The core Consumer Price Index (CPI) for Canada stayed steady at 0.2% in September. This unchanged rate reflects the ongoing developments in trade and economic conditions influencing currencies around the world. The Swiss Franc has weakened as the US Dollar gains strength due to reduced trade tensions between the US and China. In a similar trend, silver and gold prices have dropped as market optimism rises and the dollar strengthens, with gold falling below $4,100 per troy ounce.

Currency Developments

The EUR/USD is hovering around 1.1600, lacking clear direction as market sentiment stabilizes. Likewise, GBP/USD has fallen to about 1.3360 as the dollar remains strong amidst updates on US-China trade. Bitcoin, Ethereum, and XRP have also declined due to economic uncertainty and geopolitical tensions. Many companies now view Bitcoin as a reserve asset, but inflows into Bitcoin treasuries have plunged by 99% over the last five years. Globally, there is a sense of relief over improving economic conditions, but concerns about unknown changes linger. While the better economy is welcome news, fears about potential shifts reflect ongoing economic complexities. The market has changed significantly from the time when easing trade tensions were the focus. Now, attention has turned to technology competition and supply chain security, making the US Dollar a safe haven once again. This is a sharp contrast to the past optimism that pressured safe-haven assets.

US CPI Impact

The latest US CPI report from September 2025 came in at 3.1%, which was hotter than expected. This suggests the Federal Reserve may keep rates high for a longer period, delaying any potential cuts until late 2026. This is why the dollar index has recently climbed back above 106.50. For derivative traders, this means they need to rethink currency positions made years ago when EUR/USD was around 1.1600. Now, with the pair struggling to hold onto 1.0750, put options on the Euro could provide protection against further dollar strength. Similarly, GBP/USD, which used to be near 1.3360, is now closer to 1.2180, as UK inflation appears to be more controlled than in the US. Looking back, the drop below $4,100 per ounce presented a buying opportunity driven by temporary profit-taking. Interest in gold is rising again, with prices climbing back toward $4,150 as investors seek protection against persistent inflation and geopolitical tensions. Call options on gold futures seem appealing, especially since central bank purchases reportedly increased by 15% in the third quarter of 2025. The main takeaway for the next few weeks is to brace for increased volatility across various asset classes. The VIX index, which measures expected market volatility, has already jumped back above 18 from its summer lows. Traders should consider using straddles or strangles on major indices to capitalize on significant price movements, regardless of direction. Create your live VT Markets account and start trading now.

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