South Korea’s S&P Global Manufacturing PMI increased to 50.7 in September from 48.3 previously. This suggests a return to growth in the manufacturing sector after a decline.
AUD/USD fell below 0.6600 in the Asian session due to increased cautiousness related to a potential US government shutdown. The US Dollar’s defensive stance, impacted by Fed expectations, has not provided support for this currency pair.
Gold’s Rally Amid US Government Concerns
Gold is maintaining its rally, stabilising above $3,870, amidst concerns about a looming US government shutdown. Meanwhile, USD/JPY attracted buyers temporarily but faces limited upward momentum due to BoJ-Fed rate expectations and geopolitical tensions.
Solana might be less affected by supply pressure compared to Litecoin if the SEC approves altcoin ETFs. This stems from different influences and potential market impacts on both cryptocurrencies.
Ukraine faces increasing challenges regarding debt sustainability due to the ongoing conflict with Russia. Discussions around new IMF programmes are accelerating, with potential solutions including frozen Russian reserves and debt restructuring.
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Impact of US Government Shutdown on Markets
South Korea’s manufacturing PMI crossing above 50 is a significant signal for us this morning, October 1, 2025. After a prolonged semiconductor downturn that we saw through most of 2024, this expansionary reading suggests a potential bottoming in the global tech cycle. This could mean it is time to consider buying call options on Korean tech ETFs or major exporters.
However, this positive data is being overshadowed by major risk aversion stemming from the United States. The ongoing US government shutdown, now entering its third week, is fueling a flight to safety across markets. Recent data from the University of Michigan confirmed this, showing US consumer sentiment dropped by a full point in September, directly attributed to the political gridlock in Washington.
This uncertainty makes shorting risk-sensitive currencies like the Australian dollar an attractive hedge. The AUD/USD pair has struggled to hold gains, and with the Reserve Bank of Australia on hold, any negative global news will likely push it lower. We saw a similar dynamic during the US-China trade tensions in 2024, where the Aussie acted as a prime shorting vehicle against broad market fear.
Gold’s surge past $3,870 an ounce shows where capital is flowing, having now gained over 60% from the highs we saw back in 2024. This trend is a direct play on both the US government shutdown and expectations that the Federal Reserve will be forced to cut rates sooner than anticipated. For derivative traders, this suggests long positions in gold futures or call options on major gold mining ETFs remain a core strategy.
The divergence between the Bank of Japan and the Federal Reserve is also creating a clear opportunity in the USD/JPY. With Japanese inflation holding above the BoJ’s 2% target for over a year now, pressure is mounting for a rate hike, while the Fed is signaling cuts. This fundamental backdrop suggests selling any strength in the USD/JPY pair, perhaps through put options or by shorting futures contracts.
For more speculative accounts, the potential approval of altcoin ETFs by the SEC presents a unique pair trade. Going long Solana while shorting Litecoin could work, as SOL has a more favorable supply dynamic compared to the potential selling pressure on LTC from existing trust funds. This is a higher-risk strategy that depends entirely on a positive regulatory outcome in the coming weeks.
