The Business NZ Performance of Manufacturing Index (PMI) stayed at 49.9 in September, unchanged from the previous month. This means the manufacturing sector is showing signs of contraction, as the PMI is below the neutral level of 50.0. The US Dollar gained strength, causing the GBP/USD to drop to 1.3300. This decline happened because of rising risk-off sentiment amid the US government shutdown. The EUR/USD also fell to a nine-week low of around 1.1540, influenced by the strong US Dollar.

Gold Nears $4,000

Gold is close to hitting the $4,000 mark due to cautious market sentiment. Ongoing worries about the US government shutdown and potential rate cuts from the Federal Reserve are driving this trend. However, a strong US Dollar could hold back gold’s rise. Ethereum dipped by 4%, moving down towards $4,300 after medium-scale holders sold off 1.22 million ETH. In contrast, Zcash continued its upward trend, fueled by growing interest in privacy protocols, aiming to break above $200. US tariffs are crucial in foreign policy and public finance, with recent confirmations emphasizing their role as effective policy tools. The New Zealand Business NZ PMI at 49.9 shows the economy is stagnating, teetering on the edge of contraction. Similar situations occurred during the slowdown in 2023, where such stagnation led to further economic troubles. Given the strong US Dollar, traders might consider using derivatives to bet against the Kiwi Dollar, which lacks domestic strength to reverse the trend.

Shift to Safety

A clear shift to safety is happening because of the US government shutdown, causing the US Dollar to rise against most currencies. The GBP/USD’s drop to 1.3300 and the EUR/USD’s fall to 1.1540 reflect this widespread risk-off sentiment. This pattern resembles the market reaction during the 2018-2019 government shutdown, where the Dollar Index (DXY) increased steadily over several weeks. Gold is the primary safe haven, pushing closer to $4,000 as uncertainty mounts. The market is anticipating potential Federal Reserve rate cuts to support the economy, making gold’s non-yielding nature more attractive. With US inflation figures from September 2025 showing core CPI still above the Fed’s 2% target, negative real interest rates favor gold. WTI crude oil dropping below $61.50 indicates that fears of a recession are overshadowing supply concerns. Traders seem to believe that the shutdown will hurt energy demand more than any geopolitical issues will disrupt supply. Recent EIA data showing an unexpected increase in US crude inventories further supports this bearish view on demand. In the crypto market, there is a noticeable shift as traders become more selective. While Ethereum is falling, the rise in privacy-focused assets like Zcash suggests a growing demand for anonymity during government instability. This shows that capital isn’t leaving the crypto sector entirely but is moving into assets that align with the current macro environment. Create your live VT Markets account and start trading now.

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