In October, Australia’s private sector credit increased by 0.7%, more than the expected 0.6%. This rise indicates that lending activities in the private sector are picking up. Financial markets showed mixed results: EUR/USD remained steady around 1.1600 due to the US Thanksgiving holiday, while GBP/USD climbed close to 1.3250, driven by expectations of a Federal Reserve rate cut. Gold was priced around $4,200, with market movements influenced by light trading.

Cryptocurrency Market Trends

Cryptocurrency assets such as Pi Network, Sky, and Ether.fi experienced gains, particularly Pi Network, which benefited from a partnership with CiDi games. However, Ripple’s price struggled to recover, hitting resistance at $2.19. With US markets closed for Thanksgiving, UK and European stock indices slipped. Analysts focused on the recent UK budget. The financial landscape is changing, and traders are paying close attention to global events. The market is heavily anticipating a Federal Reserve rate cut in December, leading to a significant weakening of the US Dollar. Recent US Core PCE data for October showed an annualized rate of 2.7%, reinforcing this expectation. Traders might consider strategies like buying call options on EUR/USD and GBP/USD to profit from this potential dollar decline.

Gold and Interest Rate Strategies

The expectation of a dovish Federal Reserve is a key factor pushing gold prices, which are now testing the $4,200 mark. Strong physical demand supports this trend, as central banks have been net buyers for three straight years, according to the latest World Gold Council reports. We suggest that buying gold futures or call options is still a smart strategy to capitalize on this momentum. In contrast, Australia’s economy shows resilience, with private sector credit growing by a surprising 0.7% in October. This could keep the Reserve Bank of Australia adopting a more hawkish stance, highlighting a clear policy divergence. This strengthens the case for holding long positions in AUD/USD through futures or spot contracts. We saw a similar situation in late 2023 and early 2024 when market expectations of Fed pivots caused the dollar to drop sharply and risk assets, along with precious metals, to rally. History indicates that anticipating these policy shifts can be profitable, although they can be volatile. Crude oil remains uncertain, hovering around $59.00 a barrel as the market watches the Russia-Ukraine peace talks. Implied volatility on WTI options has surged above 35%, indicating that traders expect a significant price movement in either direction. A straddle or strangle strategy could be effective to trade this anticipated volatility without guessing the direction. The most straightforward way to position for the Fed’s expected move is through interest rate derivatives. We are looking to profit from lower rates by purchasing futures contracts linked to SOFR. As expectations for a rate cut become reality, these futures prices should continue to rise. Create your live VT Markets account and start trading now.

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