The New Zealand GDT Price Index fell by 2.4%, following a previous decline of 1.4%. In other economic news, the unemployment rate in New Zealand rose to 5.3% in the third quarter, which aligns with expectations. The Dow Jones Industrial Average is facing challenges due to concerns about AI trading. Meanwhile, attention is on the US ISM Services PMI as the threat of a US government shutdown looms. In the currency market, the EUR/USD pair has dropped for five straight days, largely due to the strength of the US Dollar.

Currency Markets Overview

The GBP/USD hit its lowest level since April, affected by rising borrowing costs in the UK and a strong US Dollar. Gold prices also fell to a three-day low of around $3,930 per troy ounce, pressured by the stronger US Dollar and lower expectations for a Fed rate cut in December. Ethereum’s price dropped below $3,500, influenced by ETF outflows and overall negative feelings in the crypto market. DeFi platforms are facing scrutiny after a $120 million hack on the Balancer exchange, which reported that it couldn’t stop the incident due to its effects on older pools. Looking ahead, market participants are focused on the Federal Reserve’s decisions, the potential impact of the US Supreme Court, and upcoming central bank meetings in Australia and the UK, as market risk sentiment remains delicate. With the US Dollar’s strength, we expect continued pressure on major currency pairs. The Dollar Index (DXY) is reaching multi-month highs, trading recently above 107.50 as the market discounts a December Fed rate cut. We predict that traders will prefer buying USD call options or selling EUR/USD futures while the pair remains below the key 1.1500 level.

Outlook On Major Currencies

The British Pound’s decline towards 1.3020 sends a clear bearish signal, worsened by worries over rising borrowing costs in the UK. With the latest October 2025 inflation data showing a persistent 3.9%, the Bank of England’s options are limited, creating a negative outlook. In this scenario, using put options on GBP/USD is an appealing strategy to protect against further declines. On the other hand, the Japanese Yen is showing unexpected strength due to its status as a safe haven and the Bank of Japan’s hawkish stance. Reflecting on past instances of BOJ hawkishness in 2023, the Yen appreciated quickly against both the Euro and the Dollar. We believe that taking long positions in Yen, perhaps through futures or options, is a strong hedge against ongoing risk-off sentiment. In New Zealand, the economic outlook appears weak, with the GDT price index decreasing further to -2.4% and the unemployment rate steady at a high of 5.3%. This indicates a slowing economy, suggesting that the New Zealand Dollar may underperform. Derivative traders should explore strategies that capitalize on NZD weakness, like shorting NZD/USD futures. Volatility in US equity markets is anticipated, especially due to fears surrounding an “overloaded AI trade” and a potential government shutdown. The VIX, which measures market fear, has recently surged to over 20, a level not seen consistently since the banking crisis of 2023. This suggests that traders might find profit in buying straddles or strangles on major indices such as the Nasdaq 100 in the coming weeks. The cryptocurrency market is also facing challenges, with Ethereum’s fall below $3,500 driven by significant ETF outflows totaling over $450 million last week. The recent $120 million hack of the Balancer exchange has further shaken confidence in the DeFi sector. Caution is advisable at this time, with traders likely considering shorting ETH futures or buying puts for downside protection. Create your live VT Markets account and start trading now.

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