New Zealand’s exports witnessed a decline in September, falling from $5.94 billion to $5.82 billion. This decrease contrasts with ongoing developments in related markets and global trade.

The Australian dollar has received a boost following a critical minerals agreement between the US and Australia. Furthermore, the US Dollar Index shows mild losses, hovering near 98.50 due to attention on US-China trade tensions.

Currency Markets Update

In currency markets, the People’s Bank of China set the USD/CNY reference rate at 7.0930, slightly below the previous 7.0973. The NZD/USD is gaining some traction towards 0.5750 amidst US-China trade discussions.

Gold prices have surged, climbing to a fresh record high near $4,380 during recent trading. This rise comes amid broader economic uncertainties and speculation surrounding US Federal Reserve rate cuts.

BlackRock launched the iShares Bitcoin exchange-traded product on the London Stock Exchange, allowing UK investors exposure to Bitcoin. This development coincides with discussions on US-China trade negotiations and looming US inflation data, both pivotal for market dynamics in the coming week.

Despite recent corrections, market fundamentals for cryptocurrencies remain robust, suggesting continued growth and potential stability. There is also speculation about Bitcoin reaching a $500,000 target by 2028, driven by its increasing institutional adoption.

Market Sentiment and Strategy

Given the broad uncertainty, we see gold pushing near record highs above $4,350 as a clear signal of market fear. Concerns over a potential US government shutdown and renewed credit risks are driving this flight to safety. The CBOE Volatility Index (VIX) has also reflected this, climbing above 25 in the past week, indicating that traders are pricing in significant market swings.

The fall in New Zealand’s exports to $5.82 billion should be a warning sign for the Kiwi dollar. While the NZD/USD is getting a temporary lift from hopes around US-China trade talks, underlying economic weakness is becoming clear, especially with Q3 2025 GDP growth forecasts recently being revised downward. We believe this makes any strength in the New Zealand dollar a potential opportunity to short the currency against its stronger peers.

In contrast, the Australian dollar looks much more robust, supported by the new critical minerals deal with the US. More importantly, recent data from last month showed China’s Caixin Manufacturing PMI beat expectations, which is a positive for Australian commodity demand. This fundamental divergence suggests a long AUD/NZD position could be a favorable trade in the coming weeks.

We are bracing for high volatility in the British Pound as both UK and US inflation data are due this week. Remembering the stubborn inflation crisis of 2022-2023, any sign of persistent price pressures could force the Bank of England’s hand. Derivative traders should consider using options to trade the expected price swings in GBP/USD around the 1.3400 level.

The launch of BlackRock’s Bitcoin ETP for UK retail investors confirms that institutional adoption is continuing to drive the crypto market. While some analysts are calling for Bitcoin to reach $500,000 by 2028, the asset is currently consolidating around $185,000 after its recent surge. This institutional flow brings liquidity, but traders should still be prepared for sharp corrections.

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