The ISM Manufacturing New Orders Index in the United States rose from 48.9 to 49.4 in October, showing a minor improvement in manufacturing activity. At the same time, the Canadian Dollar is weakening further. The Dow Jones Industrial Average has dipped, influenced by investments in artificial intelligence, which are affecting overall market performance.

Policy Measures And Market Reactions

The Federal Reserve’s Cook highlighted that ongoing policies target reducing inflation. Additionally, the Reserve Bank of Australia is expected to keep interest rates steady. The USD/JPY remained stable near multi-month highs, while the USD/CHF hit a three-week high due to the strength of the US Dollar. The EUR/USD is under pressure near the important 1.1500 support level due to the dollar’s rebound. In currency trading, GBP/USD is stabilizing below 1.3150, impacted by a stronger US Dollar. Gold is moving closer to the $4,000 mark as US Treasury yields rise and trade tensions ease.

Cryptocurrency Market Concerns

The cryptocurrency market is facing difficulties, with Ripple (XRP) struggling to rebound, trading over $2.40. Cardano (ADA) has dropped by 6%, trading below $0.58, reflecting negative sentiment among traders. The rise in the ISM Manufacturing New Orders Index to 49.4 is only a small improvement. It’s more about stabilizing rather than showing strong growth. This is the fifth month the index has stayed below 50, indicating a continued contraction in manufacturing. Traders should be careful not to be too optimistic about industrial-related assets and might consider selling call options during any rallies. We think the market is appropriately lowering expectations for a Federal Reserve rate cut, especially after last month’s core inflation report came in high at 3.5%. The chance of a rate cut by March 2026, according to Fed Funds futures, has dropped from over 50% to below 20% in just two weeks. This shift is boosting the dollar’s strength, making long positions in U.S. Dollar Index futures a strong strategy. With the EUR/USD pair testing the critical 1.1500 support level, traders should brace for more volatility. This level held firm last summer, and breaking below it could lead to increased selling. Buying put options on the EUR/USD can provide a way to profit from a possible downturn while managing risk. Traders should be cautious with the British Pound ahead of next week’s Bank of England meeting, as the GBP/USD pair struggles below 1.3150. With recent weak retail sales data, we expect the BoE to adopt a more cautious approach than the Fed, leading to a policy split that favors the dollar. A bear put spread on GBP/USD could be a smart move to take advantage of this expected weakness while limiting costs. Gold’s decline towards $4,000 per ounce is a result of the stronger dollar and the 10-year Treasury yield rising above 4.85%. This situation makes holding non-yielding assets like gold more costly. For those in long positions, writing covered call options can be a smart way to earn income during this decline. The ongoing sell-off in cryptocurrencies like Ripple and Cardano shows a general risk-off attitude in the market. Recent data indicates that open interest in perpetual futures for major altcoins has decreased by nearly 15% over the past week, suggesting that traders are closing positions rather than opening new ones. We recommend against trying to catch these falling prices; instead, buying protective puts or waiting for a shift in market sentiment is a safer approach. Create your live VT Markets account and start trading now.

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