In November, the United States Consumer Price Index (CPI) rose by 2.7% from last year. This increase is below the expected 3.1% and down from the 3.1% seen in October. As a result, the GBP/USD currency pair jumped to about 1.3440. This was due to the Bank of England’s recent rate cut and the lower US CPI numbers. Meanwhile, the EUR/USD remained steady around 1.1750, following the European Central Bank’s decision to keep interest rates unchanged.

Gold And Cryptocurrencies

Gold prices approached $4,350 after the US inflation data and updates from European central banks. In the cryptocurrency world, Bitcoin is nearing a breakout above $87,000, while Ethereum is stable at around $2,800. XRP is trading at $1.82, facing lower retail demand, which is affecting its performance. The Bank of England made a significant rate cut to 3.75%, strengthening the British pound. This decision has caused uncertainty in financial markets about whether another rate cut will happen soon. Ripple (XRP) continues to fluctuate between a support level of $1.82 and a resistance level of $2.00. The November CPI data, showing a 2.7% increase—well below the 3.1% prediction—has changed our outlook for next year. We now see a higher chance that the Federal Reserve will cut rates in the first quarter of 2026. This shift leads us to focus on strategies like using derivatives on the Secured Overnight Financing Rate (SOFR) to benefit from lower rates. The US dollar is weakening due to this inflation surprise, a trend we expect to continue into January. Recent findings from the University of Michigan survey show that consumer inflation expectations for the next year dropped to 2.5% in early December, supporting this outlook. As a result, we are looking to buy call options on currency pairs like EUR/USD and GBP/USD to take advantage of further dollar declines.

Gold And Equities

Gold’s rise toward $4,350 is a direct response to the likely lower real yields. As seen in the early 2020s during monetary easing, a less aggressive Federal Reserve typically benefits precious metals. We are considering long gold futures contracts or call options on gold ETFs to leverage this momentum. This inflation data is also positive for equities, as it lowers the discount rate on future earnings. The CBOE Volatility Index (VIX) recently fell to a yearly low of 11.5, indicating less market fear. We believe that buying call options on the S&P 500 or Nasdaq 100 indices presents a favorable risk-reward opportunity in the coming weeks. However, we should stay cautious because just one soft inflation report does not establish a trend. The White House is managing expectations closely, reminding us of misleading inflation signals from 2022 and 2023. The next CPI report in mid-January will be crucial, so using options to manage risk is a wiser choice than holding naked futures positions. Create your live VT Markets account and start trading now.

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