Japan’s industrial production grew by 2.6% in September, exceeding expectations of a 2.2% rise. This shows the ongoing recovery in the country’s industrial sector. In other news, currency and commodities markets responded to various economic updates. The EUR/CAD dipped below 1.6300 ahead of Canada’s CPI inflation report, while the USD/CHF remained around 0.7950.

Gold Prices Drop

Gold prices fell for the third day in a row. This decline is driven by a strong US Dollar and lower chances of a December rate cut by the Federal Reserve. Concerns about the economy and a cautious market helped prevent even larger drops. Cryptocurrencies like Bitcoin, Ethereum, and Ripple started the week near important support levels. Last week’s market volatility caused corrections of nearly 10% for BTC, 14% for ETH, and 7% for XRP. Looking ahead, the spotlight shifts to the US, where we expect to see Fed minutes, CPI, and flash PMI releases. Other countries, including Canada, Japan, and the UK, will also share CPI data. However, the US job and inflation reports for October may face delays. The Pi Network token was trading above $0.2200 following updates from Pi App Studio, maintaining its recent gains. While Japan’s industrial production figures for September were better than expected, they are overshadowed by broader economic challenges. A recent report showed a 0.4% contraction in Q3 2025 GDP, which suggests that the Bank of Japan will likely postpone any rate hikes, keeping the Yen weak against other currencies.

US Dollar Affects Currency Markets

The main focus remains on the stronger US Dollar, which puts pressure on pairs like EUR/USD, pushing them towards the 1.1600 mark. Expectations for a Federal Reserve rate cut in December have dropped sharply, with futures markets now suggesting only a 15% chance, down from over 50% just weeks ago. This shift makes holding dollars more appealing and hints at ongoing strength in the coming weeks. The Pound Sterling is also weakening against the Dollar, with GBP/USD now nearing 1.3150. Recent UK inflation data showing CPI unexpectedly dropping to 2.1% in October has fueled speculation that the Bank of England may need to cut rates soon. Traders should adjust their strategies to reflect this growing divergence between a dovish Bank of England and a steady Fed. We recommend that traders consider strategies that capitalize on the ongoing strength of the US Dollar and weakness in Gold, such as buying put options on EUR/USD and Gold futures. This situation resembles the environment in 2022 when a hawkish Fed led to a long period of US Dollar dominance, negatively affecting other assets. The forthcoming and potentially delayed US inflation data could lead to significant market volatility, making long volatility strategies appealing as well. Create your live VT Markets account and start trading now.

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