The ISM Services Prices Paid in the US increased to 69.4 in September, up from 69.2. This shows a slight rise in cost pressures in the sector. The EUR/USD currency pair reached daily highs close to 1.1750, while GBP/USD gained strength, aiming for around 1.3480. These movements are linked to the US Dollar falling due to worries about a possible US government shutdown.

Market Reactions

Gold prices approached $3,890 per troy ounce after the US data release, as uncertainty about the US shutdown affects the market. Bitcoin fell back to around $120,000 after reaching a high of $120,960, while Ethereum and Ripple held onto their weekly highs. FXStreet has launched a new design that enhances user engagement on their platform. In other news, Pump.fun continues on a bullish trend, trading above $0.0070 thanks to positive market signs. For currency traders, FXStreet has compiled a list of recommended brokers for 2025. This list includes options with low spreads and high leverage, as well as brokers for trading gold, CFDs, and Islamic & Swap-Free accounts. FXStreet emphasizes the importance of personal research when making trading decisions and does not take responsibility for any market losses, encouraging careful and informed trading strategies.

Economic Impacts

The September ISM Services Prices Paid data indicates that inflation is still a concern, rising to 69.4. Normally, this would boost the US Dollar, but the market is currently ignoring it. The main focus is on the US government shutdown, which is creating uncertainty and pushing the dollar lower against other currencies. We are a few days into the shutdown that started on October 1st, and the political deadlock is causing significant worry. The Congressional Budget Office projects that each week the government is closed could decrease fourth-quarter GDP growth by 0.2%. This potential economic loss is outweighing the Federal Reserve’s concerns about inflation for now. The conflict between stubborn inflation and political risk is likely to increase market volatility. The VIX, which measures market fear, has jumped over 25% in the past week, trading above 22, a level not seen since the banking sector troubles of 2024. Traders might consider buying VIX calls or using options straddles on major indices to deal with this rising uncertainty. With the dollar weakening, assets like gold and foreign currencies are becoming stronger. Traders are showing interest in call options for currency pairs such as EUR/USD and GBP/USD to take advantage of this trend while managing risk. This strategy offers protection against a sudden rebound in the dollar if a resolution to the shutdown is unexpectedly reached. The Fed now faces a challenging situation, caught between high services inflation and a shutdown that slows economic growth. This makes a rate hike in November less likely, a trend reflected in the SOFR futures market over the past few trading sessions. Traders can utilize interest rate derivatives to prepare for a possible pause by the Fed, regardless of inflation data. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now