Insights 
VT 
New Zealand’s electronic card retail sales showed a year-on-year decrease, falling from 1% to 0.8% in October. This decline reflects changes in consumer spending patterns for that month.
In other financial developments, the Australian dollar saw an increase as unemployment rates fell in October. Meanwhile, the British pound remained subdued, trading below 1.3150 before the release of the UK’s Q3 GDP data.
Gold Nears Record Levels
Gold approached the $4,200 mark, reaching its highest level since October 21, following actions by the US House to end the government shutdown. This move is expected to provide economic clarity and influence the Federal Reserve’s next decision.
In the cryptocurrency market, Sui (SUI) experienced a 3.5% rise, trading above $2.00 after a correction from $2.20 to $1.98. This was in line with the broader cryptocurrency market trends.
The slowdown in New Zealand’s electronic card sales confirms a worrying trend of consumer weakness. We have seen this softening for several months, and the latest 0.8% figure from Stats NZ for October will likely pressure the Reserve Bank of New Zealand toward a more dovish stance. This makes shorting the Kiwi dollar an increasingly attractive position for the coming weeks.
In contrast, Australia’s labor market is showing robust strength, with the unemployment rate recently falling to 3.8% in October. This divergence in economic data suggests a clear opportunity for a pairs trade. We believe going long on the Australian dollar against the New Zealand dollar could offer a buffer from the volatility surrounding the US dollar.
Impact of US Government Shutdown
The primary market driver right now is the anticipated end of the record-setting US government shutdown, which has now lasted longer than the 35-day shutdown we saw back in 2018-2019. This is causing broad US dollar weakness and a risk-on mood across markets. As a resolution gets priced in, we expect market volatility to continue falling, making strategies that involve selling options on major indices potentially profitable.
For the British pound, any strength from the weakening dollar may be temporary. With UK inflation having cooled to an annualized rate of 2.5% in the third quarter, markets are now firmly pricing in a rate cut by the Bank of England in December. We see limited upside for the pound, especially against currencies with more hawkish central banks.
Gold’s push toward $4,200 is a direct result of the falling US dollar as the government shutdown appears to be ending. This rally has been strong, but its continuation depends entirely on what the Federal Reserve signals next. If Fed policymakers come out with hawkish commentary once the fiscal uncertainty is resolved, this gold rally could quickly reverse.
