Russia’s unemployment rate for September is 2.2%, which is better than the expected 2.3%. This suggests that the economy is stable despite outside pressures. In contrast, global financial markets are facing challenges. The Euro has weakened against the US dollar after the Federal Reserve’s recent decision, with the EUR/USD falling below the 1.1600 support level. The British pound has also dropped to a six-month low, around 1.3140, as expectations rise for possible rate cuts by the Bank of England.

Fluctuations in Commodity Markets

Commodity markets are also seeing changes. Gold prices have decreased to about $3,950 per troy ounce due to a stronger US dollar. In the cryptocurrency world, Ripple (XRP) continues to rise, trading above $2.65, driven by hopes for ongoing monetary easing from the Federal Reserve. Looking ahead, the European Central Bank (ECB) is expected to keep its current monetary policy. In December, the ECB may slightly raise its growth forecasts. Overall, financial markets are influenced by both local and global economic factors. Russia’s unemployment rate of 2.2% in September is lower than expected. This shows the labor market is tight, a trend we’ve seen develop over the last two years. In late 2023, the unemployment rate fell below 3%, a record low since the Soviet era. This new figure indicates that the domestic economy is holding strong despite outside challenges, which is important globally, but it’s not our main strategy driver.

Impact of The US Federal Reserve

The key event affecting our decisions is the US Federal Reserve’s recent “hawkish cut,” which has boosted the US dollar significantly. This indicates that while a cut has been made, there won’t be aggressive easing, surprising many in the market. Therefore, we should prepare for continued dollar strength against other major currencies in the short term. The British Pound is particularly at risk, having dropped to around 1.3140. The market is now expecting more significant rate cuts from the Bank of England, widening the policy gap between the UK and the cautious US. This makes shorting the GBP/USD pair appealing, especially through futures or options. Gold’s decline to $3,950 is directly linked to the stronger dollar and rising US Treasury yields. Over the years, we have seen that a strong dollar makes non-yielding assets like gold less attractive. We can expect this trend to continue, creating challenges for the precious metal. Given this situation, we should focus on strategies that take advantage of a strong US dollar and differing policies. This might include buying put options on the EUR/USD, which has already fallen below the 1.1600 support level, and on the GBP/USD as well. For commodities, it may be wise to hedge long physical gold positions with puts or consider bearish plays on gold futures. Create your live VT Markets account and start trading now.

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