MBA mortgage applications in the United States rose to -4.7% as of October 3, up from -12.7%. This change indicates a slower decline in the mortgage market amid various economic pressures. Key market updates include GBP/JPY hitting 205.00, influenced by delayed expectations for a Bank of Japan rate hike. Additionally, the USD/CHF is climbing as the strong US Dollar and speculation about potential Swiss National Bank rate cuts support the rate.

Anticipation of Federal Reserve Minutes

Many are eagerly awaiting the Federal Reserve’s minutes for insights on rate cuts, especially since the government shutdown has delayed the release of US jobs data. Meanwhile, GBP/USD is stabilizing as the US Dollar weakens, with traders looking for more communication from the Fed. Gold remains just above $4,000 per troy ounce, driven by a stronger demand for safe-haven assets amid political issues in France and uncertainties in the US economy. The Fed’s minutes from September are expected to shed light on future rate cuts during the ongoing US government shutdown. Solana, a cryptocurrency, is trading above $220, with traders eager for a breakout to $250. However, a decline in on-chain activity might delay this goal. The ongoing US government shutdown brings considerable uncertainty, making volatility a key focus for trading. Buying options on major indices is worth considering, as implied volatility is likely to increase. Historically, like during the extended shutdown of 2018-2019, the CBOE Volatility Index (VIX) experienced sharp spikes, benefiting those prepared for market turbulence.

Economic Uncertainty and Market Fluctuations

With important economic data like the jobs report delayed, the upcoming Fed minutes will guide us on future rate cuts. Expectations for another cut are strengthening, so considering derivatives linked to the SOFR (Secured Overnight Financing Rate) may be beneficial. We might use options on futures for a more aggressive position should the economic outlook worsen. Gold’s rise above $4,000 signals a move to safety, spurred by the US shutdown and concerns in France. This pattern resembles the safe-haven surges during the 2008 financial crisis and the 2020 pandemic. Buying call options on gold futures or related ETFs continues to be a smart way to guard against further instability. The US Dollar is currently gaining from safe-haven flows, but this strength might not last if the Fed adopts an aggressive rate-cutting stance. Meanwhile, the Euro faces pressure from the political situation in France, pushing EUR/USD toward the crucial 1.1600 support level. Buying put options on the Euro appears to be a clearer trade until European political risks ease. Mortgage applications have improved to -4.7%, but this still indicates a weak housing market, so it isn’t a strong buy signal for housing-related assets. These negative figures are similar to the slowdown seen in 2023, which preceded slower home sales. Create your live VT Markets account and start trading now.

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