Brazil’s IPCA inflation rate rose to 0.65% in September from just 0.04% before. This increase in inflation fits into a larger economic picture that affects various markets. In currency news, the NZD/USD pair gained slightly, hitting day highs near 0.5820. Meanwhile, the USD/INR rate remains stable as trade tensions between the US and India continue.

US Equities and Commodity Movements

US equities are performing well, with Dow Jones futures rising, mainly driven by the tech sector. The US dollar is stabilizing after three days of partial government shutdown, which affected data releases. Crude oil prices are currently at $61.00, amid ongoing concerns about oversupply. Gold prices are near daily highs but show limited momentum because of a drop in demand for safe-haven assets. The EUR/USD pair is trading above 1.1700 while traders await upcoming speeches and data. Similarly, GBP/USD is holding above 1.3400 as US economic data releases approach. In the cryptocurrency market, DeFi tokens like Ether.fi (ETHFI) and PancakeSwap (CAKE) are seeing a rally. The meme coin SPX6900 (SPX) also joins this upward trend.

The US Government Shutdown Impact

The US government shutdown presents an opportunity to expect further dollar weakness. The market is already anticipating potential Fed rate cuts, and the data blackout adds to this uncertainty. This situation is reminiscent of the 35-day shutdown in 2018-2019, which cut an estimated $11 billion from US GDP. We should consider buying call options on currency pairs like EUR/USD and GBP/USD, which are both steady above 1.17 and 1.34 respectively. We are noticing a clear divergence in commodities, suggesting specific strategies. WTI oil is sitting at $61 due to oversupply concerns, so put options could help hedge against more price drops as global demand slows. On the other hand, gold remains strong above $3,850, a level not seen before the significant inflation spikes of 2023-2024, indicating that a long-term hedge against currency devaluation is still in play, even with lower short-term demand for safe havens. Brazil’s sharp rise in monthly inflation to 0.65% will likely prompt its central bank to act decisively, contrasting with the softer stance developing in the US. The Banco Central do Brasil has a track record of aggressive rate hikes to support the Real, as seen when the Selic rate reached 13.75% in 2022. This could lead to investment opportunities in derivatives that profit from rising Brazilian interest rates or a stronger BRL against the USD. Despite political unrest in Washington, a selective risk-on attitude remains, with tech stocks pushing Dow futures higher and DeFi tokens on the rise. This shows that investors aren’t panicking but are reallocating assets away from the US dollar and into growth sectors. This supports strategies like buying call options on technology indices while hedging against currency exposure. Create your live VT Markets account and start trading now.

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