The US pending home sales in June fell by 0.8%, while no change was expected. This drop indicates a slowdown in the housing market. The AUD/USD dropped to a five-week low as the US Dollar gained strength due to strong economic data and remarks from Chair Powell. The pair has fallen for five days in a row, putting pressure on the Australian Dollar. Similarly, the EUR/USD fell back to early-June levels as the US Dollar strengthened after the Fed decided to keep interest rates unchanged. This marks the fifth consecutive day of decline for this currency pair. Gold prices hit new lows around $3,270 after the Federal Reserve maintained interest rates. The US Dollar continued to strengthen after Chair Powell stated that data would guide the Fed’s decisions. Ripple (XRP) remained above $3.00 despite speculations about upcoming US government policies on cryptocurrency. There are concerns in the market, especially in reaction to the Federal Reserve’s interest rate decisions. The Bank of Canada kept its key rate at 2.75% for the fourth meeting in a row, down from 5% over the past year. This pause suggests caution after previous rate cuts. Looking ahead, the US Dollar appears to be the strongest player in the market. The Fed’s cautious stance and decision to keep rates steady are boosting the dollar against major currencies. This signals that we should prepare for more dollar gains in the coming weeks. The pressure on AUD/USD and EUR/USD stems from the strength of the dollar and differing policies. Reflecting on 2022-2023, we saw how tight Fed policies could push the EUR/USD below parity, which sets a historical precedent. With the recent US Core PCE inflation rate holding at 2.9%, we believe the Fed will remain hawkish, making short positions on these currency pairs with futures or put options an appealing strategy. The slowdown in US pending home sales is largely due to high borrowing costs, as the national average for a 30-year fixed mortgage has risen to 7.1%. This cooling trend in the housing market presents a trading opportunity. We might consider buying put options on homebuilder ETFs to profit from potential further weakness in this sector. Gold’s decline to the $3,270 level is a typical response to a strong dollar and steady US interest rates. With the 10-year Treasury yield around 4.5%, the opportunity cost of holding gold, which doesn’t earn interest, is high. Thus, we expect downward pressure on gold prices and could look to sell call options against our gold positions or buy puts on gold ETFs. The Bank of Canada’s decision to keep the rate at 2.75% shows a clear policy difference from the US. Canada’s latest inflation figures dropped faster than expected to 2.5%, which supports their cautious approach. This fundamental shift strengthens the case for a stronger USD compared to the CAD, making long USD/CAD positions via futures a sensible trade. In the cryptocurrency market, Ripple’s steady price above $3.00 occurs amid significant uncertainty from the Fed and looming government policies. Implied volatility for XRP options remains high, suggesting the market anticipates significant price movements. This situation presents an opportunity to use strategies like long straddles or strangles, which could yield profits from large price swings once regulatory clarity is achieved.

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