China’s M2 money supply year-on-year growth in September was 8.4%, slightly down from the previous 8.8%. This statistic reflects a minor deceleration in the rate of monetary expansion.

The foreign exchange markets have seen various movements. The Japanese Yen is experiencing gains, while the British Pound and Euro have shown moderate performance against the US Dollar amidst prevailing economic conditions.

Volatility in Precious Metals

The precious metal market illustrates volatility with gold battling at $4,200. Investors are cautious amid geopolitical tensions, the US-China trade conflict, and US government shutdown uncertainties affecting asset stability.

Bitcoin’s recent recovery is limited, trading below $112,500 amidst macroeconomic challenges. Renewed US-China trade tensions continue to impact Bitcoin’s market performance, presenting recovery barriers.

In the October 2025 World Economic Outlook, the IMF adjusted its global growth forecasts slightly upward. Despite this, global expansion remains slow with underlying uncertainties affecting economic stability.

Cryptocurrencies like Bitcoin, Ethereum, and Ripple are attempting recovery near pivotal technical levels. These digital currencies are facing resistance, with the sentiment among traders remaining mixed, wary of potential selling pressures.

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China’s M2 money supply growth has slowed to 8.4%, a tangible sign of tightening financial conditions in the world’s second-largest economy. We note this is the slowest pace of credit expansion in over 18 months, suggesting that stimulus measures from earlier in the decade are fading. This cooling trend could translate into lower demand for industrial metals and energy, making it a time to consider put options on commodity-linked assets.

The US Dollar is facing significant headwinds as the market has now almost fully priced in two more Federal Reserve rate cuts by the end of 2025. Fed funds futures contracts currently show a probability of over 90% for a rate reduction at the December meeting, a sharp increase in conviction over the past month. This dovish stance, combined with the economic drag from the ongoing government shutdown, suggests that selling USD volatility or using options to position for further dollar weakness is a viable strategy.

This environment of acute uncertainty is fueling a powerful rally in safe-haven assets, pushing gold to new highs around $4,200 an ounce. This surpasses the inflation-driven peaks we saw back in 2024, signaling a deeper market anxiety about geopolitical risk and a potential US slowdown. To hedge against this, we see value in long volatility positions, especially with the VIX index having traded consistently above the 25-point mark for several weeks.

While the dollar is weak, not all currencies are benefiting equally, with the pound outperforming a lagging euro. Expectations for a Bank of England rate cut in November have faded, creating a policy divergence with the Federal Reserve that supports pairs like GBP/USD. This suggests opportunities in options strategies that profit from a rising GBP/USD or a declining EUR/GBP exchange rate.

The risk-off sentiment is clearly weighing on digital assets, with Bitcoin’s recovery stalling below $112,500. Unlike gold, cryptocurrencies are not attracting significant safe-haven flows amidst the current macroeconomic pressures. This confirms that for the coming weeks, we should treat Bitcoin as a risk-on asset, vulnerable to further declines if US-China tensions escalate.

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