Insights 
VT 
In China: US Relations And Market Impacts
In the forex market, the EUR/USD continues to decline towards 1.1550, influenced by broad US dollar strength. The GBP/USD slipped by 0.13% as the dollar rebounded, and gold continues its upward trend amid geopolitical uncertainties.
In the cryptocurrency sphere, Dogecoin recovered after a recent crash, moving past $0.210. US stock markets rallied at the start of the week, easing previous trade tensions with China. The Pi Network shows recovery signs, yet faces potential supply pressure due to core team wallet movements.
The Weakness In Developed Economies
The slight uptick in New Zealand’s retail sales to 1% year-over-year is not a sign of strength, but rather a reflection of how high interest rates are strangling the economy. We’ve seen the RBNZ hold its cash rate at 5.5% since mid-2023, and these figures show the severe impact on consumer demand. This pattern of weak consumer data in developed economies is a major red flag for global growth moving into the final quarter.
This environment keeps the US dollar elevated as the ultimate safe haven, much like we saw during the US-China trade disputes of the late 2010s. The Federal Reserve is in a difficult position, as recent US inflation data has remained stubbornly above 3%, forcing them to maintain a restrictive policy stance. Derivative traders should therefore be positioned for continued strength in the dollar, especially against currencies with more dovish central banks.
Looking back, periods of geopolitical tension have always increased demand for precious metals, and the current landscape is no different. Ongoing supply chain realignments and strategic competition between major powers are creating an undercurrent of uncertainty in the market. This is a key reason why we’ve seen gold prices consolidate firmly above the $2,350 per ounce mark throughout 2025.
For the coming weeks, we believe using options to express a view is more prudent than holding outright positions. Implied volatility on major equity indices like the S&P 500 has been gradually climbing, suggesting the market is pricing in a higher chance of a significant move. Buying protective puts or structuring put spreads offers a defined-risk way to hedge against a potential economic slowdown.
The Australian dollar continues to be a proxy for sentiment on China, whose economy is showing signs of moderate but slowing growth. China’s recent industrial production numbers came in just below expectations, which is weighing on industrial metals and commodity-linked currencies. We would avoid long positions in commodity futures until there are clearer signs of a rebound in Chinese manufacturing demand.
