The Canada Consumer Price Index (CPI) rose by 2.2% year-over-year in October, which is higher than the expected 2.1% increase. This could influence economic policies and impact the Canadian Dollar and interest rates. The EUR/USD pair fell to daily lows near 1.1580, staying below 1.1600 as the US Dollar gained strength. As the market adjusts its expectations for a December rate cut, attempts to recover the pair are limited. GBP/USD remained cautious around 1.3160, losing ground after a recent dip. Ongoing fiscal concerns in the UK contribute to worries about the British Pound.

Gold Price Fluctuations

Gold stayed below $4,100, moving between small gains and losses without a clear direction. Comments from FOMC officials lowered expectations for future rate cuts, affecting gold’s performance. Cryptocurrencies like Bitcoin stayed steady, trading above $95,000, while altcoins like Ethereum and XRP showed signs of recovery. Chainlink traded above $14.00 but faced low retail interest in a weak derivatives market. In the coming week, focus will shift back to US economic data, while the tech sector’s outlook is also important. The market mood appears calmer, with US stock futures suggesting possible gains.

Impacts On Trading Strategies

With the Canadian inflation data for October 2025 at 2.2%, slightly higher than expected, we think the Bank of Canada will not rush to indicate any rate cuts. This could mean that options traders are undervaluing the risk of continued policy firming from the BoC into early 2026. The overnight index swaps market shows that the odds of a rate cut in the first quarter of 2026 have dropped below 30%, a significant decrease from just a month ago. The strength of the US Dollar is the main trend, putting pressure on pairs like EUR/USD and GBP/USD. The market is quickly reducing expectations for a Federal Reserve rate cut, as per CME’s FedWatch Tool, which now shows less than a 15% chance of a cut in December 2025. This suggests that these currencies may continue to decline. For derivative traders, this environment favors strategies like selling call options on EUR/USD rallies or buying puts to prepare for a possible drop below key support levels. After last week’s significant sell-off, there is some stability in equity futures, but underlying tensions remain high. The CBOE Volatility Index (VIX) is still elevated, around 19, well above the average for the year. This indicates that traders are paying a high price for portfolio protection. As major earnings reports, like Nvidia’s, approach, traders may use options straddles to bet on large price movements, regardless of direction. Gold continues to be stuck below $4,100 per ounce, affected by a strong US dollar and ongoing geopolitical uncertainty. Reduced expectations for Fed rate cuts have taken away a key driver for gold, leading to a range-bound market. This means that selling volatility through strategies like iron condors may be more effective than making directional bets until a clear catalyst appears. In the cryptocurrency market, we see a fragile recovery, with Bitcoin trading above $95,000 but showing thin market depth. The decline in open interest for Bitcoin futures has dropped by almost 20% in the last month to about $28 billion, indicating that significant leverage has been removed. This reduction suggests that any price rally may lack confidence, and traders should consider using protective put options to safeguard against a potential drop to recent lows. Create your live VT Markets account and start trading now.

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