Singapore’s foreign reserves increased to $393.1 billion in September from the previous $391.3 billion. This reflects the ongoing adaptation and strategic management of financial resources within the region.

The Euro remains under pressure due to political unrest in France, causing investors to seek the safety of the US Dollar. Meanwhile, the persistent risk-off theme affects the GBP/USD, which has nonetheless managed to recover from recent lows.

Commodities Market Trends

In the commodities market, gold continues its upward trajectory, nearing the $4,000 mark per troy ounce. Silver prices have slipped amid US Dollar strength, although reaching a record high remains viable.

In the cryptocurrency space, Bitcoin steadies around $124,000, following a record high of $126,199. Ethereum is also looking towards record highs, backed by significant institutional investments.

Japan’s political scene sees a shift with Sanae Takaichi’s leadership win, expected to bring consistent fiscal support and monetary policy strategies. This stability introduces both opportunities and risks for the market in Japan.

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Market Reactions to Political and Economic Events

We are seeing a clear flight to safety in the markets, driven by political turmoil in France and the ongoing US government shutdown. This is strengthening the US Dollar and putting significant pressure on the Euro, which is hovering near 1.1650. Derivative traders should consider buying put options on the EUR/USD pair, as recent polls indicate French political uncertainty is at its highest since the 2022 elections.

Despite US stocks opening higher, the underlying risk from a prolonged government shutdown should not be underestimated. Historically, like during the 35-day shutdown that began in late 2018, equities experienced significant swings before finding direction. This suggests that buying VIX call options or using options spreads to bet on increased market volatility could be a prudent strategy for the coming weeks.

Gold is benefiting directly from this uncertainty, with prices pushing towards the key psychological level of $4,000 per ounce. The combination of political instability and Japan’s commitment to a pro-stimulus agenda is fueling this rally. Buying call options with strike prices above $4,000 could capture further upside, a view supported by recent CFTC data showing a sharp rise in bullish bets among hedge funds.

In contrast, oil prices are showing weakness, with WTI struggling below $61.50 as fears of an economic slowdown outweigh supply concerns. A prolonged US government shutdown could further dampen energy demand forecasts in the world’s largest economy. We see opportunities in selling WTI futures or buying put options, especially as the latest EIA report confirmed a surprise build in crude inventories of 3.1 million barrels.

Cryptocurrencies are acting as a distinct asset class, with Bitcoin steadying after hitting a new all-time high above $126,000. The strong momentum is also visible in Ethereum, which seems poised to test its own record highs. Continued institutional interest, confirmed by recent reports of over $2 billion in weekly inflows into digital asset products, suggests using futures to maintain a long position in both assets is the prevailing strategy.

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