South Africa’s Manufacturing Production Index improved in September, moving from a decline of 1.5% to a rise of 0.3%. This marks a positive change for the manufacturing sector. In other market news, the USD/CAD continued to lose ground due to weak US labor data, increasing speculation that the Federal Reserve might cut rates soon.

Currency Market Dynamics

In currency markets, the EUR/JPY gained value, supported by a strong Euro, while the Yen faced pressure from the Bank of Japan’s dovish policies. Conversely, the EUR/CHF hit a two-week low as the Swiss Franc strengthened amid optimism about US-Switzerland trade relations. The GBP/USD rebounded, helped by a weaker Dollar, despite poor UK employment data. The UK’s unemployment rate rose to 5% in the three months leading up to September, with a drop of 22,000 jobs. Gold prices held steady around $4,150 per troy ounce, supported by cautious market sentiment and a softening Dollar. Bitcoin Cash also showed bullish signs, rising 1% during Tuesday’s trading session. Given the weak US labor data, the Dollar is likely to fall further in the coming weeks. October’s Non-Farm Payrolls reported only 95,000 jobs added, much lower than expected, which aligns with the soft ADP numbers. This disappointing performance heightens expectations that the Federal Reserve may start cutting rates early next year.

Opportunities and Strategies

In this context, taking a bullish position on the EUR/USD pair looks appealing, especially as it approaches the 1.1600 mark. Recent US CPI data for October showed inflation cooling to 3.2%, strengthening the case for a dovish Fed. Consider buying call options with strike prices above 1.1600 to benefit from a potential breakout. Gold remains a strong candidate for long positions while it’s near $4,150. The combination of a weakening Dollar and ongoing market uncertainty supports the precious metal’s price. It’s noteworthy that just two years ago, in late 2023, gold was priced at less than half of its current value, highlighting a strong upward trend. The British Pound presents a more complicated picture, as challenges in the UK economy pose obstacles. With unemployment at 5% and potential rate cuts from the Bank of England, the GBP/USD may trade in a narrow range. This situation creates opportunities for strategies like selling strangles or setting up iron condors, betting that the pair will stay between roughly 1.3065 and 1.3230. There is also a sign of improvement in South Africa, where the manufacturing index turned positive in September. The latest Absa Purchasing Managers’ Index for October rose to 49.8, indicating a shift toward expansion. This modest recovery, combined with broad US dollar weakness, suggests selling USD/ZAR futures is an increasingly promising trade. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now