Insights 
VT 
Retail sales in the Eurozone remained stable in August, with a modest growth of 0.1%, aligning with forecasts. This indicates a steady consumer demand across the region during the month.
Gold prices have neared record highs, trading around $3,950 per troy ounce due to consistent safe haven demand and concerns over a potential US government shutdown. Meanwhile, Bitcoin underperformed gold in the third quarter, showing only modest returns after its peak in mid-August.
Political Landscape and Economic Impact
Politically, the resignation of French PM Lecornu has created a further unease in France, affecting the EUR/CHF rate negatively. Japan’s market outlook remains more certain with the election of Sanae Takaichi, the country’s first female leader, who is expected to maintain fiscal support and an ultra-easy monetary policy.
Pi Network has maintained consolidation, staying above a $0.2565 support level for 11 consecutive days. Meanwhile, centralized exchanges reported significant outflows of nearly 13 million PI within the last 24 hours.
In currency markets, the GBP/USD remains below the mid-1.3400s due to a stronger US Dollar, with the pair down over 0.30% for the day. EUR/USD has started recovering, reclaiming the 1.1700 level after being pressured by political uncertainties and US Dollar strength.
Given the current market turmoil, we are seeing a classic flight to safety. The combination of a US government shutdown and a political crisis in France is creating significant uncertainty, pushing investors away from risk. Derivative traders should be looking at strategies that benefit from high volatility and clear directional weakness in specific currencies.
Strategies In Uncertain Times
The Euro is clearly the weakest link right now due to the political instability in France, which we see dragging pairs like EUR/CHF and EUR/USD lower. We have seen this pattern before, such as during the run-up to the 2017 French election when the spread between French and German bond yields widened dramatically on political fears. Buying put options on the EUR/USD is a straightforward way to position for further downside while capping potential losses.
Despite its own political problems, the US Dollar is acting as a primary safe haven, outperforming most other major currencies like the British Pound. This strength, even during a government shutdown, signals a deep-seated demand for liquidity and safety in uncertain times. We can use call options on the US Dollar Index (DXY) to gain exposure to this broad strength against a basket of currencies.
Gold is the standout performer, breaking record highs above $3,900 as investors seek a reliable store of value. Historically, gold has performed well during periods of intense market stress; for instance, it rallied over 20% in the months following the initial COVID-19 shock in early 2020. Buying call options on gold futures or gold-backed ETFs allows for leveraged upside participation in this powerful trend.
The ongoing US government shutdown is a primary source of this market anxiety and is likely to persist for weeks. We can look back at the 35-day shutdown in 2018-2019 as a template for prolonged uncertainty, which kept market volatility elevated. This environment makes long volatility plays, such as buying straddles on major equity indices, an attractive strategy to profit from large price swings in either direction.
