Mexico’s industrial output improved in September, showing a reduction in its year-on-year decline from -3.6% to -2.4%. This marks a positive recovery trend compared to previous months. In the United Kingdom, the unemployment rate rose to 5% for the three months ending in September, with a drop of 22,000 jobs during that time. These developments have led to expectations for the Bank of England to cut interest rates.

Gold’s Performance

Gold is holding strong, trading at over $4,100 per ounce. A weak US dollar and cautious market conditions are helping gold’s performance. Bitcoin remains above $105,000 as of Tuesday, despite a slight drop from earlier highs. This fluctuation shows decreased demand from both institutional and retail investors. In the cryptocurrency space, Bitcoin Cash increased by 1%, continuing its upward trend for three days. Data indicates a rise in capital inflows for BCH futures, suggesting a buying advantage. Investors should exercise caution, as an FXStreet article advises doing thorough research before entering high-risk investments. Forward-looking statements come with uncertainties that require careful consideration.

US Dollar Weakness

The current weakness of the US dollar presents a great opportunity in the coming weeks. The latest Non-Farm Payrolls report for October showed only 130,000 new jobs, strengthening the case for a Federal Reserve rate cut in the first quarter of 2026. Derivative traders might consider buying puts on the Dollar Index (DXY) or selling USD futures to benefit from this expected decline. A similar situation is unfolding for the British Pound. UK unemployment is a persistent issue, with the rate hitting 5% in late 2024. The latest data from the Office for National Statistics confirms it has slightly increased to 5.1%. This situation supports the idea of a potential Bank of England rate cut, making puts on GBP/USD an attractive strategy to hedge against further GBP weakness. In this context, bullish positions on the Euro and the Canadian dollar are appealing. The EUR/USD pair is testing the 1.1600 level, and rising WTI crude prices, which surpassed $85 a barrel last month, are benefiting the CAD. Using call options on EUR/USD or put options on USD/CAD could effectively leverage the weaknesses in the dollar and the strengths in commodities. While recent data shows improved industrial output in Mexico, it still reflects a year-over-year contraction. According to the latest INEGI figures, the -2.4% reading is less severe than before but still indicates sluggishness linked to reduced US demand. Although the Peso might gain against a weak dollar, this underlying economic softness may limit its potential growth. Gold’s recent pullback from the $4,150 resistance level seems to be just temporary profit-taking, not a sign of a trend change. The possibility of lower interest rates in the US remains a strong long-term factor for non-yielding assets. This dip could be a good opportunity to establish bullish positions, perhaps using bull call spreads to minimize upfront costs and manage risk. Create your live VT Markets account and start trading now.

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