Australia’s S&P Global Composite PMI dropped to 52.1 in October, down from 52.6 in September. This change indicates a slowdown in the country’s economic activity. In currency news, USD/CAD reached seven-month highs above 1.4100, affected by falling crude oil prices. At the same time, WTI crude oil prices fell to around $60.00 due to increasing US inventories.

Gold and Cryptocurrency Challenges

Gold prices went below $3,850, struggling against a strong US Dollar but supported by lower US Treasury bond yields. The cryptocurrency market also faced difficulties, with Bitcoin falling below $100,000, resulting in $2 billion in liquidations. The decentralized exchange Balancer suffered a hack that resulted in $120 million in losses. The platform confirmed that it could not stop the breach, impacting its older pools. Central banks, including the European Central Bank, are key players in currency movements. The Euro rose as traders expected a cautious ECB policy, allowing EUR/USD to recover to around 1.1490. GBP/USD fell consistently, hurting the Pound Sterling’s value over 12 trading sessions. This drop pushed the currency to a new low against the US Dollar.

Australia’s Economic Slowdown

Australia’s composite PMI decrease to 52.1 suggests a cooling economy, although it is still in expansion territory. This reflects a broader slowdown observed in developed economies in late 2023, indicating that growth is becoming more fragile. Since Australia is closely linked to China’s economy, this slowdown puts downward pressure on the Australian dollar. The US dollar remains strong, and it is expected to continue this trend in the near future. The Dollar Index (DXY) has stayed above 106 since the Federal Reserve signaled a hawkish pause in its October 2025 meeting, indicating low chances of rate cuts. This strength is shown as USD/CAD hits seven-month highs, and the Pound falls below 1.3100. Falling crude oil prices are influencing currency markets, particularly for commodity-linked currencies. With WTI struggling near $60 a barrel and a surprising increase in US inventories of 3.6 million barrels last week, supply is exceeding demand. This creates challenges for currencies like the Canadian dollar. Given these factors, holding a short position on the AUD/USD seems wise, especially as it lingers around 0.6450. China’s cautious economic signs, including the PBOC setting a weaker yuan reference rate, will continue to affect the Australian dollar negatively. There appears to be little reason for this trend to change in the upcoming weeks. The British pound’s sharp decline also deserves attention, as it is quickly losing value against the dollar. This kind of momentum resembles the volatility seen after the UK’s mini-budget crisis in 2022, suggesting that traders should be careful when trying to catch a bottom. Options strategies that profit from further declines or high volatility may be effective. Gold is caught between a strong US dollar and the risk of adverse events, such as a potential US government shutdown. While the strong dollar typically limits gold’s price, safe-haven buying might offer support, keeping it within a range. We should consider using straddles or strangles to trade on the potential for a breakout in either direction rather than making a straightforward directional bet. Create your live VT Markets account and start trading now.

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