The ISM Services New Orders Index in the United States jumped to 56.2 in October, up from 50.4. This increase indicates a positive trend in new orders in the American service sector. The Dow Jones Industrial Average rose by 300 points, suggesting a market recovery. On the other hand, WTI crude oil fell below $60 due to an unexpected rise in inventory reported by the EIA.

Currency Market Dynamics

In the currency market, EUR/USD struggles to stay above the 1.1500 mark, even with better-than-expected US economic data. The GBP/USD is staying steady, remaining below 1.3050, as attention shifts to the upcoming Bank of England meeting. Gold increased by more than 1%, nearing $4,000 per troy ounce, driven by changes in US Treasury yields. Meanwhile, Ethereum is gaining momentum, stabilizing around the $3,350 support level after recent drops. Next week could test risk sentiment, influenced by statements from the Federal Reserve, the US Supreme Court, and economic data affecting the Dollar’s strength. The Australian and British currencies may move in opposite directions as their central banks prepare for meetings. Stellar (XLM) may face more losses, with a possible 15% correction due to soft retail demand. We are observing strong US services data, with the ISM New Orders rising to 56.2, a level we haven’t seen in over a year. This indicates the economy’s solid foundation, even with a record-long government shutdown in its fifth week. Given these mixed signals, traders might want to prepare for increased market volatility. Historically, the VIX tends to rise by 15-20% during prolonged shutdowns, similar to what we experienced in 2018-2019.

US Dollar’s Continued Strength

The US dollar looks poised to stay strong, driven by robust domestic data compared to stagnation elsewhere. The Dollar Index (DXY) remains firmly above 108.00, keeping the EUR/USD under the important 1.1500 resistance level. We should consider selling out-of-the-money call options on the Euro or Pound to collect premiums, betting on the dollar’s continued strength through the end of the year. Gold’s recent rise is notable, as it continues to climb despite the strong dollar, highlighting its role as a safe haven amid political turmoil in Washington. This rally has been steady since gold broke past its 2024 high of approximately $2,400 per ounce. Buying call options with a strike price at or just below $4,000 could be an effective way to capitalize on this momentum as the market approaches this crucial psychological level. In contrast to the economic optimism, WTI crude oil is showing weakness, having broken decisively below $60 a barrel. The latest EIA report revealed a surprise inventory increase of over 4 million barrels, indicating that supply is outstripping demand. We recommend buying put options on crude futures, aiming for a decline towards the $55 support level in the coming weeks. Create your live VT Markets account and start trading now.

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