China’s exports grew by 8.3% in September compared to last year, surpassing the 6% forecast. This growth brings a more positive outlook amid ongoing global trade tensions. However, uncertainty still looms due to various geopolitical factors that affect global markets. For example, the US government’s decision to maintain tariffs as a key policy tool influences international trade dynamics.

Market Reactions to Trade Tensions

Gold prices have risen due to these trade tensions, reflecting cautious investor sentiment. The US Dollar’s value fluctuates against major currencies like the Euro and Pound Sterling amid rising trade and economic concerns. In the cryptocurrency market, there was a significant drop linked to tariff threats on Chinese imports. Major cryptocurrencies like Bitcoin faced a sharp decline, showcasing market volatility. Conversely, some cryptocurrencies, like PancakeSwap and Aster, have seen impressive rebounds. The market remains unstable, driven by global economic policies and regulatory news. Forex trading continues to experience shifts in major currency pairs. Despite ongoing uncertainties, brokers and investors are closely monitoring global economic indicators and policy changes that impact trade.

Chinese Export Data Exceeds Expectations

China’s export data for September, at 8.3% year-over-year, has exceeded expectations, indicating strong global demand. However, this positive signal clashes with the ongoing threat of new US tariffs. This tension between solid economic fundamentals and high political risk creates both challenges and opportunities. With the market’s heightened sensitivity to news, we believe focusing on volatility is the best approach in the upcoming weeks. The CBOE Volatility Index (VIX) is currently elevated, trading above 25, indicating increased market anxiety similar to spikes seen during the 2018-2019 trade war. Traders may consider using options on major indices for portfolio protection or to profit from significant price fluctuations. Gold continues to perform exceptionally well, reaching new highs as a primary safe-haven asset. In August 2020, gold hit a record of around $2,075 per ounce, but current geopolitical issues have pushed it even higher. We expect traders to use futures and call options to capitalize on this upward trend as a hedge against rising trade tensions. In foreign exchange markets, the US dollar faces opposing forces, making derivatives more effective than spot trading. The ongoing US government shutdown is a challenge for the dollar, but its safe-haven status provides support during risk-off situations. This explains the unstable behavior in pairs like EUR/USD, where options can help manage this unclear direction. The recent 10% flash crash in Bitcoin due to tariff threats underscores the nervousness surrounding risk assets. While the crypto market has rebounded strongly, this volatile price action is a cautionary sign. For traders in this sector, using futures for short-term bets while holding protective put options seems like a sensible way to capture gains while guarding against sudden drops. Strong Chinese export figures from the General Administration of Customs would usually signal risk-on opportunities for assets like the Australian dollar and industrial commodities. However, with the market focused on White House policies, this important economic data is currently overlooked. We expect this trend to persist, advising that any positions taken be tactical and short-term. Create your live VT Markets account and start trading now.

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