Recent data shows that Canada’s Raw Material Price Index rose by 1.7% in September, a change from last month’s drop of 0.6%. This news comes amidst concerns about Canadian inflation, trade disagreements, and the possibility of a US government shutdown. In the markets, the Dow Jones Industrial Average increased by 550 points after Apple received an upgrade. Gold prices jumped by 2% as expectations of Federal Reserve rate cuts grew. Silver also rose as it became a safe haven amid fears of a US shutdown and geopolitical issues.

Currency Fluctuations

Currency pairs like EUR/USD and GBP/USD have seen fluctuations. The EUR/USD fell to 1.1640, close to daily lows, while GBP/USD tested support at around 1.3400. Gold remains just below $4,360, affected by ongoing US–China trade worries and anticipated shifts in Federal Reserve policy. In the world of cryptocurrencies, some analysts predict Bitcoin could hit $500,000 by 2028. However, a recent crash in the crypto market resulted in losses exceeding $19 billion in leveraged positions. Investors are expected to monitor US inflation data and ongoing US–China trade talks this week. These economic indicators are likely to heavily impact the markets in the upcoming days.

Mixed Signals from the US

The US is sending mixed signals, with concerns about a shutdown alongside hope for a resolution. This situation is likely to increase market volatility, making long vega options strategies appealing. Historically, the VIX surged over 30% during the first week of the extended 2018-2019 shutdown, which could happen again soon. A softer US Dollar trend is still in play, driven by increasing expectations of a Federal Reserve rate cut. Fed Fund futures now indicate a better than 75% chance of a cut before the year ends, putting pressure on the dollar. This supports using derivatives to anticipate further declines in the dollar index (DXY). Gold’s rise to nearly $4,360 per ounce is a reaction to this uncertainty and the weak dollar. Having more than doubled since early 2020, gold remains a top safe-haven asset. Using call options on gold futures can help investors participate in potential gains while managing risk if market sentiment changes. The unexpected 1.7% increase in Canada’s Raw Material Price Index for September is an important data point to monitor. This inflationary pressure positions the Bank of Canada as more hawkish compared to the dovish Federal Reserve, offering a chance to bet on a stronger Canadian dollar against the US dollar using futures or options contracts. While EUR/USD and GBP/USD are experiencing slight pullbacks, attention will be on upcoming inflation data from Europe. The UK’s CPI report on Wednesday will be particularly important, especially since last month’s reading exceeded the Bank of England’s target at 3.1%. Another strong report could easily push GBP/USD back above the 1.3400 level, creating opportunities for short-term trades. Create your live VT Markets account and start trading now.

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