Insights 
VT 
New Zealand Trade Balance and Oil Prices
The Japanese yen experienced depreciation ahead of Japan’s parliamentary vote for a new Prime Minister. Meanwhile, the Australian dollar is finding support from a US-Australia critical minerals deal.
The US Dollar Index saw a slight drop to near 98.50, with attention on US-China trade tensions. The PBOC set the USD/CNY reference rate at 7.0930 compared to the previous 7.0973.
Gold remains near a record high above $4,380, reflecting broader market uncertainties. Developments in the US government situation and Federal Reserve actions are crucial factors influencing this trend.
BlackRock’s Bitcoin Product Launch
BlackRock has launched a Bitcoin exchange-traded product on the London Stock Exchange, aiming to provide UK retail market access to cryptocurrency. In the crypto market, institutional adoption is projected to grow, potentially stabilising the market dynamics.
Given the extreme uncertainty, we see the record high in gold above $4,380 as a clear signal for defensive positioning. The CBOE Volatility Index (VIX) has just ticked up to 25.3, its highest level in three months, reflecting anxiety over a potential US government shutdown and Federal Reserve rate cuts. Traders should consider using derivatives like call options on gold (GLD) to hedge portfolios against further market stress.
The weakness in WTI crude oil, which has been hovering below $57 a barrel for weeks, is creating a clear divergence among commodity currencies. This sustained low price has been a primary driver of the Canadian dollar’s weakness, as Canada’s export revenues have fallen by 8% in the last quarter. We believe selling CAD futures or buying USD/CAD call options is a logical response to this trend.
Conversely, the Australian and New Zealand dollars are showing relative strength. The recent US-Australia minerals deal is projected to boost Australian export values by $10 billion annually, while New Zealand’s trade balance just improved significantly. This environment supports strategies like going long AUD/CAD or NZD/CAD futures to capitalize on this fundamental divide.
Looking at the US dollar, we are cautious despite its current strength near 98.50 on the index. The market is pricing in a 75% chance of a Fed rate cut at its next meeting, a probability that has increased from 50% just last month. This expectation of looser policy suggests that selling USD call options or buying puts against a basket of currencies could be prudent.
The institutional embrace of Bitcoin, underscored by BlackRock’s new product launch, signals a structural shift in the asset class. Digital asset investment products have seen net inflows of over $5 billion year-to-date in 2025, confirming strong demand. We see opportunities in using long-dated call options to gain exposure to crypto’s upside while limiting risk.
