Insights 
VT 
Australian building permits saw a 12% increase in September, exceeding the 5.5% expectations. This rise reflects a rebound in the construction sector, affecting economic growth in Australia.
US President Donald Trump plans to halt sales of NVIDIA’s Blackwell AI chips to China, amid ongoing US-China tensions. Meanwhile, China’s Manufacturing PMI fell to 50.6 in October, slightly below the 50.9 forecast.
Chinese Yuan And FX Markets
The People’s Bank of China has set the USD/CNY reference rate at 7.0867, slightly stronger than previously. In the FX markets, EUR/USD remains below 1.1550, influenced by potential Federal Reserve rate cuts. GBP/USD is near its lowest since mid-April, and gold prices dropped near $3,950 due to Federal Reserve comments and trade optimism.
The week ahead may offer more insights into market sentiment, assessing recent monetary policies, economic data, and geopolitical events. Market participants remain wary as they consider these dynamics.
The economic landscape is shifting rapidly, requiring traders to track changes in central bank policies, manufacturing figures, and other indicators that might impact market trends.
Looking back at the strong 12% jump in Australian building permits from September, we see it as an early sign of economic resilience that is now complicating policy. With the Reserve Bank of Australia holding the cash rate steady at 4.35% for much of 2025, this persistent strength creates uncertainty about their next move. This suggests traders should consider buying volatility through options on the Australian dollar, as the currency will be sensitive to any surprise inflation data.
Impact Of Long-Standing Trade Tensions
The trade tensions involving technology, like the old plans to block NVIDIA chip sales to China, have since become standard policy and continue to weigh on the market. Given that China-related sales have historically accounted for over 20% of revenue for major US chipmakers, any escalation from here poses a direct threat to tech valuations. We believe traders should look at protective put options on semiconductor ETFs as a hedge against sudden geopolitical friction in the coming weeks.
China’s manufacturing sector remains a concern, with the latest official PMI for October 2025 coming in at a fragile 50.2, continuing the weak trend seen in earlier data. This persistent softness is why the People’s Bank of China is carefully managing the yuan, keeping it from weakening too rapidly against the dollar. This environment suggests that any rallies in industrial metals like copper may be short-lived, making call spreads a cautious way to gain exposure.
We see markets struggling to price the Federal Reserve’s next move, which explains the pressure on currency pairs like the EUR/USD. The Fed has held the federal funds rate above 4.5% all year to ensure inflation is defeated, a stark contrast to the rate cut speculations that occasionally surface. For derivative traders, this conflict makes straddles on major currency pairs attractive to profit from a significant move in either direction once the Fed provides clearer guidance.
Gold’s recent tumble to near $3,950 an ounce shows how sensitive it has become to interest rate expectations after the major inflationary pressures of 2023 and 2024. This high price level reflects a new baseline, but its daily movements are driven entirely by chatter about central bank policy. We anticipate that gold futures will see significant volatility around the release of the next U.S. inflation and jobs reports.
