The New Zealand Business NZ Performance of Manufacturing Index (PMI) hit 51.4 in November, indicating a small growth in the manufacturing industry. In other market news, WTI crude oil has bounced back above $57.50 after the U.S. confiscated a Venezuelan tanker. Additionally, the People’s Bank of China set the USD/CNY reference rate at 7.0638, down from 7.0686, impacting currency values.

Currency Movements

The USD/CAD is close to its lowest level since September 17, around 1.3770. In contrast, the NZD/USD has risen above 0.5800 due to disappointing U.S. jobless claims data. Gold prices have climbed above $4,250 thanks to a Federal Reserve rate cut, which has weakened the U.S. Dollar. This increase in gold prices was fueled by high demand from India and a surge in silver. Zcash’s value has increased by 12%, bringing its total gain for the week to about 25%. Meanwhile, Solana’s price fell below $130 after negative market sentiment following the Fed’s hawkish rate cut. In the forex market, EUR/USD has risen as the U.S. Dollar drops, currently trading at 1.1742. GBP/USD has stabilized near recent highs but is encountering resistance at 1.3400 after the Fed’s rate cut. An overview of the top brokers for 2025 points out various strong options for trading, based on factors like spreads, leverage, and regulatory compliance.

Fed Rate Cut Impact

The Federal Reserve’s decision to lower interest rates to a range of 3.50-3.75% has made the U.S. Dollar weaker. This trend will likely continue into the new year, impacting asset positioning against the dollar. This decision aligns with recent economic data. The November jobs report indicated slower hiring than expected, and the latest Consumer Price Index (CPI) showed inflation has fallen to 2.9% year-over-year. These data points suggest that the Fed could implement further cuts in early 2026. In the foreign exchange market, the current conditions favor currencies like the Euro and the Australian Dollar, which are already at three-month highs against the dollar. It may be wise to consider call options on pairs like EUR/USD and AUD/USD for potential gains while managing risk. The favorable Business NZ PMI reading of 51.4 also supports the outlook for currencies linked to commodities. Gold has responded positively, surpassing the $4,250 mark as a weaker dollar and lower interest rates enhance its attractiveness. Historically, periods of easing by the Fed, such as in 2019, have benefited precious metals. Traders are likely to consider futures contracts aiming for a rise toward $4,300. However, it’s important to note that the Fed’s rate cut was a “split” decision, highlighting some caution among policymakers. The CBOE Volatility Index (VIX) is around 18, indicating that the market expects more fluctuations in the coming weeks. This makes volatility-trading strategies, such as options straddles on major indices, worth exploring. Looking ahead, derivative markets have begun pricing in expected future Fed actions. Current data from CME Fed funds futures indicates over a 60% chance of another rate cut by the March 2026 meeting. As long as economic data continues to weaken, we anticipate that the dollar will remain under pressure. Create your live VT Markets account and start trading now.

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