China’s non-manufacturing PMI for September was 50, which is lower than the expected 50.3. This number reflects how the sector is performing and can indicate economic trends. In currency news, the AUD/USD rose above the 0.6600 level after the RBA decided to keep interest rates at 3.6%. Meanwhile, the USD/JPY remains above 148.50, affected by insights from the BoJ.

Gold Hits New Highs

Gold is nearing record highs of $3,850, marking its largest monthly gain in 14 years with a 12% increase. This surge is driven by worries about a possible US government shutdown and a shift toward safer investments. Bitcoin is stable at over $114,000 despite earlier volatility. Positive market sentiment is bolstered by seasonal expectations for increased demand known as ‘Uptober’. It’s important to note that FXStreet offers general financial information and commentary. Readers should be aware of the risks involved in trading and investing. Always do thorough research and consider seeking independent advice. FXStreet does not recommend specific investment choices.

Concerns About China’s Economy

Recent data show stagnation in China’s non-manufacturing sector, with the PMI at 50—the dividing line between growth and contraction. This falls short of expectations, continuing a trend from much of 2025 where China’s recovery post-pandemic has been shaky. This weakness could dampen global growth and affect currencies sensitive to Chinese demand. Given this situation, the recent strength of the Australian dollar above 0.6600 appears fragile despite the Reserve Bank of Australia holding rates steady. Weak data from China poses a direct risk to Australia, its largest trading partner. Traders may look at buying put options on the AUD/USD to hedge against a downturn while managing risk ahead of more global data. Meanwhile, uncertainty in the US is leading to a major flight to safety, especially with a possible government shutdown approaching. This is driving gold towards its strongest month in over a decade, indicating significant market anxiety. To take advantage of this fear, buying call options on gold or volatility indexes like the VIX could be wise. There is also a clear divide in currency markets, as the Japanese Yen remains weak due to the Bank of Japan’s unclear stance on rate hikes. Although the USD/JPY is currently high, the risk of sudden policy changes from Tokyo remains significant. Using risk-defined strategies, like bull call spreads on USD/JPY, can help profit from potential gains while limiting losses. Overall, with the Federal Reserve facing challenges and awaiting important data such as this Friday’s US Non-Farm Payrolls, caution is essential. We experienced similar market jitters during the US government shutdowns in 2018 and 2019, which caused sharp and unpredictable swings. To safeguard portfolios in the coming weeks, using index put options to hedge broad equity exposure is a prudent strategy. Create your live VT Markets account and start trading now.

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