**Retail Sales and Job Growth Analysis** Retail sales data is part of a broader analysis that includes Nonfarm Payroll data. For October, this data showed a dip in job growth compared to previous months. This decline in job growth could affect monetary policy and market expectations. Analysts predict various impacts on future economic indicators and decisions by the Federal Reserve and other central banks regarding interest rates and economic support. The mixed retail sales report for October 2025 hinted at the economic slowdown we’re currently experiencing. Recent figures support this, such as the November jobs report showing hiring has slowed to just 120,000. Inflation is also easing, with the latest Consumer Price Index for November indicating core inflation at an annual rate of 2.8%. **Federal Reserve Policy and Market Strategy** This economic slowdown is changing expectations for Federal Reserve policy moving into early 2026. Traders are using SOFR futures to predict a high chance of at least two interest rate cuts by the end of the second quarter next year. This is a significant shift from a few months ago when the focus was on keeping rates high for a longer period. The uncertainty about when the Fed will make its first move is creating opportunities in the volatility markets. We are preparing for potential market fluctuations by utilizing options on the VIX index. Reflecting on the pivot from late 2023, we’ve seen that even an anticipated policy change can lead to short-term instability before markets stabilize. The likelihood of lower U.S. interest rates compared to other major economies is weakening the dollar. As a result, we are considering buying call options on the EUR/USD pair, expiring in March 2026. This strategy allows us to benefit from a declining dollar as the narrative around rate cuts develops. Expectations of monetary easing usually boost equities, particularly technology and growth stocks that are sensitive to interest rates. We are increasing our exposure through call spreads on the Nasdaq 100 index (NDX). This strategy enables us to engage in a potential rally while also managing our risk if the economic slowdown is more severe than anticipated. Create your live VT Markets account and start trading now.

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