Brazil’s FIPE’s IPC inflation jumped to 0.65% in September, up from just 0.04% before. This marks a significant rise in the inflation rate. In other market news, the NZD/USD climbed to day highs around 0.5820, while USD/INR stayed steady amid ongoing US-India trade tensions. Dow Jones futures rose, driven by gains in tech stocks boosted by AI developments.

Market Highlights

WTI oil increased slightly to $61.00, and gold remained stable near its daily high. The US Dollar showed some strength as the government shutdown entered its third day. FXStreet rolled out a new design, moving forward to tackle editorial and business issues. At the same time, DeFi tokens like Ether.fi and PancakeSwap led a surge in the cryptocurrency sector, with SPX6900 joining in. FXStreet reminds readers to be cautious, providing legal and informational disclaimers about risks. It highlights the need to do thorough research before making investment choices. With Brazil’s inflation rising from 0.04% to 0.65% in September, we can expect the Banco Central do Brasil to take a tougher approach. Previously, the central bank responded with rate hikes in 2021 and 2022 to combat similar inflation. This new data might pause any rate cuts, making strategies betting on higher short-term Brazilian interest rates appealing.

US Government Shutdown Impact

The current US government shutdown is in its third day and is causing major uncertainty by delaying important economic data. In the past, like during the 2018-2019 shutdown, such events led to short-term spikes in market volatility, often causing the VIX index to rise sharply. It’s wise to consider buying volatility through options on major US indices to safeguard against unpredictable market movements in the coming weeks. Even with the shutdown, gold has had a hard time breaking above $3,850, showing that safe-haven demand is surprisingly low. This reaction differs from the initial COVID-19 period in 2020 when gold prices soared amid global uncertainty. As a result, gold may trade sideways, making strategies like selling covered calls on gold ETFs possibly profitable. WTI oil is hovering around $61 a barrel, indicating that oversupply worries are overshadowing geopolitical risks. This price is well below the average of over $80 seen for much of 2023 and 2024, when OPEC+ cuts kept the market tight. We should prepare for ongoing weakness and consider put spreads on oil futures as protection against further declines. In currency markets, the steady US Dollar and inflation in Brazil could spark renewed interest in the Brazilian Real. The high-yielding Real looks more appealing if its central bank adopts a hawkish stance, especially compared to low-yielding currencies. Keep an eye on the BRL/JPY pair for potential opportunities, as carry trades may become popular again. Create your live VT Markets account and start trading now.

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