The Canadian unemployment rate is likely to increase in September. The EUR/USD pair has strengthened to 1.1575, bouncing back from earlier losses, while GBP/USD remains steady at 1.3310. This caution stems from concerns about the Bank of England’s monetary policy. Gold is facing some pressure, trading below $4,000. Geopolitical risks and the possibility of Federal Reserve rate cuts are providing some support. Bitcoin is trading around $121,000 after reaching a recent peak, while Ethereum and Ripple are also seeing price corrections.

Use of Tariffs in Foreign Policy

US tariffs continue to be an important tool in foreign policy, as confirmed last month. Coinbase and Mastercard are in talks to acquire BVNK, a stablecoin company, with a potential deal worth between $1.5 billion and $2.5 billion. The information here is for informational purposes only and not meant as investment advice. Investing in open markets carries risks, including the possibility of losing your entire investment. We acknowledge potential errors and omissions and take no responsibility for any losses related to this information. With the possibility of a US government shutdown and discussions about Fed rate cuts, the recent strength of the US Dollar may be reaching its peak. This situation is similar to the market volatility seen during the government shutdown from 2018 to 2019, which caused the VIX to spike above 30. We can use options to prepare for increased market turbulence and a potentially weaker dollar in the coming month. The environment is very favorable for Gold, and any dip below $4,000 should be viewed as a buying chance. The combination of geopolitical risk, a dovish Federal Reserve, and US fiscal uncertainty historically supports Gold prices. A similar, although less severe, situation in the early 2020s drove Gold to record highs.

EUR USD and Economic Impact

In the case of EUR/USD, the political crisis in France limits potential gains, making a straightforward buy position risky. It’s wiser to sell out-of-the-money puts or set up bull call spreads to profit from a modest rise toward the 1.1650 level. The market is pricing in political risks, similar to those linked to France’s credit rating outlook observed in 2024. The Bank of England’s cautious approach, as opposed to the Federal Reserve, makes a long position on GBP/USD appealing. UK inflation remains sticky, with core figures slow to decline leading up to 2025. This means the BoE will likely have less flexibility to cut rates compared to the Fed. Such interest rate differences should support the pound, aiming for a target near 1.3500. The expected rise in Canadian unemployment signals weakness for the Canadian dollar. Data from Statistics Canada in 2024 showed a steady increase in the unemployment rate to above 6.1%, suggesting a concerning trend in the upcoming report. We should consider shorting USD/CAD if the dollar weakens or pair a short CAD position with a stronger currency like the pound. Bearish sentiment in crude oil reflects concerns over a US economic slowdown. US crude inventories have been increasing, a trend linked to weakening demand that we saw during late 2024. Traders might consider buying puts on WTI futures or shorting the commodity, as a government shutdown could worsen downward price pressure. Create your live VT Markets account and start trading now.

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