In November, average hourly earnings in the United States rose by just 0.1% from the previous month, falling short of the expected 0.3%. This led to changes in currency values, with GBP/USD reaching a two-month high and EUR/USD hitting a three-month high. US Retail Sales for October were steady at $732.6 billion, matching what the market expected. This followed a small revised increase of 0.1% in September, which was lower than the anticipated 0.3%.

Manufacturing and Services PMI Performance

At the same time, the US S&P Global Manufacturing PMI dropped to 51.8, while the Services PMI decreased to 52.9 in December. The unemployment rate rose to 4.6% in November, indicating mixed signals in the job market. Gold prices have benefitted from the weak US data, rising above $4,300. After a slow start today, the US dollar’s weakness has shifted the market dynamics. Meanwhile, BNB prices are around $855, facing pressure from negative on-chain indicators. Currency traders are discussing plans for 2025, with various brokers noted for differing market conditions. As of December 16, 2025, economic indicators suggest a slowdown in the US. November’s average hourly earnings only rose by 0.1%, well below the expected 0.3%, suggesting weaker inflation. Alongside declining PMI figures and stagnant retail sales from October, these signs reinforce the narrative of a cooling economy.

Federal Reserve And Market Expectations

Recent data has influenced expectations for the Federal Reserve’s next actions. Following the FOMC meeting on December 11th, futures markets predict a high chance of a rate cut in the first quarter of 2026. The CME FedWatch tool shows a 75% likelihood of a 25-basis-point cut by March, a significant change from last month. For those trading currency derivatives, it looks like the US dollar may weaken further. Buying call options on pairs like EUR/USD and GBP/USD could be beneficial as these currencies are gaining strength. Selling call options on the US Dollar Index (DXY) might also be a smart strategy for profit or protection against further dollar declines. In the stock market, a more dovish Fed usually supports stock prices. Traders should consider buying call options on major indices like the S&P 500, as lower interest rates enhance the present value of future earnings. This scenario mirrors the market shift we experienced in late 2023, which led to a significant rally. The market conditions are also favorable for gold, which benefits from a weaker dollar and lower real interest rates. We can expect additional gains for gold, making long positions via futures contracts or buying call options on gold ETFs an attractive option, especially as holding gold becomes less costly. Considering the changing economic outlook, increased market volatility is likely. We might use options to trade this by employing strategies like buying straddles on major indices if a large price movement is expected but the direction is unclear. The CBOE Volatility Index (VIX) is currently around 14.5, a low point that could make long volatility positions a cost-effective hedge against unexpected market shifts. Create your live VT Markets account and start trading now.

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