Insights 
VT 
Early Thursday, markets remained calm as participants awaited US housing data and the release of September’s Consumer Price Index on Friday. The US Dollar was particularly strong against the Japanese Yen, with a weekly increase of 1.27%, but saw losses against currencies like the Canadian and Australian Dollars.
Reports emerged of the US planning to restrict certain software exports to China, potentially in coordination with G-7 allies, amid rare earth export constraints. US stock futures showed mixed movements, and the US Dollar Index maintained modest gains around 99.00.
Currency Movements
EUR/USD gained slightly after a three-day decline but struggled for direction near 1.1600. GBP/USD rebounded slightly after reacting to softer UK inflation data, stabilising around 1.3350. Gold saw fluctuations above $4,100, stemming from a cautious market environment after recent losses. USD/JPY maintained its upward momentum, trading at a 10-day high near 152.50 on Thursday.
The US-China trade war continues to have global economic repercussions, disrupting supply chains and potentially impacting the Consumer Price Index. Trade tensions escalated following Donald Trump’s return to the presidency, with planned tariffs intensifying the economic conflict.
Markets are very still right now as we await tomorrow’s US Consumer Price Index (CPI) data. With inflation having been difficult to control over the past year, we’ve seen figures like the August 2025 report showing a stubborn 4.1% annual rate. A higher-than-expected number tomorrow will likely cause a sharp rise in the US Dollar, so traders should be prepared for significant volatility using options to protect their positions.
Market Strategy
The US Dollar’s strength is most obvious against the Japanese Yen, with the USD/JPY pair now trading above 152.50. This upward trend has been consistent, reflecting the wide policy gap between the Federal Reserve and the Bank of Japan, a pattern we have observed since the rate divergences became stark back in 2023. We believe holding long positions on USD/JPY, possibly through call options or futures, remains a sensible strategy heading into the CPI release.
The renewed trade war with China is the main source of market tension, especially after the 60% tariffs were imposed in January 2025. Gold is trading above $4,100, which shows that traders are already pricing in a lot of risk, especially with new threats of US software export curbs. The upcoming meeting between Presidents Trump and Xi is a major risk event, so holding options on gold or equity indices could be a good hedge against a negative outcome.
In contrast to the dollar, the Euro and the Pound are showing little direction. The EUR/USD is stuck near 1.1600, while recent soft inflation data from the UK has kept GBP/USD steady around 1.3350. For now, these currencies are secondary to the bigger US inflation and China trade narratives, making them less suitable for large directional bets.
