Retail sales in the Eurozone stayed steady in August with a slight growth of 0.1%, which matches expectations. This shows that consumer demand remained stable in the region. Gold prices have climbed close to record levels, trading around $3,950 per troy ounce. This rise is driven by strong demand for safe investments and worries about a possible US government shutdown. In contrast, Bitcoin did not perform as well as gold during the third quarter, providing only small returns after its peak in mid-August.

Political Landscape and Economic Impact

In France, the resignation of Prime Minister Lecornu has increased uncertainty, negatively impacting the EUR/CHF exchange rate. On the other hand, Japan’s market outlook seems more stable with the election of Sanae Takaichi, the first female leader of the country, expected to uphold fiscal support and maintain a relaxed monetary policy. The Pi Network has shown stability, staying above a support level of $0.2565 for 11 days. At the same time, centralized exchanges reported significant outflows, with almost 13 million PI leaving in the last 24 hours. In currency markets, the GBP/USD remains below the mid-1.3400s because of a stronger US Dollar, dropping over 0.30% for the day. The EUR/USD has begun to recover, returning to the 1.1700 level after being pressured by political uncertainties and the strength of the US Dollar. With the current market turbulence, investors are seeking safety. Concerns over a US government shutdown and political issues in France are causing significant uncertainty, leading many to avoid risk. Traders dealing in derivatives should consider strategies that benefit from high volatility and clear weaknesses in certain currencies.

Strategies In Uncertain Times

The Euro appears to be the weakest currency right now due to the political instability in France, causing pairs like EUR/CHF and EUR/USD to drop. This pattern is reminiscent of the situation leading up to the 2017 French election, where fears about politics widened the gap between French and German bond yields. Buying put options on the EUR/USD is a simple way to bet on further declines while limiting potential losses. Even with its own political challenges, the US Dollar is acting as a main safe haven, outperforming most other major currencies like the British Pound. Its strength, even amid a government shutdown, indicates a strong demand for safety and liquidity. We can consider using call options on the US Dollar Index (DXY) to take advantage of this broader strength against a range of currencies. Gold is shining bright, reaching record highs above $3,900 as investors look for a reliable store of value. Historically, gold performs well during times of market stress; for instance, it surged over 20% after the initial COVID-19 shock in early 2020. Buying call options on gold futures or gold-backed ETFs offers a chance to participate in this strong trend with leverage. The ongoing US government shutdown is a major source of market anxiety and may last for several weeks. The 35-day shutdown in 2018-2019 can serve as an example of prolonged uncertainty, which kept market volatility high. This situation makes strategies that benefit from long volatility, like buying straddles on major equity indices, appealing to profit from large price movements in either direction. Create your live VT Markets account and start trading now.

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