Spain’s HCOB Manufacturing PMI for November was 51.5, which is lower than the expected 52.5. Meanwhile, the USD/INR is gaining strength as foreign investors are selling off their Indian stock holdings. The Pound Sterling is struggling due to expectations that the Bank of England will take a dovish stance. In contrast, the Euro is still rising against the US Dollar, even after weak manufacturing numbers from the Eurozone, staying above 1.1600 amidst a softer market sentiment.

Gold And Cryptocurrencies

Gold is trading near its highest point in six weeks, boosted by a weaker US Dollar following dovish comments from Federal Reserve officials. At the same time, Bitcoin, Ethereum, and Ripple are down over 4% as December begins, with ongoing selling pressure threatening their market values. As December starts, the financial outlook has shifted, with US and European equity futures showing negative trends. This change comes after stocks had finished November with slight gains, influenced by a crypto market downturn. The weakening US Dollar is the key focus for us right now, driven by expectations of interest rate cuts from the Fed. This trend is propelling gold to a six-week high and supporting the Euro, highlighting interest in derivatives that benefit from a declining dollar, like puts on the DXY index. The CME’s FedWatch tool shows over a 70% chance of a rate cut by March 2026, reinforcing this outlook.

Currency And Market Trends

Despite disappointing manufacturing data from Spain, the EUR/USD pair is rising. However, we see this as a negative for the dollar, rather than a positive for the euro. Recent Eurozone inflation data was slightly below the ECB’s 2% target, leaving no reason for aggressive action. This suggests potential for increased volatility in the pair, making options strategies like long straddles worthwhile. The British Pound is underperforming as the market expects a dovish Bank of England, which is supported by last month’s 0.5% drop in UK retail sales. This scenario makes shorting Sterling against the Euro a more promising strategy than shorting it against the already weak dollar. Remembering the BoE’s quick shift to easing during past uncertainties, we anticipate similar moves now. A significant sell-off in the cryptocurrency market has erased over $150 billion from the total market cap in just 24 hours, creating a negative environment for risk. This decline in digital assets is affecting equity futures and echoes the 2022 crypto slump that preceded a stock market downturn. This is a strong sign to hedge long portfolios by buying put options on major indices like the S&P 500 in the coming weeks. In contrast to the nervous sentiment, copper prices have surged to record highs, likely driven by factors such as the easing of US-China trade tensions and low inventories. LME copper stockpiles are at their lowest since 2005, indicating a supply squeeze. This difference suggests we should trade each theme separately, possibly considering call options on industrial metal producers instead of making a broad bet on global growth. Create your live VT Markets account and start trading now.

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