New Zealand’s Business NZ Performance of Services Index (PSI) rose to 48.3 in September, up from 47.5. This change shows shifts in economic activities in the service sector. In other news, US President Donald Trump announced new tariffs on China that will start on November 1. This decision is affecting markets worldwide, causing shifts in currency exchanges and commodities. The EUR/USD pair increased above 1.1600, reflecting the rising US-China trade tensions.

Market Reactions to Tariffs

The Dow Jones Industrial Average fell due to renewed tariff discussions, while gold prices jumped close to $4,000 as more investors seek safety. Meanwhile, WTI crude oil prices dropped below $60 due to worries about the trade war. In the cryptocurrency market, Bitcoin is holding above a support level. Ethereum and Ripple are at important support points, while Litecoin is performing well at around $130. It’s also important to note that US tariffs are still key tools for public finance and foreign policy, beyond the frequent news. With new US-China trade tensions, we’re seeing classic market reactions. The CBOE Volatility Index (VIX) surged over 35% in the past week, hitting above 28 for the first time this year. It may be wise to consider buying call options on the VIX or volatility-linked ETFs to take advantage of the increasing market fear. The recent decline in the Dow Jones signals that stocks might face more downturns. From the 2018-2019 trade war, we learned that initial tariff announcements often led to extended market drops. Buying put options on the S&P 500 or Nasdaq 100 indices can help position for further declines.

Impact on Gold and Currency

Gold nearing $4,000 indicates a strong trend for safety that likely won’t stop soon. Geopolitical uncertainty drives demand for gold, and with no signs of easing tensions, this momentum can work in our favor. We can consider long positions in gold futures or call options on gold ETFs to benefit from this trend. The US dollar is weakening against the Euro and Pound due to instability from American policies. This situation makes the dollar more of a risk currency rather than a safe haven right now. We can expect continued strength in pairs like EUR/USD, which has already broken through key resistance at 1.1600. Concerns about a global slowdown are hitting oil hard, with WTI crude falling below the crucial $60 support level. Ongoing trade disputes could seriously reduce global demand, as shown by last month’s global manufacturing PMI data indicating a two-year low in new export orders. It may be smart to short crude oil futures or buy puts on energy sector ETFs. Even smaller economic indicators suggest caution. The recent New Zealand services PMI, while a bit better at 48.3, still shows contraction in the sector. This weakness indicates that the global economy is not ready for another trade shock, highlighting the risks posed by these tariffs. Create your live VT Markets account and start trading now.

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