Gold prices have risen above $3,600, driven by expectations of a more lenient Federal Reserve and weaker US economic data. The price has increased by 0.8%, reaching $3,615.72. The US dollar is weaker against most major currencies except for the yen, which has dropped due to Ishiba resigning as Japan’s prime minister. USD/JPY fluctuated between 148.00 and 147.46 before rising back to 147.70.

Dollar And Currency Movements

The dollar has also dipped against currencies like the Swiss franc and euro. USD/CHF has decreased by 0.3% to 0.7955, while EUR/USD is up slightly by 0.1%. The Australian and New Zealand dollars have both performed well, gaining 0.6% and 0.7%, respectively. European stocks and US futures are showing slight gains amid concerns following a disappointing US jobs report. US 10-year yields fell by 0.2 basis points to 4.083%. Oil prices have increased by 1.8% to $63.05, and Bitcoin is up 0.6% to $111,799. In other news, Germany’s industrial production for July rose 1.3% month-on-month, which was higher than expected. There are ongoing concerns about political developments in France and Japan, alongside the upcoming US consumer price index data. Gold’s significant rise above $3,600 is expected to continue, driven by the anticipation of a more dovish Federal Reserve. The trend gained momentum after last Friday’s jobs report showed only 95,000 jobs added, which was well below expectations. Buying call options on gold futures or related ETFs remains an effective way to capitalize on this upward trend.

Increasing Market Volatility

The market is now anticipating a high probability of a Fed rate cut, with futures data indicating a 75% chance for the next meeting. This is keeping pressure on the US dollar and supporting riskier currencies like the Australian dollar. It might be wise to purchase puts on a dollar index ETF to profit from further dollar weakness, especially if this week’s inflation data is soft. We should exercise caution with equities, as the upcoming US CPI report could disrupt the current stability. Historically, September is the weakest month for stocks, and high inflation could quickly shift the overall sentiment. Buying protective puts on major indices or VIX call options could serve as a hedge against potential volatility. Political events in Europe and Japan are creating opportunities in the currency markets. With a confidence vote approaching for the French prime minister and Japan’s leadership contest set for October 4th, we can expect significant movements in EUR/USD and USD/JPY. Utilizing straddles or strangles can allow us to benefit from large price swings in either direction without needing to predict the outcome. Create your live VT Markets account and start trading now.

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