Canada’s building permits for August dropped by 1.2%, which is worse than the expected decrease of 0.1%. This indicates a slowdown in the construction sector for that month. In currency markets, the US Dollar’s recent movements affected various currency pairs. The EUR/USD rose above 1.1600 as the Dollar weakened, and GBP/USD bounced back above 1.3300 despite disappointing UK labor market data.

Gold’s Rise And Market Influences

Gold prices continued to climb, exceeding $4,100 per troy ounce. This rise is due to safe-haven demand, a weaker US Dollar, and lower US Treasury yields. Investors are waiting for comments from Fed Chair Jerome Powell, which could suggest two more rate cuts. These remarks may influence the US Dollar, especially with no major data releases expected soon. Karim AbdelMawla, a senior digital asset researcher, recently discussed the crypto market’s potential longevity at an event in Spain. Current market sentiment indicates a potential bullish trend for the next year.

Canadian Economy And Market Reactions

There are clear signs of a slowing Canadian economy. The decline in building permits for August is now supported by a 3% drop in housing starts in September compared to last year. This slowdown suggests that the Bank of Canada may take a more cautious approach. Derivative traders might want to explore strategies that benefit from a weaker Canadian dollar, such as buying puts on the CAD, anticipating possible rate cuts by year-end. The market expects two more rate cuts from the U.S. Federal Reserve this year. However, Powell continues to warn about inflation risks, a sentiment reinforced by a core CPI of 3.4% in September. This tension between market expectations and Fed warnings may lead to volatility in the US Dollar. Using options like straddles on major pairs such as EUR/USD could be a smart way to trade the expected moves after the next Fed policy update. Economic weakness isn’t just a North American issue. Both the Bank of England and the European Central Bank are indicating potential risks. The UK’s unemployment rate has risen to 4.5%, and Eurozone manufacturing PMI remains in contraction. As a result, the pound and euro look vulnerable. There are opportunities to pair trade by shorting these currencies against the Japanese Yen, which is gaining from safe-haven inflows amid global trade tensions. Gold’s strong surge past $4,100 an ounce is a direct response to global uncertainty and falling bond yields. This trend has been underway since gold broke the significant $3,500 resistance earlier in 2025. With the U.S. 10-year Treasury yield now below 3.9%, the demand for non-yielding safe havens like gold is strong, making call options on gold futures a solid strategy to capture further gains. Create your live VT Markets account and start trading now.

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