Insights 
VT 
South Korea’s export price growth year-on-year escalated to 2.2% in September, compared to a previous contraction of 1%. This indicates a recovery in the price levels for the country’s exports, signifying potential shifts in market dynamics and demand.
The People’s Bank of China set the USD/CNY reference rate at 7.0949 from a prior 7.0968. In financial movements, NZD/USD surpassed 0.5700 due to the Federal Reserve’s tone, while gold rallied above $4,350 with heightened safe-haven demand.
Global Trade and Tariff Predictions
Predictions suggest global tariffs could amount to $1.2 trillion by 2025, as estimated by S&P Global. In European markets, the EUR/USD is nearing 1.1700 driven by a waning dollar and market uncertainties, whilst GBP/USD has rebounded over one percent within two days.
Gold surged to $4,365, continuing its ascent influenced by fears of a US shutdown and US-China tensions. Meanwhile, Solana saw a 5% dip despite a major purchase by DeFi Development Corp, although it aims to surpass $200 amidst a general crypto market recovery. The S&P 500 exhibited an “inside day,” reflecting market indecision following tariff-related volatility.
The recent shift in South Korea’s export prices, moving from a 1% decline to a 2.2% annual increase, is a key indicator for us. This suggests that despite global tariff concerns, demand for manufactured goods is improving, which could signal underlying strength in the global economy. This aligns with recent data from the World Bank, which just last month revised its forecast for 2025 global trade growth slightly upward to 2.8%, citing resilience in Asian economies.
Focus on the US Dollar and Gold
Our primary focus should be on the sustained weakness of the US dollar, driven by expectations of further rate cuts and the looming threat of a government shutdown. We have seen futures markets, as of this morning, price in a nearly 80% probability of a 25 basis point cut by the Federal Reserve in its December meeting. This environment makes buying call options on EUR/USD and GBP/USD attractive, as both pairs are showing strong technical breakouts against the dollar.
Gold’s extraordinary rally above $4,350 reflects a clear flight to safety, but its high price makes outright long positions risky. The implied volatility on gold options has surged, reminding us of the sharp market swings we saw back in late 2022. Therefore, using bull call spreads could be a prudent way to maintain upside exposure while capping potential losses if sentiment quickly reverses.
In equities, the market is trapped in a state of indecision following the recent tariff-driven selloff and weak recovery. The S&P 500’s “inside day” pattern confirms this uncertainty, suggesting traders are hesitant to commit to a direction. With the VIX, a measure of expected volatility, holding stubbornly above 24, strategies that benefit from price movement in either direction, such as long straddles on major index ETFs, should be considered.
