In October, China’s Producer Price Index (PPI) was reported at -2.1% year-on-year, which is slightly better than the expected -2.2%. This means that deflation in producer prices is not as severe as some thought. At the same time, we see changes in other markets. The GBP/USD pair reached multi-day highs near 1.3160 due to a decrease in US Dollar strength after disappointing data from the US. Gold is trading around $4,000 per troy ounce, supported by a weaker US Dollar and falling US Treasury yields.

Crypto Market Update

In the crypto market, Dogecoin is now trading above $0.1600 as talks continue about a possible Bitwise Dogecoin Exchange Traded Fund (ETF). This ETF might launch 20 days after filing the 8(a) form. Next week, central bank meetings could also influence currency trends, especially for the Australian Dollar and the British Pound. The S&P 500 and Nasdaq have dipped below their 50-day moving averages, which may signal the end of the recent rally. This situation makes buying put options on ETFs like SPY a good move to protect against or bet on further declines. The CBOE Volatility Index (VIX) has risen above 28, a level we haven’t seen since the brief market scare in spring 2025, indicating increased market fear. The ongoing US government shutdown and a disappointing U-Mich Consumer Sentiment report have pushed the US Dollar Index (DXY) below the important 101 support level. We see this weakness as an opportunity, suggesting options on currency pairs like EUR/USD to profit from further dollar depreciation. This follows last week’s Non-Farm Payrolls report, which showed job growth slowing to just 95,000—well below what economists expected.

Gold Market Strategy

With gold breaking the important $4,000 per ounce mark, it confirms its status as a primary safe haven in this uncertain market. We recommend buying call options on gold ETFs (GLD) to benefit from its rise, driven by the government shutdown and declining US Treasury yields. Recent data indicates the largest weekly inflow into gold-backed funds in over a year, suggesting strong institutional support behind this trend. China’s producer prices have fallen less than expected, which is a small positive sign, but it still indicates deflation for the 13th month in a row. This suggests that while the situation is not worsening rapidly, a global manufacturing recovery is not on the horizon. Therefore, we advise against aggressive bullish bets on Chinese industrial stocks and recommend range-bound strategies, such as iron butterfly or condor spreads on China-focused ETFs. The possible launch of a spot Dogecoin ETF this month offers a unique trading opportunity that stands apart from the broader economic gloom. We recall the significant volatility and price jumps in Bitcoin before its own ETF approvals in early 2024. Traders might consider using options on crypto-related stocks or trading DOGE perpetual swaps to position themselves for a speculative rally leading up to the launch date. Create your live VT Markets account and start trading now.

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