Canada’s international merchandise trade showed a deficit of $6.32 billion in August, surpassing forecasts of $5.55 billion. This result reflects ongoing economic trends and trade conditions impacting the country’s international trade balances.

The Dow Jones Industrial Average faced challenges amid an ongoing shutdown, affecting market dynamics. Furthermore, the Australian dollar maintained a strong position against the US dollar despite the latter’s strength.

FOMC Minutes Analysis

The FOMC minutes have been a focal point, with many anticipating their implications on the financial market. Meanwhile, tensions continue as Donald Trump commented on potential tariffs with Canada.

The pound sterling saw fluctuations, retreating due to the strengthening US dollar as the shutdown loomed. At the same time, gold prices stalled below their record peak amid market anticipation for a $4,000 breakout.

In the crypto market, Bitcoin reached a new high of $126,199 before settling at $124,000, while Ethereum aimed for record highs. Japan’s political landscape shifted with Sanae Takaichi’s leadership victory, bringing opportunities and challenges linked to her economic agenda.

We’ve seen Canada’s August trade deficit come in worse than expected at $-6.32 billion, adding pressure to an already soft Canadian dollar. With potential US tariffs still on the table, the outlook for the loonie appears weak in the near term. Traders should consider buying USD/CAD call options to position for further upside in the pair.

US Government Shutdown Impact

The ongoing US government shutdown is creating significant market uncertainty, pushing the Dow lower while strengthening the US dollar as a safe haven. We remember the 35-day shutdown back in 2018-2019, which shows these situations can drag on and increase market jitters. This environment suggests buying VIX futures or S&P 500 put options to hedge against further equity declines.

Political instability in the US and Europe is fueling a powerful rally in gold, with prices now testing the $4,000 level. This is classic safe-haven behavior, amplified by central bank purchases which, according to World Gold Council data, have continued their strong pace from the 2022-2024 period. We believe buying gold futures or call options on gold ETFs remains a primary strategy to capitalize on this fear-driven momentum.

In Japan, the new leadership is expected to maintain an ultra-easy monetary policy, which should continue to weigh on the yen. With core inflation still struggling to consistently stay above the 2% target, the Bank of Japan has little incentive to tighten policy soon. Therefore, we see opportunities in buying USD/JPY call options, anticipating a move higher as the policy divergence with the US widens.

Bitcoin is consolidating around $124,000 after its recent all-time high, showing strong underlying momentum. This rally is the result of sustained institutional inflows that we’ve seen ever since the spot ETFs were approved back in early 2024. Given the high volatility, using bull call spreads on Bitcoin or Ethereum could be a cost-effective way to stay long while defining risk.

Create your live VT Markets account and start trading now.