Insights 
VT 
NZD/USD Performance Review
AUD/USD is trading around 0.6550. This is in response to China’s latest NBS PMI data.
Gold is experiencing a slight increase due to safe-haven buyers. It remains below $4,050 in light of the Federal Reserve’s hawkish stance.
China’s NBS Manufacturing PMI decreased to 49 in October. Meanwhile, the Non-Manufacturing PMI increased slightly to 50.1.
Global Manufacturing Slowdown
We are seeing clear signs of a global manufacturing slowdown, especially from Asia. South Korea’s industrial output unexpectedly contracted by 1.2% in September, and China’s manufacturing purchasing managers’ index has now slipped to 49, signaling a contraction. This points to weakening global demand for goods, a trend that has echoed past periods of global uncertainty, like the slowdown we experienced back in late 2023.
The US dollar is strengthening as hopes for Federal Reserve rate cuts fade, a dynamic we also saw when the Fed held rates firm through 2024 to combat inflation. Currencies like the British Pound are hitting six-month lows, so we should consider buying put options on pairs like GBP/USD and AUD/USD to position for further dollar dominance. This strategy allows us to profit if these currencies continue to fall against the dollar.
Gold is catching a bid from this uncertainty, but its upside appears capped by the strong dollar and the Fed’s firm stance. With gold trading above $4,000, we could see it remain in a tight range in the near term. This sets up a potential play for selling out-of-the-money call and put options to collect premium from traders betting on a big move that may not happen.
Asian Manufacturing and Equity Markets
This weakness in Asian manufacturing is a major headwind for regional equity markets. We saw similar patterns during previous slowdowns when South Korea’s industrial output posted significant year-over-year declines, leading to market underperformance. Therefore, buying puts on indexes exposed to global trade could be a prudent hedge in the coming weeks.
