In November, the ISM Services New Orders Index in the United States fell to 52.9, down from 56.2 the month before. This drop shows that the growth rate of new orders in the service sector is slowing down. The Dow Jones Industrial Average rebounded strongly, gaining 450 points after some initial worries about artificial intelligence. Meanwhile, gold prices stabilized around $4,200, thanks to a weak US Dollar and expectations for a change in Federal Reserve policy.

GBP/USD Exchange Rate Rises

The GBP/USD exchange rate climbed above 1.3300, driven by speculation regarding Federal Reserve actions. Bitcoin and other major cryptocurrencies, including Ethereum and XRP, saw slight increases despite low demand from both institutional and retail investors. In Japan, the ‘Sanaenomics’ initiative plans to boost growth by 2026, though too much government stimulus could lead to risks. Ripple’s XRP is trading at about $2.17, benefiting from positive trends and increased investment in exchange-traded funds. Several lists and guides offer insights into the best brokers for trading currencies and assets in 2025. These guides highlight brokers with low spreads, high leverage, and those that are trustworthy and regulated. The ISM Services New Orders Index’s drop to 52.9 from 56.2 signals a cooling economy in the US. While it remains in growth territory, this sharp slowdown is fueling market expectations that the Federal Reserve will soon adopt a more dovish approach. This will likely be the main theme influencing markets in the upcoming weeks.

Future Market Expectations

We think the market is betting ahead of the Fed, aggressively pricing in rate cuts for 2026. Looking back to late 2023, we noticed a similar high sentiment for a policy shift. Currently, interest rate futures markets indicate a greater than 70% chance of a rate cut by March 2026, which is putting pressure on the US Dollar. This situation favors strategies that bet against the US Dollar. We are seeing continued strength in currency pairs like EUR/USD, now above 1.1600, and GBP/USD, which has returned to the 1.3300 mark. Traders might want to consider buying call options on these pairs to take advantage of ongoing dollar weakness while managing risk. For equity traders, the market currently interprets bad economic news as positive for stocks, which is reflected in the Dow’s recent surge. However, this optimistic view is fragile, and we advise using options to hedge long positions. Buying puts on the S&P 500 or VIX call options can be a cost-efficient way to protect against a downturn if recession concerns outweigh the optimism for rate cuts. Gold trading above $4,200 is a direct result of a weaker dollar and diminishing rate expectations, reducing the cost of holding gold. This trend seems reliable, and traders might explore call spreads on gold futures to benefit from further price increases. We observed a similar trend during the 2020-2021 period when loose monetary policy greatly supported precious metals. Attention now turns to the upcoming US employment data. This follows last month’s Non-Farm Payrolls report, which revealed that job growth had slowed to its lowest level in over a year, with the unemployment rate rising to 4.1%. A weaker jobs report would heighten pressure on the Fed and likely accelerate current market trends. Create your live VT Markets account and start trading now.

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