China’s National Bureau of Statistics has reported that the Manufacturing Purchasing Managers’ Index (PMI) for November is at 49.2, which is in line with expectations. A PMI below 50 shows that the manufacturing sector is shrinking. The Euro has stayed above the 1.1600 level, thanks to 87% of traders expecting gentle monetary policy changes in December. Meanwhile, gold has remained stable above $4,200, as the likelihood of a rate cut next month supports rising precious metal prices.

Silver Hits Record High as Oil Prices Rise

Silver soared to a record high, exceeding $56, driven by strong market energy. Oil prices also climbed amid peace talks between Russia and Ukraine, shifting attention to the upcoming OPEC+ meeting. In the currency market, EUR/USD rose above the 1.1600 mark, while GBP/USD had mixed results around 1.3230. Cryptocurrencies like Bitcoin and Ethereum struggled to recover from a major market crash that resulted in a sell-off of $19 billion in digital assets. Ripple traded within a tight range, showing a standoff between buyers and sellers. Next week will bring important US economic data that may affect Federal Reserve decisions. This data includes ISM PMIs, ADP employment numbers, and PCE inflation, which could shape market predictions. The market expects an 87% chance of a Federal Reserve rate cut in December, which is causing a notable drop in the US dollar. Investors should consider options strategies that take advantage of further dollar weakness, especially against the Euro, which remains steady above 1.1600. The VIX index has been falling for weeks, indicating that traders are quite comfortable as key data releases approach.

Important Week Ahead for US Economic Data

Next week is critical because several US data points, including ISM manufacturing, ADP employment, and PCE inflation, will challenge this dovish outlook. If any data comes in stronger than expected, it could trigger a sharp turnaround, reversing trades and pushing the dollar higher. We need to be prepared for potential volatility. The market’s expectation for a rate cut strengthened after the last core PCE report indicated inflation easing to an annual rate of 3.1%. Additionally, the latest jobs report showed only 155,000 new jobs, which was below expectations. Historically, the first cut in a Fed rate-cutting cycle often leads to more cuts in the following months. This suggests that the dollar may continue to weaken. Gold has decisively surpassed $4,200 an ounce, and there could be more gains if US data shows an easing economy. With silver hitting a record high above $56, traders might consider call options for both metals. The gold-to-silver ratio is now about 75, historically a good level for value opportunities. WTI crude oil has reacted positively to peace talks between Russia and Ukraine, but the upcoming OPEC+ meeting will be the main focus in the weeks ahead. Any indication of production cuts could drive prices up, so straddles might be a strategy to capitalize on potential volatility surrounding the meeting. However, if OPEC+ decides to maintain production levels, prices could drop back toward the lows we saw in the third quarter. China’s manufacturing PMI at 49.2 indicates a second consecutive month of contraction, further supporting the idea of a global slowdown. This softness may limit significant rallies in industrial metals and currencies that rely on Chinese growth, like the Australian dollar. This situation puts pressure on the Fed to implement policies that support the global economy. After the significant $19 billion sell-off during the October 10th flash crash, interest in cryptocurrencies remains low among retail investors. Caution is advised for long derivative positions in Bitcoin and Ethereum, as recent recovery efforts have been limited by low trading volume. Until we see increased activity in the crypto market, the risk of another sharp downturn stays high. Create your live VT Markets account and start trading now.

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