The Netherlands’ manufacturing output rose by 1.7% in August, a bounce back from a previous decline of 1.4%. Currency movements include the Japanese yen’s struggle amid political uncertainties and the Australian dollar’s losses despite the Reserve Bank of Australia’s cautious projections.

EUR/USD strengthened above 1.1550 due to persistent Euro zone political concerns, ending a four-day slide. GBP/USD maintained levels above 1.3300 with support from the Bank of England’s cautious approach. Meanwhile, gold prices stayed below $4,000, lacking follow-through selling, but were buoyed by US rate cut bets and geopolitical tensions.

Cryptocurrencies Aim for Stability

Cryptocurrencies such as Bitcoin, Ethereum, and Ripple faced corrections after strong rallies, with Bitcoin hovering around $121,000. In US policy, tariffs continue as a key tool despite daily news cycles, reflecting ongoing foreign policy strategies.

In corporate news, Coinbase and Mastercard are reportedly vying to acquire stablecoin firm BVNK, with the transaction estimated between $1.5 billion and $2.5 billion. The final outcome remains uncertain as discussions are still ongoing.

In the coming weeks, we see the EUR/USD pair facing a ceiling around the 1.1575 level due to the political uncertainty in France. The spread between French and German 10-year government bonds has widened recently, a classic signal of rising risk that traders should not ignore. This suggests that selling call options or establishing bearish option spreads could be a prudent strategy to hedge against a potential reversal.

The British Pound appears more resilient, holding firm above 1.3300 as the Bank of England remains cautious. With UK core inflation data from earlier this year showing it to be stickier than in other G7 nations, the market is pricing out any imminent rate cuts. This divergence from the Federal Reserve’s anticipated policy could continue to support GBP/USD, making long positions attractive on any dips toward the 1.3300 handle.

US Dollar Strength and Gold Market Trends

We expect the US dollar to continue its strength against commodity-linked currencies, with USD/CAD aiming for the 1.4050 target. This trend is reinforced by the US administration’s unwavering stance on tariffs, which historically pressures currencies like the Canadian and Australian dollars. Looking back at the trade disputes of 2018-2019, the AUD/USD pair weakened significantly, a pattern that could repeat itself.

For gold, although the price is under pressure below $4,000, the downside seems limited for now. The market is pricing in a high probability of a Fed rate cut in early 2026, which is fundamentally supportive for non-yielding assets like gold. Any escalation of geopolitical tensions or a prolonged US government shutdown could quickly trigger a flight to safety, making put options on gold miners or long positions in gold futures a valuable hedge.

After reaching a record high, Bitcoin’s pause around $121,000 warrants a cautious approach from traders. We have observed a significant drop in open interest for Bitcoin perpetual futures this week, suggesting that enthusiasm from leveraged buyers is waning. This pattern is reminiscent of the market tops we saw in 2021, indicating that hedging long exposure or considering short-term put options could be a wise move.

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