Consumer credit in the United States rose by $9.18 billion in October, missing the expected increase of $10.5 billion. This suggests that consumers are being more cautious when it comes to borrowing.

Currency Movements

The EUR/USD exchange rate stayed around 1.1650, influenced by US inflation and factors from the European Central Bank (ECB). The Canadian dollar gained strength after a positive labor report, while the Dow Jones Industrial Average rose as inflation slowed, increasing hopes for a rate cut. Gold started strong at $4,200 but later dipped as the dollar gained strength following stable PCE data. Expectations around Federal Reserve policy shifts are affecting market outlooks, including for cryptocurrencies like Bitcoin and Ethereum. Ripple is trading at $2.06 but continues to face challenges despite healthy inflows into XRP spot ETFs. In 2025, traders are encouraged to explore various brokers, paying attention to low spreads, leverage, and trading platforms to improve their trading strategies. The latest consumer credit report indicates a borrowing increase of $9.18 billion, which is below the expected $10.5 billion and suggests a cautious consumer base. This marks the third month in a row of slowing credit growth, a trend not seen since the economic instability of 2023. This decline strengthens the belief that the Federal Reserve may need to intervene to support the economy. With the Federal Reserve meeting set for December 10, market expectations are high, indicating more than a 90% chance of a 25-basis-point rate cut. This belief is further backed by recent data showing Core PCE inflation, the Fed’s preferred measure, has cooled to 2.4% year-over-year. The market is almost fully pricing in a rate cut, creating a tricky situation for the upcoming weeks.

Strategic Trading Considerations

Since gold has already risen to $4,200 an ounce in anticipation of the rate cut, holding long positions could be risky. We recommend that traders consider buying protective put options on gold mining ETFs to guard against a potential “sell the news” scenario or if the Fed adopts a more hawkish stance. This strategy offers defined risk if the market’s expectations do not materialize. The general consensus is that the US Dollar is weak, pushing currency pairs like EUR/USD to around 1.1650. However, this positioning leaves the dollar at risk of a sharp bounce if the Fed’s statement is less dovish than anticipated. We’re looking into buying inexpensive, short-term call options on the US Dollar Index (DXY) as a low-cost way to benefit from a possible reversal. Implied volatility for major stock indices has dropped significantly, with the VIX hovering around 13, showing market complacency ahead of the Fed’s decision. This low volatility results in cheaper option premiums. We see a chance to buy straddles on the S&P 500, allowing us to profit from a significant price movement in either direction following the announcement. Create your live VT Markets account and start trading now.

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