In September, pending home sales in the US showed no growth, falling short of the expected 1.7% increase. The Federal Reserve is expected to lower interest rates after its October meeting. Many are looking forward to comments from Fed Chair Powell since there hasn’t been much new economic data. Other market highlights include WTI crude oil prices rising due to a drop in inventory and anticipation of the Fed’s interest rate decision. Gold prices held steady as traders looked for a soft approach from the Fed. At the same time, the EUR/CAD pair dropped because the Bank of Canada hinted at stopping rate cuts amid tariff worries.

Key Forecasts And Analysis

Predictions include the EUR/USD reaching daily highs around 1.1670 and GBP/USD bouncing back to 1.3240, while gold prices may retreat to $4,000. Markets are also eagerly waiting for outcomes from the European Central Bank meeting, which ties into broader economic discussions. This information is only for your reference and not a guide for trading. Investing carries risks, including the potential for complete capital loss. FXStreet does not guarantee accuracy or provide personalized investment advice. The reader is fully responsible for any losses. With the Federal Reserve likely to lower rates after its October meeting, a significant policy change is on the horizon. The latest home sales data for September, remaining flat at 0% rather than showing the expected 1.7% growth, gives the Fed further reason to make a move. The weakness in housing signals that earlier rate hikes are now impacting the economy.

Market Volatility And Fed Announcement

A recent government shutdown complicates this decision, leading to a lack of fresh data for officials. This situation harks back to October 2013 when the Fed postponed tapering asset purchases due to uncertainties caused by a shutdown. Without new data, we should expect higher market volatility, as the Fed’s announcement could be more surprising than usual. For those trading interest rates, this environment suggests preparing for lower yields. Current market pricing indicates over a 90% chance of a 25-basis-point cut. Options on SOFR futures may help manage risk around the Fed announcement, making purchasing volatility a smart strategy given the current uncertainties. In currency markets, the anticipated Fed rate cut is putting pressure on the US dollar. This is evident with the EUR/USD approaching 1.1670, while currencies like the Canadian dollar, backed by more hawkish central banks, are gaining strength. Traders might explore derivative strategies that speculate on ongoing dollar weakness against various other currencies. This dovish view bodes well for gold, which typically shines during falling interest rates. With gold currently steady near $2,850 an ounce, buying call options could be a way to benefit from a potential price jump following the Fed’s decision. This could also serve as a hedge against growing economic uncertainties. Additionally, WTI crude oil has gained momentum, recently surpassing $95 a barrel thanks to a significant drop in inventories. However, cutting rates to address economic slowdown could hint at weaker energy demand in the future. Traders may want to consider options to safeguard long positions from any potential market reversal, especially if recession fears intensify. Create your live VT Markets account and start trading now.

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