The U6 underemployment rate in the United States dropped to -5% in November, down from 8% in October. This change shows that the labor market is improving. Retail sales in the US stayed steady at $732.6 billion in October. This came after a slight rise of 0.1% in September, which did not meet expectations for another 0.1% increase.

Gold Prices Rise Due to Weaker US Dollar

Gold prices went up and reached above $4,300 due to a weaker US dollar. The US unemployment rate also rose to 4.6% in November. Additionally, PMI data showed a slowdown in growth for the private sector in December. The US S&P Global Manufacturing PMI fell to 51.8, and the Services PMI decreased to 52.9 in December. These numbers indicate less growth in the manufacturing and service sectors compared to earlier months. Major currency pairs like EUR/USD and GBP/USD gained value as the US dollar weakened. The EUR/USD approached 1.1800, while the GBP/USD hit its highest point since mid-October, influenced by weak US employment data. BNB (Binance Coin) dropped below $855, influenced by negative signals. This decline in BNB happened alongside increased retail activity and poor market sentiment.

US Economic Data is Confusing

Recent US economic data presents a mixed picture. The U6 underemployment rate seems unusual and should be viewed skeptically until confirmed, especially since other important indicators show a slowdown. For example, November added only 64,000 jobs, and the unemployment rate rose to 4.6%. Markets appear to overlook the U6 anomaly, focusing instead on the broader job data and falling PMI figures. This situation has put pressure on the US dollar, which we expect to continue into the new year. Markets are anticipating over a 75% chance of a Federal Reserve rate cut in the first quarter of 2026, according to the CME FedWatch tool. This suggests that the dollar is likely to keep weakening. Traders should consider buying call options on pairs like EUR/USD and GBP/USD for potential gains while managing risk. Gold’s rise above $4,300 is directly linked to the weak dollar and increasing economic uncertainty. This trend mirrors what happened during the 2020 financial crisis, when a dovish Fed and stimulus measures led to a surge in precious metals. Taking long positions in gold futures or call options may be wise to take advantage of this shift to safety and the dollar’s decline. The outlook for stock indices is more uncertain, leading to a potentially volatile market. While slow economic growth usually hurts stocks, the chance of rate cuts could provide some support. This conflict between weak growth and accommodating monetary policy suggests there could be significant price swings ahead. Given this uncertainty, options that capitalize on volatility are appealing. The VIX has risen from its fall lows and is now around 22, indicating growing investor concern. We suggest traders look into buying straddles on the S&P 500, a strategy that could pay off if the market moves significantly in either direction soon. Create your live VT Markets account and start trading now.

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