Insights 
VT 
India’s foreign exchange reserves dropped to $699.96 billion as of September 29, down from $700.24 billion previously. This minor decrease reflects slight adjustments typical in the global market context.
Gold prices have stabilised below $4,000 after recent bullish trends. The current geopolitical climate, including the easing of tensions in Gaza, has influenced the commodity’s flat performance.
Oil Prices and Market Response
On the other hand, oil prices dipped below $60 due to a peace deal affecting geopolitical risks. Meanwhile, the US indices opened higher, buoyed by AI developments despite government shutdown fears.
The currency market saw the USD/CAD falling below 1.4000, influenced by strong Canadian employment data. At the same time, the Pound Sterling struggled to stabilise against the US Dollar amidst cautious BoE remarks.
The EUR/USD trading pair held steady near weekly lows. This was unaffected by the latest US consumer sentiment data from the University of Michigan.
Cryptocurrencies like Bitcoin and Ethereum maintained their key support levels. Despite this, concerns over potential downside risks remain prevalent across digital currency markets.
US Tariffs and Economic Strategy
US tariffs continue to play a substantial role in America’s foreign policy and public finance strategies. The US government has reiterated its commitment to maintaining these tariffs as a tool for addressing international economic issues.
The slight dip in India’s foreign exchange reserves is a familiar signal from the Reserve Bank of India. We have seen similar interventions historically, like in 2022 and 2023, where the central bank sold dollars to cushion the rupee against sharp falls. Traders should anticipate continued subtle management, making range-bound options strategies on the USD/INR pair a viable consideration for the coming weeks.
With crude oil falling below $60 a barrel, the immediate geopolitical risk premium has evaporated. History shows these sharp drops can lead to a period of heightened volatility; we saw WTI prices swing dramatically after the geopolitical shocks of 2022 before settling into a new range. This suggests selling put option spreads on WTI futures could be a way to profit from the elevated volatility premium while betting that the price will stabilize and not fall much further.
Gold’s pause below $4,000 an ounce comes after a massive rally, mirroring the run-up we saw in the late 1970s when high inflation and a weak dollar sent prices soaring. Now that the momentum is cooling, the risk of a sharp pullback is increasing. Buying protective puts on gold futures or ETFs offers a way to hedge against a potential correction from these historically high levels.
US indices are showing impressive strength, with AI excitement overriding concerns about the government shutdown. We saw a similar dynamic during the 2018-2019 shutdown, where markets ultimately focused on fundamentals and Federal Reserve policy instead of political gridlock. This divergence suggests a strategy of staying long on tech-heavy indices while considering bearish derivative plays on the US dollar, which is simultaneously being pressured by dovish Fed commentary.
