New Zealand’s manufacturing sales increased by 1.1% in the third quarter, bouncing back from a previous decline of 2.9%. This increase indicates a positive shift in the country’s manufacturing sector. In other news, the Japanese Yen gained strength against the weakening US Dollar due to different policies from their central banks. The US Dollar Index dropped to around 98.50 after a recent Federal Reserve rate cut, with upcoming jobless claims data also affecting its value.

The Pound Sterling Rise

The Pound Sterling rose against the US Dollar following another Federal Reserve rate cut, hitting levels around 1.3400. Meanwhile, gold faced resistance at the $4,250 mark amid changes in Federal Reserve policies. American Bitcoin Holdings added 416 BTC to their stash, bringing their total to 4,783 BTC, making them the 22nd largest Bitcoin treasury. Hyperliquid’s value exceeded $28, even as the overall cryptocurrency market saw losses. The Federal Reserve predicts that interest rates will average 3.4% by the end of 2026, with only minor rate cuts expected between 2026 and 2027. This outlook influences the overall economic landscape.

US Dollar Weakness Anticipation

With the Federal Reserve’s third consecutive rate cut, we can expect the US Dollar to weaken further in the coming weeks. The Dollar Index is already low at about 98.50, and any additional dovish signals may drive it even lower. Strategies based on derivatives should focus on benefiting from a declining dollar against major currencies. The EUR/USD is currently testing the 1.1700 level, a significant resistance not surpassed since the summer of 2021. As the European Central Bank takes a less dovish approach, buying call options on the EUR/USD may offer good potential. Watch for the upcoming US weekly jobless claims, as they will provide important insights for market direction. In interest rate markets, the Federal Reserve’s expectation of just 50 basis points of cuts for 2026-2027 suggests that this easing cycle might happen quickly. Consequently, we may see a steepening yield curve, where long-term rates do not decrease as fast as short-term rates. Monitoring futures contracts across the curve can help position for this possible change. Gold’s test of $4,250 per ounce is a result of the weak dollar and lower interest rates, continuing the bull run that started after the high inflation of 2022-2023. As long as the Fed maintains its accommodative policy, buying call options on gold futures could capture further gains. However, we should be cautious about the high price level and consider protective put options. Oil presents a different scenario, with West Texas Intermediate (WTI) dropping below $59 amid hopes for a peace deal in Ukraine. This is a significant decline from the $80-plus levels observed in 2023 when OPEC+ was cutting production aggressively to stabilize the market. This situation is highly sensitive to news, making options strategies that could profit from increased volatility appealing. The encouraging data from New Zealand, revealing manufacturing sales rebounding to 1.1% from a -2.9% decline, offers a specific trading opportunity. This domestic strength, combined with the overall US dollar weakness, supports the case for the Kiwi dollar. This signals a chance to consider long positions in the NZD, potentially through NZD/USD call options. Create your live VT Markets account and start trading now.

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