The ISM Services PMI for October in the United States is at 52.4, beating the predicted 50.8. This upbeat news helped lift the Dow Jones Industrial Average by 300 points. In the commodities market, WTI Crude Oil dropped below $60 due to unexpected inventory increases. Meanwhile, gold rose by over 1%, despite the strong US data affecting market sentiments.

FX Market Movements

In the FX market, the NZD/USD saw a slight rise on news about China easing tariffs, even though New Zealand’s job market remains weak. The EUR/USD struggled to move above the 1.1500 level. GBP/USD stayed steady just under 1.3050, as eyes turned towards the Bank of England meeting, with no changes expected to the policy rate at 4.00%. Ethereum showed signs of recovery and began trading upward after previous drops. On the other hand, Stellar faced possible losses due to the formation of a Death Cross pattern. Upcoming events include a session with the US Supreme Court and more economic data from the US, which may challenge the Dollar’s strength. Overall, market sentiment remains mixed after recent earnings and trade news.

Continued US Economic Strength

The ISM Services report at 52.4 indicates the US economy is holding strong, contrary to earlier predictions of a slowdown. The third quarter of 2025 also showed resilience, with GDP growth at a solid 2.9%, indicating healthy consumer and business activity. This makes it hard to bet against the US economy in the short term. This robust economic performance is likely to keep the Federal Reserve on the sidelines, with less expectation for rate cuts this year. Current market pricing suggests a less than 15% chance of a rate cut before the second quarter of 2026. As a result, we anticipate continued strength in the US Dollar, creating opportunities for those holding long positions on it. For equity index traders, the strong services data supports a positive outlook for the S&P 500. However, the ongoing government shutdown introduces volatility. Historical data shows that similar political gridlocks, like the 2018-2019 shutdown, can unexpectedly unsettle markets. In this situation, strategies such as buying call options on the SPX while holding cheaper, out-of-the-money puts for protection could be effective. The dollar’s strength is exerting pressure on foreign currencies, especially the Euro, which is having difficulty maintaining its value. With recent Eurozone inflation figures for October 2025 at a modest 2.1%, the European Central Bank has little incentive to take a more aggressive approach. This policy difference should keep the EUR/USD pair under pressure, making put options on the Euro an attractive hedge or speculative play. Gold is climbing toward $4,000 an ounce, indicating traders are viewing it as a safe haven against systemic risks, likely due to the government shutdown. A similar pattern occurred during the 2023 debt ceiling crisis when gold price surged even as bond yields increased. This suggests that call options on gold could be a good bet as long as political uncertainty remains high in Washington. In energy markets, the unexpected inventory increase reported by the EIA is the main driver, pushing WTI crude below $60 per barrel. The report showed an increase of over 4 million barrels, while a slight decrease was anticipated, indicating that supply is currently outstripping demand. We believe this trend will persist, making short positions or buying puts on oil futures a solid strategy in the weeks ahead. Create your live VT Markets account and start trading now.

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