In August, South Korea’s money supply growth rose from 6.4% to 6.8%. This indicates shifts in the country’s monetary conditions. The EUR/GBP currency pair approached 0.8700 as the French government considered postponing pension reforms. Silver prices (XAG/USD) bounced back towards $52.50, remaining in an overbought area.

Gold’s Value and Yen’s Performance

Gold’s price came close to $4,200, showing signs it could keep climbing. The Japanese yen held steady against a weak US Dollar, with the 151.00 level being vital. The USD/CHF pair fell toward 0.8000 as the US Dollar declined. EUR/CAD seemed ready to test a multi-year high around 1.6400. The EUR/USD pair showed strength by rising above 1.1600 after Jerome Powell hinted at possible rate cuts. GBP/USD also improved to about 1.3350, boosted by growing expectations for Federal Reserve rate cuts in 2025. Gold pulled back from its record highs but stayed well-positioned amid US-China trade tensions and expectations of Federal Reserve rate cuts. Bitcoin, Ethereum, and Ripple faced resistance at key points as traders watched for their next moves.

Signals from the Fed

The Fed is sending clear signals that more rate cuts are likely in 2025, putting consistent pressure on the US Dollar. Futures markets now suggest an over 85% chance of another cut by year-end, especially after last week’s Core PCE data missed forecasts. This overall weakness of the dollar opens up opportunities for our trading strategies in the next few weeks. With the dollar slipping, buying call options on pairs like EUR/USD and GBP/USD seems appealing, aiming for strikes above 1.1700 and 1.3400, respectively. The policy outlook is stark since the Bank of England hasn’t indicated a forthcoming easing cycle, unlike the Fed. This strategy lets us benefit if the dollar continues to fall. Even as gold nears $4,200, caution is warranted since the rally appears overextended, with a 14-day RSI remaining above 80 for weeks. We see a shift toward silver, where call spreads might provide better risk-reward, as it tries to catch up to gold. The gold-to-silver ratio has recently dropped from 85 to below 80, supporting the idea that silver has more upside potential. We’re also paying attention to Asia, where South Korea’s money supply growth hit 6.8% in August. This type of monetary growth, alongside a weak US dollar, has historically boosted South Korean stocks. We should consider buying call options on KOSPI futures to take advantage of this potential regional strength. Despite these positive trends, risks like renewed US-China trade tensions require us to stay protected. The VIX index, although down from its recent highs, remains above 18, showing that underlying market uncertainty still exists. Maintaining some long volatility positions or buying puts on USD/JPY can help safeguard us if market sentiment shifts suddenly. Create your live VT Markets account and start trading now.

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