Canada’s housing starts in September reached 279,200 units, exceeding expectations of 255,000. This shows a significant rise from what was predicted. In the currency market, the EUR/USD climbed above 1.1680, marking a weekly high. At the same time, GBP/USD showed signs of recovery, hitting the 1.3450 level thanks to positive UK data.

Gold’s Strong Performance

In commodities, gold’s price approached $4,300 per troy ounce. The demand for gold remains strong due to worries about the US economy and ongoing geopolitical issues. In the cryptocurrency market, Bitcoin fell to around $110,500. Other cryptocurrencies like Ethereum and Ripple also struggled during this period. Solana targeted a value over $200 after some recent ups and downs, with Bitcoin and Ethereum also hinting at better market conditions. Overall, the mood in cryptocurrencies remains cautious. The stock market showed mixed feelings, with the S&P 500 forming an “inside day” pattern. This resulted from recent market moves and suggests traders are uncertain.

Federal Reserve Rate Cut Expectations

Currently, markets see an 85% chance of a Federal Reserve rate cut in December, suggesting the US dollar may continue to weaken. The latest Consumer Price Index for September showed a year-over-year increase of 2.8%, supporting the idea that inflation is not the Fed’s main worry anymore. Strategies benefiting from a weaker dollar, like call options on the Euro or Pound Sterling, are becoming more popular. The positive Canadian housing starts indicate a stronger Canadian economy compared to the US at this time. With Canada’s unemployment rate steady at 5.7% last month, it seems the Bank of Canada will likely cut rates more slowly than the Federal Reserve. This difference could make selling USD/CAD futures or buying puts on the pair appealing in the coming weeks. Gold’s rise toward $4,300 directly correlates with increasing trade tensions and a search for safety. Central banks have been major buyers, with official net purchases reaching a record 1,250 metric tons over the past four quarters, far exceeding 2022 highs. We believe that buying call options to bet on a move toward $4,500 presents a low-risk opportunity for more gains. In equity markets, the recent uncertainty in the S&P 500 reflects worries following new tariff announcements. The CBOE Volatility Index (VIX) remains high, closing above 22 yesterday, which is notably above its average for earlier in the year. We suggest traders consider buying VIX futures or S&P 500 put spreads to protect against another downturn. Create your live VT Markets account and start trading now.

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