Insights 
VT 
Foreign investment in Japanese stocks amounted to ¥1885 billion as of October 10, down from the previous figure of ¥2479.9 billion.
The Japanese yen experienced a strengthening due to safe-haven flows, with USD/JPY testing the 150.00 level amidst a weaker USD.
Euro and Pound Performance
The EUR/USD moved above 1.1700 following a no-confidence vote in France’s government. The GBP/USD showed a gain of over one percent in a two-day recovery creating a positive trajectory.
Gold prices remained volatile, briefly dipping below $4,300, before finding support due to a risk-off market environment. Bitcoin, Ethereum, and Ripple suffered losses, decreasing nearly 5%, 6%, and 7% respectively, indicating potential further downside.
Solana showed recovery signs after experiencing an intraday drop, buoyed by improved sentiment in the cryptocurrency market. Bitcoin and Ethereum also saw similar trends with an upswing.
In the S&P 500 market, a 2.7% crash was followed by a 1.3% recovery, showing uncertain market trends. The inside day pattern reflected traders’ cautious stance and market indecision despite rebounds.
Legal Disclaimers and Market Trends
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Foreign investors are pulling back from Japanese stocks, with investment dropping by over ¥590 billion in a single week. This is the third straight week of net selling, a pattern not seen since the market turbulence of late 2024. Derivative traders should consider buying put options on the Nikkei 225 index to profit from further declines driven by this capital flight.
The Japanese yen is strengthening as a safe haven, pushing the USD/JPY pair down towards the critical 150.00 level. We know this is a significant zone, as it prompted Bank of Japan intervention back in the 2022-2024 period. This environment makes shorting USD/JPY futures or buying call options on the yen an attractive proposition.
Gold remains a primary beneficiary of this uncertainty, trading back near its all-time high of $4,300 per ounce. This rally is supported by strong physical demand, with the World Gold Council reporting that central banks added another 80 tonnes to reserves last quarter, continuing the accumulation trend from 2023-2024. We see value in using call options to maintain long exposure to gold while defining risk.
The US stock market is showing clear indecision after the recent tariff-induced volatility. The CBOE Volatility Index (VIX) has remained elevated above 22 for a week, signaling persistent fear among investors. This suggests that strategies that profit from large price swings, such as long straddles on the SPY ETF, could be prudent.
Weakness in the US dollar is spilling over into other major currency pairs, with EUR/USD now pushing above 1.1700. This dollar decline is directly linked to concerns over the prolonged US government shutdown, which reminds us of the economic drag caused by the 35-day shutdown in 2018-2019. Traders could look at buying near-term EUR/USD call options to capitalize on this upward momentum.
