Insights 
VT 
Eurozone retail sales experienced a decline, dropping from 2.2% to 1% year-on-year in August. This decrease is indicative of the broader economic challenges faced by the region amidst fluctuating market conditions.
The EUR/CHF currency pair is affected as political tensions rise in France following a key resignation. Meanwhile, gold prices surge past $3,900 due to a heightened demand for safe-haven assets amid US political uncertainties.
Currency Market Dynamics
In currency markets, the GBP/USD pair struggles, remaining below the mid-1.3400s due to a stronger US Dollar. Additionally, the EUR remains weak against most G10 currencies amidst political and economic pressures.
Gold continues to approach record highs, trading around $3,950 per ounce on rising safe-haven demand. Bitcoin, by contrast, underperformed gold in Q3, showcasing only modest returns in comparison.
In Japan, a leadership shift promises potential market opportunities and risks, with a consistent policy agenda anticipated. For cryptocurrencies, the Pi Network stabilises above $0.2565, showing limited investor interest post-Defi launch.
Eurozone Retail Sales Decline
The slowdown in Eurozone retail sales, which fell to 1.0% year-over-year in August, signals weakening consumer demand across the continent. This, coupled with the ongoing political crisis in France, creates a fundamentally bearish case for the Euro. We should consider strategies that benefit from a declining Euro, such as buying put options on the EUR/USD or establishing bear put spreads to limit risk.
Despite a US government shutdown, the US Dollar is showing broad strength, which is a pattern we’ve seen before. During the 35-day shutdown in late 2018 and early 2019, the dollar index (DXY) actually strengthened as global uncertainty drove capital into US assets. This suggests we should be cautious about shorting the dollar and instead look for pairs where it can continue to outperform, like against the Euro or Pound Sterling.
Gold is surging towards $3,950 an ounce, acting as the primary safe haven amid the political turmoil in both the US and Europe. This momentum is strong, and we anticipate it will continue as long as these uncertainties persist. Buying call options on gold futures or gold-backed ETFs offers a way to participate in further upside while clearly defining our maximum loss.
The political situation in France is also creating a clear regional trade, with the Euro underperforming the Swiss Franc. The EUR/CHF cross is a direct play on this European-centric risk, isolating it from the dynamics of the strong US dollar. We see further downside potential here, making short positions in this pair attractive.
With Japan’s new leadership signaling a continuation of ultra-easy monetary policy, the Japanese Yen is likely to remain weak. This creates a stark contrast with other central banks and could provide opportunities in pairs like USD/JPY and GBP/JPY. We should monitor these pairs for long entry points, using derivatives to manage volatility.
