Germany’s HCOB Composite PMI for September came in at 52, which is lower than the expected 52.4. This indicator measures business performance in both manufacturing and services sectors in Germany. In market news, the US ISM Services PMI is expected to show steady growth in the services sector. The absence of new US Nonfarm Payrolls data makes this report even more significant.

Euro and Pound Updates

Meanwhile, the EUR/USD has risen towards 1.1750 as the US Dollar weakens due to an ongoing government shutdown. GBP/USD is stable above 1.3450, influenced by a slowdown in the US job market. Gold prices have increased due to expectations of more Federal Reserve rate cuts, even as market sentiment remains upbeat. Decentralized Finance tokens, like Ether.fi and PancakeSwap, are currently leading a surge in the cryptocurrency market. Finally, FXStreet has launched a new platform designed to help traders more effectively. Remember, the information provided is for informational purposes only and does not endorse buying or selling any assets. Always conduct thorough research and exercise caution when trading in financial markets.

Federal Reserve Rate Cuts and Currency Movements

The ongoing US government shutdown is creating considerable uncertainty. With no major non-farm payrolls report available, attention is turning to the ISM Services PMI. This could lead to increased volatility in US dollar-based assets. Traders should get ready for significant movement in either direction based on the ISM report, making strategies like straddles or strangles on key currency pairs an intriguing possibility. Expectations for Federal Reserve rate cuts are gaining momentum, with markets anticipating at least two additional cuts before the year ends. The CME FedWatch Tool indicates that the probability of a rate cut in December has risen to over 75% this week, marking a stark shift from the rate hikes of 2023. This dovish sentiment will likely pressure the dollar, making put options on the USD index more appealing. While the Euro is gaining against the dollar, Germany’s PMI reading of 52 indicates that the Eurozone’s recovery is not strong yet. Although this score is a significant improvement from the lower figures in 2023, the lower-than-expected result could limit the EUR/USD increase around 1.1750. Selling out-of-the-money call options on the Euro might be a sensible way to protect against this sluggish growth. The rise of the Pound Sterling above 1.3450 is more about the dollar’s weakness than any UK strength. Economic data from the UK has been mixed; inflation is cooling from the highs seen in previous years, but growth remains slow. For now, trading GBP/USD remains a clear way to engage with the broader US economic narrative. Gold’s price stability above $3,850 an ounce reflects market demand for safety amid US political instability and the potential for lower interest rates. This price point represents nearly double the stable levels around $2,000 seen in 2023, emphasizing a strong long-term trend. We expect that long positions in gold futures will continue to be favored, with price dips seen as buying chances. Create your live VT Markets account and start trading now.

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