The Canadian unemployment rate is expected to increase in September as the job market cools down. This could lead to more rate cuts. The Canadian Dollar is currently valued at less than 1.4000. US tariffs remain important in foreign policy and public finance. Despite regular news coverage, these tariffs are firmly in place. The US government has recently restated its commitment to using tariffs strategically.

Coinbase and Mastercard Bidding War

Coinbase and Mastercard are reportedly competing to buy the stablecoin company BVNK. The deal is estimated to be worth between $1.5 billion and $2.5 billion, but talks are still ongoing and could change. The September labor report indicated a cooling market, with unemployment rising to 6.5%. This puts the possibility of a Bank of Canada rate cut on the table for their December meeting. There is growing belief that the Bank of Canada will take action before the US Federal Reserve does, leading to a difference in monetary policies. As a result, shorting the Canadian dollar against the US dollar becomes an appealing strategy. We are considering USD/CAD call options with a strike price above 1.4100, expiring in January 2026, to take advantage of this anticipated movement. The premium for these options is still reasonable, providing a good risk-reward scenario for the coming months. The ongoing US tariffs are causing a wave of volatility that many are overlooking. Just last week, renewed discussions about Chinese semiconductors caused a drop in the SOXX semiconductor ETF. Looking back at the volatility spikes from the 2018-2019 trade disputes, we see similar uncertainty emerging.

Trading Strategies and Market Moves

We are purchasing long-dated put options on specific industrial ETFs that are heavily reliant on international supply chains. Alternatively, traders might buy call options on the VIX index as a hedge against potential trade tensions. These options offer an affordable way to protect against risks from unexpected policy changes. The competition between Coinbase and Mastercard for BVNK highlights a rapid adoption of stablecoin infrastructure by large institutions. This situation is not just about cryptocurrencies; it signifies the future of payment systems, reinforcing the entire digital asset ecosystem. This potential $2 billion deal follows a trend of market consolidation throughout 2024 and early 2025. We think the implied volatility for Coinbase (COIN) stock is low considering the chance of a major acquisition announcement. Buying short-dated COIN call options is a direct approach to speculate on a positive outcome from these negotiations. This move could create a valuation floor for crypto infrastructure, marking a crucial moment. Create your live VT Markets account and start trading now.

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