The US economy grew at a surprising annual rate of 4.3% in the third quarter, beating the predicted 3.3%. This growth also pushed the US GDP price index up to 3.7%, higher than the expected 2.7%.

Impact On Currency Markets

As a result of this data, demand for the US Dollar has increased. This shift caused the GBP/USD to drop from session highs, trading just below 1.3500. Gold prices, which peaked at $4,497, have fallen as more investors turned to the US Dollar after the economic report was released. Bitcoin is facing challenges, but it remains above the $87,000 support level as the cryptocurrency market deals with selling pressure. Other cryptocurrencies like Ethereum and Ripple are also being negatively impacted. In the crypto space, Dogecoin continues to decline as a risk-averse mood spreads. The DOGE derivatives market is slowing down, with low futures Open Interest and a consistently low funding rate. As we look toward 2026, focusing on growth, inflation, fiscal issues, and geopolitics may become more important than precise predictions. There is a caution against complacency, as popular trades can quickly go too far. The unexpectedly strong US economic data, with higher growth and inflation than anticipated, makes us rethink the Federal Reserve’s plans. The odds for a rate cut in the first quarter of 2026, according to the CME FedWatch tool, have dropped from over 60% last month to below 35% now. Traders should consider selling interest rate futures to adjust for rates possibly staying higher than expected longer.

Market Trends And Strategies

This outlook is lifting the US Dollar, boosting the Dollar Index (DXY) above the 105.50 resistance level. Recent reports show that big investors are increasing their net-long USD positions for the third week in a row. Buying call options on the DXY or put options on pairs like GBP/USD lets traders take part in the dollar’s strength with a defined risk. Gold’s decline from nearly $4,500 is directly linked to the stronger dollar and higher real yields, which we also noticed during the 2022 tightening cycle. With 10-year real yields approaching 2.2%, non-yielding gold becomes less appealing. We suggest shorting gold futures or buying puts on gold ETFs as an effective way to protect against further price drops. The risk-averse mood is clearly impacting the cryptocurrency market, with Bitcoin struggling to hold above $87,000. Analytics firm Glassnode reports that exchange inflows rose by 15% this week, indicating that more investors are transferring coins to sell. This situation favors short positions through perpetual futures, with negative funding rates showing a bearish sentiment among traders. It’s also important to note that trading volumes are very low as we head into the new year, which can lead to larger price swings. The VIX, a measure of expected stock market volatility, is near multi-year lows below 14, indicating widespread calmness. Given the warning about a possible change in the market in 2026, now is a good time to buy low-cost, out-of-the-money put options on major indices as a hedge against sudden changes in sentiment. Create your live VT Markets account and start trading now.

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