In the United States, jobless claims dropped to 1.838 million on November 28, which is better than the expected 1.95 million. This decline indicates positive trends in employment data. The Federal Reserve has cut interest rates by 25 basis points, lowering the target range to 3.50–3.75%. This change impacts market sentiments and influences investment choices.

Market Reactions to Fed Rate Cut

Following this rate cut, gold prices rose above $4,270. At the same time, the Dow Jones Industrial Average jumped by 600 points as traders began to invest more in growth stocks. In currency movements, the NZD/USD has risen for five days in a row, aided by a weaker US dollar and support from the Reserve Bank of New Zealand. Additionally, the EUR/USD reached a nine-week high as soft US job data put pressure on the dollar. Recent reports highlight the best brokers for 2025, assessing factors like spread, leverage, and regulations. This information helps traders choose the right broker for currency and CFD trading in regions like the Middle East, Latin America, and Indonesia. It also includes options for Islamic and swap-free accounts to assist traders. The Federal Reserve’s recent rate cut to 3.50-3.75% is the main focus for the market, even though it was a split decision. Investors are aggressively selling the US dollar, bringing the Dollar Index (DXY) down below the critical 99.50 support level for the first time since August 2025. This trend suggests that strategies benefiting from dollar weakness should be favored.

Impact on Equities and Commodities

This environment has sparked a strong rally in equities, especially in growth stocks that benefit from lower borrowing costs. The Volatility Index (VIX) has dropped to 14.2, its lowest in over six months. We recommend selling out-of-the-money puts on indices like the S&P 500 and Nasdaq 100 to capitalize on low volatility and positive market sentiment. Gold is profiting from the weaker dollar and lower real yields, having convincingly risen above $4,270 per ounce. This situation mirrors major gold rallies that followed the Fed’s easing moves in 2007 and 2019. Staying long on gold through call options or bull call spreads is a leveraged way to benefit from this strong trend. However, we need to acknowledge a conflict between the Fed’s actions and upcoming economic data. Recent jobless claims for late November 2025 were stronger than expected, suggesting the labor market may not be as weak as the Fed’s cut indicates. This resilience could be a warning that the market might be overly optimistic. The CME FedWatch tool reveals that the market is predicting over a 70% chance of another rate cut by March 2026. This outlook seems overly ambitious given the strong employment data, which could lead to a quick shift if the December 2025 jobs report exceeds expectations. A wise strategy would be to buy some inexpensive, short-dated put options on equity indices as protection against this dovish narrative unwinding. Create your live VT Markets account and start trading now.

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