India’s trade deficit for October was $41.68 billion, exceeding the expected $29.4 billion. This discrepancy suggests shifts in either imports or exports dynamics have impacted the balance.
The US Dollar has shown renewed strength, impacting currency pairs like EUR/USD and GBP/USD. EUR/USD dropped below 1.1600 due to diminishing expectations for a Federal Reserve rate cut in December, affecting market sentiment.
Currency Movements
GBP/USD has seen modest growth, but it remains under the 1.3200 mark amidst concerns about the UK fiscal landscape. In contrast, gold has been stabilising around $4,000 per troy ounce, with market players reassessing Federal Reserve policy speculations.
Cryptocurrencies like Bitcoin, Ethereum, and XRP are trying to recover, with Bitcoin trading above $95,000. Ethereum lingers below $3,200, while XRP maintains around $2.27, following subtle recovery signs.
In stock markets, the start of the week sees a stabilised mood, with US stock futures anticipating slight gains and European indexes showing little change. The price of Pi Network, bolstered by new Pi App Studio updates, is above $0.2200, marking a sustained recovery.
The Indian trade deficit for October 2025 came in shockingly high at $41.68 billion, blowing past the $29.4 billion expectation. This is a record-high deficit, far exceeding the previous peak of around $30 billion we saw back in 2022, and it puts significant downward pressure on the Indian Rupee. We should therefore consider long positions on USD/INR futures or buy out-of-the-money call options to profit from further INR depreciation.
Impact of US Rates
With the market now pricing out a December 2025 Fed rate cut, the US Dollar is finding renewed strength across the board. According to current futures market pricing, the probability of a cut has fallen from over 60% just last week to under 25% today, fueling this dollar rally. Given the EUR/USD pair’s break below the key 1.1600 level, we see opportunities in buying put options on the Euro.
This shifting sentiment on US rates is also creating a major headwind for Gold, which is struggling to hold above $4,000. Higher for longer US interest rates increase the opportunity cost of holding the non-yielding metal, a pattern we saw suppress prices throughout the 2022 hiking cycle. We are therefore cautious on long positions and may look to sell call options against existing holdings to collect premium.
