Insights 
VT 
Argentina’s industrial output saw a year-on-year decline to -4.4% in August, down from -1.1% previously. This marks a noticeable downturn in the performance of the industrial sector.
The People’s Bank of China has set the USD/CNY reference rate at 7.1102, up from 7.1055. Meanwhile, China’s Commerce Ministry is planning tighter regulations on rare earth exports.
The Gbp Usd Currency Pair And Government Shutdown
The GBP/USD currency pair has shown modest gains, hovering above 1.3400, amid the ongoing shutdown of the US government. Concerns over the shutdown have also influenced gold prices, which have maintained gains above $4,000.
In geopolitical developments, US President Donald Trump announced that Israel and Hamas have agreed on the initial stage of a Gaza peace plan. Fiscal concerns in Japan have led the USD/JPY to extend its rally beyond 152.50.
The EUR/USD is testing the support level at 1.1600, while Ethereum has regained a price of $4,500. FXStreet underscores that investing carries risks, including potential financial loss. It advises conducting thorough research before making investment decisions and clarifies that it does not offer personalised financial recommendations. The content reflects the authors’ views, which are independent of FXStreet’s official stance.
Market Uncertainty Amid Us Government Shutdown
The US government shutdown, now in its ninth day, is creating significant market uncertainty and traders should anticipate higher volatility. We believe using options on major indices like the S&P 500 is a prudent way to manage this environment. Looking back, the 16-day shutdown in October 2013 caused the VIX, a key measure of fear, to spike by over 30% in two weeks.
Gold is a key asset to watch, holding firm above $4,000 as a safe haven, though the recent news of an Israel-Hamas peace plan is providing some resistance. We expect its price to be highly sensitive to any news about the shutdown’s length, making call and put spreads a viable strategy to trade the expected range. History supports this, as gold gained over 3% during that same 2013 shutdown amid fiscal uncertainty.
In currency markets, the dollar’s weakness is not uniform, as USD/JPY has pushed above 152.50 due to persistent fiscal fears in Japan. This suggests the yen carry trade remains a powerful force, a dynamic we also saw back in 2023 when the pair sustained levels above 150. We see continued upside potential in the pair as long as Japan’s policy and debt concerns remain unresolved.
Beyond the major headlines, other markets are signaling caution. China’s move to tighten control over rare earth exports could create future supply shocks for technology and defense sectors, a situation reminiscent of the price spikes seen after similar restrictions in 2010. This, combined with weak industrial data from Argentina, suggests traders should be wary of risks in emerging markets and specific commodity-linked assets.
