In the third quarter, Italy’s Gross Domestic Product (GDP) rose by 0.6% compared to last year, beating the anticipated growth of 0.4%. On Thanksgiving, U.S. financial markets were open for only half the day, affecting trading in other markets. The GBP/USD exchange rate fell, nearing 1.3200, cutting into its weekly gains.

Gold Prices and Zcash Trends

Gold prices increased by over 2.5% this week, remaining stable below $4,200 as expectations grow for a Federal Reserve rate cut in December. In contrast, Zcash faced a significant decline, losing more than 17% this week due to low demand for privacy coins. European markets experienced slight pressure as investors reacted to the recent UK budget. Increased trading in Zcash futures may present an exit opportunity for large investors. This information is not investment advice and carries risks. Readers should do their research before making any investment decisions. FXStreet is not responsible for any inaccuracies or omissions in the information provided. In Europe, we see a mixed picture. Italy’s economy grew unexpectedly at 0.6% year-on-year, while German data shows a 0.3% decline in monthly retail sales. These different signals from the Eurozone create a complex situation for the Euro.

Monetary Policy and Market Effects

The biggest news is the rising expectation that the U.S. Federal Reserve will lower interest rates in December. The latest U.S. Consumer Price Index (CPI) report shows inflation cooling to 2.8%, and Non-Farm Payrolls recently fell short of forecasts. This has led the market to anticipate a dovish pivot, which supports gold prices, keeping them just below $4,200 per ounce. For the EUR/USD, keep an eye on the 1.1600 level in the coming weeks. If the Fed cuts rates, the dollar could weaken, pushing this pair towards 1.1655 resistance. Traders might think about buying call options with strikes above 1.1620 to benefit from a potential rise while limiting risks tied to weak German data. This sets up a clear difference in policy between the central banks, a situation we haven’t seen in a while. Throughout 2023, both the Fed and the European Central Bank (ECB) raised rates aggressively to combat inflation. Now, the U.S. seems ready to ease, while Europe’s path remains uncertain. The strong Italian GDP gives the ECB more reason to hold rates steady for a longer time. Trading volumes were low due to the Thanksgiving holiday, but we expect volatility to increase as U.S. traders return next week. This quiet period allowed the market to absorb the Fed’s dovish hints. The real challenge will come with new data releases before the December blackout period. Be prepared for some fluctuations as the market finalizes its expectations for a Fed rate cut. Create your live VT Markets account and start trading now.

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