The Canada New Housing Price Index reported a yearly decline of just -0.8% in June, improving from -1% in May. This indicates that the drop in housing prices is slowing down. The EUR/USD currency pair is recovering, moving closer to the 1.1750 level after advances in a US-EU trade deal. In contrast, GBP/USD has reached daily highs near 1.3560, coinciding with shifts in the US Dollar driven by the US-Japan trade agreement.

Gold Market Trends

Gold prices have dipped to a two-day low, falling below $3,400 per troy ounce. This decline is due to reduced trade worries after the US-Japan agreement and potential positive moves in US-EU relations. Cryptocurrencies like Bitcoin, Ethereum, and XRP are facing difficulties, leading to a 3.5% decrease in total market capitalization, now at $3.9 trillion. However, a rise in Open Interest indicates that some investors are still optimistic about the crypto market. During Trump’s second presidency, early months have seen unpredictable policy changes. Despite this, markets have remained steady. His administration focuses on “America First” policies that influence trade, taxes, AI, and national defense.

Canadian Real Estate Outlook

The slower rate of decline in housing prices suggests that the market is stabilizing. Recent data from Statistics Canada shows that the New Housing Price Index dropped only 0.1% year-over-year in May 2024, a significant improvement compared to the steeper declines in late 2023. This presents a potential opportunity for call options on Canadian real estate ETFs, as we expect the market to stabilize. With the EUR/USD pair around 1.07, the disparity in inflation data between the US and the Eurozone presents trading opportunities. While US CPI remains over 3%, Eurozone HICP has cooled to 2.6%. This suggests that the European Central Bank might diverge from the Federal Reserve regarding interest rate cuts. Derivative traders might look to profit from this difference by selling euro call options. The recent trading pattern of precious metals indicates the market adjusting to a “higher for longer” interest rate climate. Holding non-yielding bullion becomes more costly when assets like US Treasury bonds yield 4.7%. We expect continued price pressure on gold, making put options a smart choice for hedging against or speculating on further price drops if rates stay high. The cryptocurrency market is showing a classic divergence. Prices for major assets like Bitcoin are stabilizing, while derivatives open interest has surged, recently exceeding $32 billion for Bitcoin. This suggests that leveraged traders expect a significant price shift even though the spot market momentum is waning. We recommend using options strategies like straddles to take advantage of upcoming volatility, no matter the direction. The political climate, particularly the upcoming US election, is fostering sector-specific uncertainty, similar to the previous administration’s focus. Historically, election years often bring increased market volatility; for example, the VIX index spiked ahead of the 2016 and 2020 elections. We’re preparing for this by utilizing derivatives on sector-specific ETFs, like those related to defense and energy, which could experience notable changes based on Mr. Trump’s policies. Create your live VT Markets account and start trading now.

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