Forex Market Developments

In October, the United Kingdom had 65,018 mortgage approvals, exceeding the expected 64,400. This number shows the actual approvals for that month. Gold is trading above $4,250, keeping its momentum since October 21. There’s growing speculation about a possible interest rate cut by the US central bank. The EUR/USD pair rose above 1.1600, thanks to a general weakness in the US Dollar. All eyes are on US PMI data as people await another potential rate cut. The GBP/USD pair stayed above 1.3200, continuing its positive trend. The US Dollar is facing pressure due to dovish expectations about the Federal Reserve’s future actions. The US ISM Manufacturing PMI data will be released at 15:00 GMT. This data will help gauge overall factory activity.

Projected Broker Performance

FXStreet shares insights on brokers expected to succeed in forex and commodities by 2025. This includes comparisons of trading conditions and account features for traders. FXStreet warns that the information provided carries risks and potential errors. It is for informational use only, and individuals should do their own research before making investment choices. The main theme right now is the ongoing weakness of the US Dollar. Strong market expectations for a Federal Reserve rate cut this month are driving this trend. The CME FedWatch Tool currently predicts over an 85% chance of a 25-basis point cut at the December 18th meeting. This follows last month’s Core PCE Price Index, which was 2.8%, indicating a continued cooling from the highs of 2024. With the US Dollar under pressure, it may be wise to consider going long on currencies like the British Pound. The unexpected rise in UK mortgage approvals to over 65,000 signals a robust housing market. Recent ONS data showed UK inflation dropped to 3.1% in October. This suggests that buying call options on GBP/USD, targeting a rise towards 1.3300, could be a strategic move. The rise of EUR/USD past 1.1600 indicates a clear difference in policy between the Fed and the European Central Bank. While we expect a Fed cut, ECB President Lagarde highlighted last week that the battle against inflation in the Eurozone isn’t finished, giving the Euro a relative strength edge. This supports the case for long positions in EUR/USD futures through December. Gold’s increase above $4,250 is a significant technical and psychological milestone, boosted by a faltering dollar and a cautious sentiment surrounding the Ukraine peace talks. There have been large inflows into gold ETFs, with November data showing the highest net buying by funds since the banking turmoil of 2023. As long as the US Dollar Index stays under pressure, call options on gold futures seem appealing. Today’s US ISM Manufacturing PMI is an important upcoming factor and poses a short-term risk. A much weaker result could heighten expectations for a Fed rate cut, while a stronger-than-expected report might lead to a brief dollar rebound. Traders might want to consider using options straddles on major pairs like EUR/USD to take advantage of increased volatility, regardless of the direction. Create your live VT Markets account and start trading now.

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