Australia’s trade balance for September was better than expected, reaching $3.938 billion, compared to the forecast of $3.850 billion. This boost helped strengthen the Australian Dollar. Gold prices stayed below $4,000, failing to maintain a previous rise. The US Dollar pulled back due to renewed risk flows during an ongoing government shutdown.

Euro and Pound Update

EUR/USD traded sideways and remained below the 1.1500 level. On the other hand, GBP/USD found temporary support above 1.3000 after recent drops. Decred, Internet Computer, and Quant saw significant gains, but they faced mixed signals as they approached key resistance levels. Stellar (XLM) broke out of a downward trend, suggesting further potential losses. Market sentiment was mixed, even after the Federal Reserve’s rate cut and other developments. The Australian and British currencies took different paths ahead of their respective central bank meetings. The US Dollar is showing mixed signals, leading to chances for volatility. The ongoing government shutdown is now the longest on record, adding political uncertainty. However, strong economic indicators, like October’s ISM Services PMI, continue to support the dollar. Reviewing strong labor market data from 2024, we believe that fundamental economic strength will outweigh political concerns in the medium term.

Australian and Canadian Currencies

The Australian Dollar appears strong after a trade surplus for September of nearly $4 billion. This strength is mainly due to high global demand for key exports such as iron ore and liquefied natural gas, a trend that has continued since late 2023. With the Reserve Bank of Australia meeting next week, traders might consider buying call options in anticipation of a potential rise in the AUD/USD. In the energy market, we expect further weakness in WTI crude oil, which is currently struggling below $60 per barrel. Concerns about global oversupply, driven by increased non-OPEC production throughout 2024, suggest that buying put options or taking short futures positions could be wise. Gold remains stuck below $4,000, so we recommend a range-bound strategy, like selling strangles, until it breaks out of its current pattern. For the British Pound, the recent rise above 1.3000 seems fragile, and we see this as a selling opportunity ahead of the Bank of England meeting next week. Meanwhile, the Canadian Dollar is weakening, pushing the USD/CAD exchange rate towards its highest levels in seven months near 1.4100. The combination of a robust US Dollar and falling oil prices paves the way for continued USD/CAD strength. Create your live VT Markets account and start trading now.

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