Brazil’s FIPE’s IPC inflation rose to 0.65% in September, up from just 0.04% in the previous month. This marks a significant rise in inflation during this period. In other market news, the NZD/USD has reached day highs near 0.5820, while the USD/INR remains steady amid ongoing US-India trade tensions. Dow Jones futures are up, bolstered by gains in tech stocks fueled by AI developments.

Market Highlights

In the market highlights, WTI oil crept up to $61.00, while gold held steady near its daily peak. The US Dollar showed some stability as the government shutdown entered its third day. FXStreet has rolled out a new design, improving its approach to editorial and business challenges. DeFi tokens like Ether.fi and PancakeSwap are leading a surge in the cryptocurrency market, with SPX6900 joining the upswing. FXStreet emphasizes various legal and informational disclaimers about risks and financial insights. It encourages thorough research before making investment choices. With Brazil’s inflation jumping from 0.04% to 0.65% in September, we can expect the Banco Central do Brasil to adopt a more aggressive stance. In the past, the central bank took decisive action with rate hikes throughout 2021 and 2022 to address similar pressures. This new data may signal an end to any future rate cuts, making options that bet on higher short-term Brazilian interest rates a strategy worth exploring.

US Government Shutdown Impact

The ongoing US government shutdown, now in its third day, is creating significant uncertainty and delaying key economic data. Historically, as seen during the 2018-2019 shutdown, such events can lead to short-term spikes in market volatility, often causing the VIX index to rise sharply. Therefore, we should consider buying volatility through options on major US indices to guard against unpredictable market shifts in the coming weeks. Despite the shutdown, gold’s struggle to rise above $3,850 reflects surprisingly weak safe-haven demand. This is a stark contrast to the initial phase of the COVID-19 pandemic in 2020, when gold surged amid global uncertainty. As a result, we might see gold trade sideways, making strategies like selling covered calls on gold ETFs potentially profitable. WTI oil is hovering around $61 a barrel, indicating that concerns about oversupply outweigh geopolitical risks. This price is well below the average of over $80 seen for much of 2023 and 2024 when OPEC+ production cuts kept the market tight. We should brace for continued weakness and consider using put spreads on oil futures to safeguard against further declines. In the currency markets, the stabilizing US Dollar and Brazil’s inflation shock could spark renewed interest in the Brazilian Real. The high-yielding Real becomes more appealing if its central bank turns hawkish, especially compared to low-yielding currencies. Keeping a close eye on the BRL/JPY pair may reveal opportunities, as carry trades could become popular again. Create your live VT Markets account and start trading now.

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