Japan’s retail trade in September grew by 0.5% compared to last year, which is less than the expected 0.7%. This indicates a slower growth in retail sales than anticipated. The US Dollar remains steady as predictions about Federal Reserve rate cuts fluctuate. There’s now a 71% chance of a cut in December, up from 66% the day before. Gold is dealing with weekly losses but aims for a third consecutive monthly gain.

Shifts In The Cryptocurrency Market

In the cryptocurrency market, meme coins like Dogecoin, Shiba Inu, and Pepe are seeing losses due to a general market downturn. Zcash is on the rise, trading around $360, boosted by positive sentiment despite volatility. Recently, the US and China held trade discussions. As a result, China reduced tariffs on Fentanyl and postponed some export controls. At the same time, the United States promised to continue exporting soybeans to China. FXStreet provides various insights but recommends doing comprehensive research before making any investment decisions. Individual investors are responsible for all risks, including losses and emotional stress. FXStreet does not guarantee the completeness or accuracy of the information provided. Japan’s retail sales data, showing just a 0.5% year-over-year rise in September, confirms a troubling trend. Consumer spending in Japan is declining, putting more strain on the economy. This suggests that any potential economic recovery remains very delicate.

Policy Dilemmas And Market Implications

The Bank of Japan faces challenges, as their policy rate has stayed near zero for years, limiting their options. The ongoing uncertainty from the BOJ is leading to a weaker Yen, making pairs like EUR/JPY trade near record highs. This hesitance in policy has been a consistent theme throughout 2023 and 2024, with little change. On the other hand, expectations for the US Federal Reserve are changing rapidly. Markets now see more than a 70% chance of a rate cut in December. This follows recent US inflation data from September, which showed core inflation falling to 2.6%. This gives the Fed more space to consider adjusting its policy. The growing gap between a potentially dovish Fed and a stationary BOJ is crucial to watch. This policy split may increase volatility in major currency pairs, especially USD/JPY. The Cboe Volatility Index (VIX) is currently low at around 15, making options strategies that benefit from significant price movements attractive. This situation differs greatly from the market jitters seen in early 2025 when the VIX spiked. Gold is trying to gain momentum above the $4,000 mark. The expectation of Fed rate cuts supports gold, but a strong US dollar is a major challenge. A decisive move will likely depend on whether the market embraces the narrative of a US policy shift in the coming weeks. Create your live VT Markets account and start trading now.

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