India’s foreign exchange reserves fell to $699.96 billion as of September 29, down from $700.24 billion. This small drop is a normal adjustment in the global market. Gold prices are stabilizing below $4,000 after a recent upward trend. The current situation in geopolitics, especially the easing tensions in Gaza, has contributed to gold’s steady performance.

Oil Prices and Market Response

Oil prices have dropped below $60 due to a peace agreement that reduced geopolitical risks. In contrast, US stock indices opened higher, boosted by developments in AI, despite concerns about a possible government shutdown. In the currency market, the USD/CAD fell below 1.4000, following strong Canadian job reports. Meanwhile, the Pound Sterling struggled to gain stability against the US Dollar amid cautious comments from the Bank of England. The EUR/USD trading pair remained steady near its weekly lows, showing little reaction to the recent US consumer sentiment data from the University of Michigan. Cryptocurrencies like Bitcoin and Ethereum have held their vital support levels. However, worries about potential drawbacks still loom over digital currency markets.

US Tariffs and Economic Strategy

US tariffs are crucial in shaping America’s foreign policy and financial strategies. The US government has confirmed its intention to keep these tariffs in place to tackle international economic challenges. The slight decline in India’s foreign exchange reserves is a typical sign from the Reserve Bank of India. We’ve witnessed similar interventions in the past, like in 2022 and 2023, when the central bank sold dollars to protect the rupee from significant declines. Traders should be prepared for ongoing subtle management, making range-bound trading strategies on the USD/INR pair a good option in the upcoming weeks. With crude oil prices dropping below $60 per barrel, the immediate geopolitical risk has decreased. Historical data suggests that such sharp declines can lead to increased volatility; for instance, WTI prices fluctuated significantly after the geopolitical upheavals of 2022 before stabilizing. This indicates that selling put option spreads on WTI futures might be a profitable strategy, allowing bets on volatility while expecting prices to hold steady. Gold’s pause below $4,000 an ounce follows a significant rally, reminiscent of the surge in the late 1970s when high inflation and a weak dollar drove prices up. As momentum wanes, the risk of a sudden price pullback grows. Purchasing protective puts on gold futures or ETFs can be an effective way to guard against a potential correction from these historically high levels. US indices are performing well, with excitement over AI outweighing concerns about a government shutdown. This trend is similar to what occurred during the 2018-2019 shutdown, where markets focused on fundamentals and Federal Reserve policy rather than political deadlock. This pattern suggests a strategy of remaining long on tech-focused indices while considering bearish plays on the US dollar, which is facing pressure from dovish comments from the Federal Reserve. Create your live VT Markets account and start trading now.

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