy through interest rate adjustments, affecting the US Dollar’s strength. The Fed conducts eight policy meetings annually, and employs measures like Quantitative Easing and Tightening to manage economic conditions.
Today is October 9, 2025, and looking back at the market conditions from that period is instructive. The Dollar Index was holding at 99 during that government shutdown, but we have since seen it trade in a higher range. Currently, the DXY is hovering around 105, showing the dollar has maintained its strength on the back of a resilient US economy.
Currency Intervention Risks
The surge in USD/JPY above 153 was a precursor to the extended yen weakness we have experienced. We are now watching the pair test the 162 level, driven by the persistent interest rate gap between the Federal Reserve and the Bank of Japan. Derivative traders should be cautious, as the risk of currency intervention from Japanese officials is now significantly higher than it was back then.
We remember the panic that sent Gold to $4,000 an ounce following the unexpected Israel-Hamas peace plan announcement. Today, with geopolitical tensions having shifted, Gold is trading at a more sustainable $2,550, reminding us how quickly fear premiums can be priced out of the market. This historical spike serves as a key lesson on managing exposure during major geopolitical news.
That government shutdown highlighted how markets become reliant on Fed commentary when key data is delayed. While we don’t have a shutdown today, the US national debt has continued to grow, now exceeding $37 trillion, making future budget negotiations a source of potential volatility. The Fed’s position has also shifted dramatically from leaning toward cuts to holding rates steady to contain inflation, which is currently running at an annual rate of 2.8%.
Given this context, options strategies that profit from sharp, unexpected moves seem prudent. Buying straddles or strangles on major currency pairs like EUR/USD could be an effective way to position for potential political surprises or sudden shifts in central bank tone. Implied volatility remains relatively low, making these positions cheaper to enter than they were during the crisis periods we saw in previous years.
