Insights 
VT 
The US Energy Information Administration reported a change in crude oil stocks with an increase of 3.715 million barrels, surpassing expectations of 2.25 million. This data reflects differing stock levels, which can impact market perceptions and strategy.
In the foreign exchange market, EUR/USD has faced losses due to German economic data and political turmoil in France. Meanwhile, the USD/JPY has risen to 153.00, with the dollar maintaining strength despite a dovish outlook from the Federal Reserve.
Rise In Gold Prices
Gold prices surged past $4,000 per ounce, driven by a demand for safe-haven assets. This increase occurred alongside geopolitical concerns and potential fiscal changes in Japan.
Cryptocurrency movements show Ripple (XRP) struggling to maintain a price of $2.85 due to decreased futures interest. Solana trades around $220 but faces delays in bullish momentum due to reduced on-chain activity.
The US faces economic uncertainty after a government shutdown began on October 1, with no reopening date in sight. This has contributed to a cloudy economic outlook with markets watching for developments.
The larger-than-expected build in crude oil inventories signals softening demand. We see this as a clear opportunity to initiate bearish positions on WTI futures, as the ongoing US government shutdown is likely to curb economic activity and fuel consumption further. This supply glut is worsened by domestic production that has remained near the record highs of over 13 million barrels per day we first saw back in late 2023.
Turn To Safe Havens
With Gold surging past $4,000, the flight to safety is in full force. We should consider buying call options to ride this momentum, which is fueled by the twin uncertainties of the US shutdown and French political instability. This rally is supported by years of sustained central bank buying, which absorbed over 1,000 metric tons of gold annually back in 2022 and 2023, fundamentally tightening the market.
We should prepare for increased stock market volatility as long as the government shutdown continues. Protective put options on the S&P 500 seem prudent, as the last prolonged shutdown in 2018-2019 lasted 35 days and caused significant market turbulence. Trading VIX futures or options could also be a direct way to profit from the rising uncertainty.
The US dollar’s strength, pushing the Dollar Index above 110, is a major theme despite the Fed’s dovish signals. This indicates the dollar is acting as a primary safe haven, overriding typical reactions to future rate cut expectations. Therefore, we should continue to hold short positions on EUR/USD and GBP/USD, as European political issues add to the relative weakness of those currencies.
