**Electronic Card Retail Sales**
In October, electronic card retail sales in New Zealand increased by 0.2%, bouncing back from a decline of 0.5% in the previous month. This shift indicates a change in how consumers are spending.
The Japanese Yen remains weak due to uncertainties about the Bank of Japan’s policies. Meanwhile, the NZD/USD exchange rate has adjusted to around 0.5650.
In the US, the government is nearing a solution to its shutdown, with the House voting on the issue. At the same time, the Australian dollar has gained strength thanks to positive labor market data.
In the metals market, gold is trading close to its highest level in three weeks, hovering around the $4,200 mark. This price rise is linked to developments regarding the US government shutdown and expectations surrounding the Federal Reserve’s next actions.
The cryptocurrency Sui is trading above $2.00, showing a 3.5% increase despite a previous dip.
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The recent 0.2% increase in New Zealand’s electronic card sales for October is a slight positive indicator for the kiwi dollar. Following a 0.5% drop last month, this small gain suggests some consumer spending resilience. However, it is not enough to outweigh our belief that the NZD/USD will continue to be influenced by events in the US.
With the end of the US government shutdown, our attention now turns to what the Federal Reserve will do next. The political uncertainty that left the Fed inactive has passed, and traders will start focusing on hard data again. The latest CPI report from October indicated core inflation around 3.5%, increasing pressure on the Fed to address inflation.
This situation is likely to cause more volatility in US markets over the next few weeks. Looking back at the resolution of the 2018-2019 government shutdown, we noticed a similar rise in market fluctuations as focus shifted back to monetary policy. Derivatives traders should prepare for significant movements around upcoming Fed speeches and important data releases.
The recent strength of gold, nearing three-week highs around $4,200, seems more about hedging against potential policy mistakes than dollar weakness. The market appears to be using options to guard against a scenario where the Fed tightens policy too much after a shutdown pause. There has been a marked increase in open interest for call options that expire in the first quarter of 2026.
In the currency market, the renewed focus on the Fed positions the US dollar as the main influencer. This suggests that volatility strategies, like straddles on EUR/USD near the 1.1600 level, might be beneficial. The pound’s strength beyond 1.3100 is also supported by solid fundamentals, especially since recent UK job data revealed stubborn wage growth above 5%.
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