Canada’s Core Consumer Price Index (CPI) increased by 0.3% in September, up from 0.2% the previous month. This rise shows ongoing inflation pressures in the Canadian economy that policymakers are closely watching. Gold prices fell sharply, nearing multi-day lows just under $4,100 per troy ounce. This drop was due to a stronger US Dollar, profit-taking, and less excitement about US–China trade developments.

Currency and Inflation Trends

The GBP/USD currency pair struggled, dropping below 1.3400. The strong US Dollar, supported by easing US–China trade concerns, made it difficult for the British Pound as traders awaited Wednesday’s UK inflation report to see how the Bank of England might respond. Bitcoin, Ethereum, and Ripple also fell amidst macroeconomic uncertainty and geopolitical tensions. The ongoing US government shutdown added to the nervous global market environment affecting cryptocurrencies. Recent reports indicate that the global economy is performing better than expected despite the effects of US tariffs. The ownership landscape for corporate assets has changed over the last five years, with Bitcoin now commonly held as a reserve asset by companies and governments.

Market Strategies and Sentiment

The higher-than-expected Canadian core inflation rate of 0.3% suggests that the Bank of Canada will continue its strict policies. However, the US dollar’s strength, boosted by a solid September Non-Farm Payrolls report of over 250,000 jobs added, is a key driver in currency markets. Using options to bet on further USD strength against the Canadian dollar seems wise. The British Pound remains weak below 1.3400 as traders wait for the UK’s important inflation data. With the August 2025 report showing Consumer Price Inflation at a stubbornly high 3.8%, another high reading could increase pressure on the Bank of England. Given the strong dollar, traders might consider buying put options on GBP/USD to guard against further declines. The sharp drop in gold prices from the $4,100 mark suggests that the recent rally, fueled by the three-week US government shutdown and geopolitical tensions, has come to an end for now. This price level was supported by historic central bank purchasing throughout 2024, where they acquired over 1,200 metric tonnes. With short-term risks reducing, selling call options to generate premium is becoming a viable strategy. Bitcoin’s decline is mainly due to a “higher for longer” interest rate environment, which makes non-yielding assets like Bitcoin less appealing. Corporate and government balance sheets now reportedly hold over $200 billion in Bitcoin. These large holders are becoming more sensitive to macroeconomic changes, potentially increasing selling pressure. Despite signs of economic strength, underlying market anxiety continues. The VIX index rose above 25 during the recent shutdown concerns and remains high compared to the calmer early 2024. Traders should remain flexible and consider using derivatives to shield against unpredictable “tectonic shifts” that could destabilize the market. Create your live VT Markets account and start trading now.

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