Insights 
VT 
China’s trade balance in September registered a decrease, dipping from CNY 732.7 billion to CNY 645.47 billion. Despite solid exports, the trade surplus narrowed.
Japanese Yen continues to be affected by political instability and ongoing risk-on sentiment. The USD/INR saw a slight decline, potentially due to anticipated market intervention by the Reserve Bank of India.
Nz and Aud Dollar Gains
The NZD/USD is gaining traction, approaching 0.5750, possibly due to hopes of a compromise in the ongoing US-China trade conflict. Meanwhile, the AUD/USD remains near 0.6550 following new data from China’s trade balance.
EUR/USD is stable, trading above 1.1600 amidst increased US-China trade tension. The GBP/USD has weakened below 1.3350, facing pressure from a stronger US Dollar despite Trump’s tariff threats on China.
Gold reached record highs, continuing its upward momentum amid US-China trade tensions. It holds within a rising channel, with more upside potential indicated.
PancakeSwap, Aster, and SPX6900 recorded significant recoveries, gaining over 20% after a market sell-off. Meanwhile, Bitcoin experienced its largest drop since 2025 due to Trump’s fresh tariff threats on China, briefly losing nearly 10%.
Economic Volatility and Strategies
The recent threat of 100% tariffs on Chinese software has injected extreme volatility into markets, a sentiment confirmed by the massive sell-off in cryptocurrencies we saw last Friday. For us, this signals a clear risk-off environment heading into the coming weeks. We must prepare for sharp, headline-driven price swings.
China’s narrowing trade surplus, which fell to 645.47B CNY, is a concerning signal for global growth and directly pressures commodity currencies. Looking back, we saw similar pressures during the 2018-2019 trade disputes, which consistently weakened the Australian and New Zealand dollars. Therefore, buying puts on AUD/USD seems like a prudent hedge against further negative trade news.
In this environment, gold is acting as the ultimate safe haven, pushing past $3,950 to new records. This continues the powerful uptrend that began after it decisively broke the old 2024 highs of around $2,150. Traders should consider buying call options on gold-backed ETFs to gain upside exposure while limiting risk.
The market’s fear is palpable, and we expect the CBOE Volatility Index (VIX) to remain highly elevated, likely above the 25-30 range we saw during previous tariff escalations in 2019. This makes long volatility strategies, such as buying straddles on the S&P 500, attractive for capturing large moves regardless of direction. It is a direct play on the ongoing uncertainty from the US government shutdown and trade disputes.
The specific threat against “critical software” puts the technology sector directly in the crosshairs. We should anticipate significant underperformance in tech-heavy indices like the Nasdaq 100. Protective puts or even speculative short positions via futures on the Nasdaq could be considered to guard against a sharp downturn.
