The United States Producer Price Index (PPI), excluding food and energy, increased to 2.9% year-on-year in October, up from 2.6% the previous month. This information is for informational purposes only and should not be seen as investment advice. In other news, WTI prices have risen to their highest level since late October due to unrest in Iran. The NZD/USD pair has also moved higher thanks to positive trade data from China, although gains are limited by a strong US dollar.

Insights on Inflation and Labor Market

Experts like the Fed’s Bostic and Kashkari have pointed out ongoing difficulties with inflation. Ramsden from the Bank of England indicates that the labor market is weakening. For those thinking about financial trading in 2026, top brokers for forex, gold, and various regional markets are discussed. Note that investing in open markets involves risks, including potential losses. FXStreet encourages readers to do their own research before investing. They are not responsible for any errors or omissions in the information shared. Last October, the Producer Price Index saw a rise to 2.9%. Along with hawkish remarks from Fed officials, this raised concerns about inflation. Yet, the recent Consumer Price Index report for December 2025 showed inflation easing to 3.1%, down from the previous month. This change suggests that the trend of rising inflation from late last year is losing steam.

Future Economic Outlook

With cooling inflation data, the market is now expecting a more dovish Federal Reserve policy later this year. Just a few months ago, in November 2025, there was confidence that interest rates would remain high. However, futures markets now indicate over a 60% chance of at least one rate cut by the third quarter of 2026. This makes it sensible to position for lower interest rates using SOFR futures or call options on Treasury bond ETFs in the upcoming weeks. Volatility in equity markets has also decreased, with the VIX index dropping from above 18 last quarter to around 14 now. This environment makes options purchases cheaper than just a few months ago. We see this as a chance to buy call options on major indices to capitalize on potential gains if the market continues to rally based on the “soft landing” idea. The US dollar, which was strong throughout most of 2025, has started to weaken due to the changing interest rate outlook. The Dollar Index (DXY) has fallen over 3% from its peak in November 2025, and this trend may continue if inflation data remains soft. Derivative traders should think about strategies that can benefit from this, like buying call options on currency pairs such as EUR/USD or GBP/USD. Create your live VT Markets account and start trading now.

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