Canada’s S&P Global Manufacturing PMI dropped to 48.4 in November, down from 49.6 in October. This indicates ongoing contraction in the manufacturing sector, as any reading below 50 suggests a decline. In other news, the Dow Jones Industrial Average faced pressure from concerns related to AI and a downturn in Bitcoin values. Meanwhile, gold prices surged to a five-week high of $4,264, driven by speculation surrounding potential rate cuts from the Federal Reserve.

Currency Markets

The EUR/USD exchange rate moved closer to 1.1600 as the US dollar strengthened due to rising yields. The GBP/USD pair declined to about 1.3200, also influenced by the strong dollar, despite forecasts of more accommodating actions from the Fed. In the cryptocurrency space, nearly $2 billion has been withdrawn from Ethereum traders since 2020. China’s role in global markets is shifting from being a source of revenue to an innovation hub, creating new growth opportunities for businesses. SB Seker, head of Asia Pacific at Binance, discussed the changing crypto market cycle and shared future plans for Binance. A comprehensive guide on top brokers and trading platforms for 2025 was also shared, highlighting options for those interested in currency, gold, and CFDs. The market is banking on the Fed cutting rates soon, which is lifting gold prices toward $4,300 per ounce. We recommend considering call options on gold futures, as this upward trend is linked to the inverse relationship between gold prices and falling real yields. Historically, when the Fed hinted at a pivot, such as in late 2023, gold typically experienced a strong multi-month rally.

Market Opportunities

Despite the dollar’s short-term rise, the expectation of Fed rate cuts suggests it will weaken in the coming weeks. Current interest rate futures indicate an over 80% chance of a rate cut by the March 2026 meeting. This creates an opportunity to buy puts on the US Dollar Index (DXY) or take bullish positions in pairs like EUR/USD. Canada’s manufacturing sector is showing a clear slowdown, with the S&P Global PMI at 48.4, indicating contraction below 50. This economic weakness makes the Canadian dollar susceptible, even though oil prices remain strong. We think taking long positions in USD/CAD through call options provides a favorable risk-reward ratio. OPEC+’s decision to pause production increases stabilizes crude oil prices, a strategy they successfully used in 2023 and 2024 to manage supply. With supply risks bolstering the market, WTI crude futures are likely to stay high. Bull call spreads on WTI could be a cost-effective way to benefit from potential price increases. We also see some caution in equities, with the Dow Jones feeling the impact of AI sector concerns and a falling Bitcoin. This might be an ideal time to add downside protection to investment portfolios. Buying puts on the S&P 500 or call options on the VIX index can help hedge against possible market volatility. Create your live VT Markets account and start trading now.

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