BoE officials delivered comments on the November monetary policy report to the Treasury Select Committee.
Officials from the Bank of England, including Deputy Governors Dave Ramsden and Clare Lombardelli, shared their thoughts with the Treasury Select Committee about the November monetary policy report. Ramsden noted that the current economic situation matches their baseline predictions, which suggests they may gradually ease policy restrictions.
Lombardelli expressed worries about inflation risks, explaining they are due to structural issues. She questioned whether the current policy is restrictive enough and hinted at a slower pace of rate cuts as the cycle finishes. The budget is expected to lower inflation by 0.4-0.5 percentage points starting in the second quarter of 2026.
Investors await the Fed’s interest rate decision while gold remains in a sideways pattern
Gold is holding steady as traders anticipate the Federal Reserve’s interest rate decision. Currently, XAU/USD is around $4,200, facing resistance at $4,250 and support between $4,180 and $4,200.
The CME FedWatch Tool shows a 90% chance of a 25 basis point rate cut, bringing rates to a range of 3.50%-3.75%. However, there’s still uncertainty about future guidance. Fed Chair Jerome Powell has stated that there are no guarantees for further rate cuts.
Additionally, uncertainty is rising due to disagreements within the Fed about inflation risks and signs of a slowing labor market. Geopolitical tensions, like the situation between Russia and Ukraine, are also increasing Gold’s appeal as a safe-haven asset.
Gold prices are affected by the US Dollar’s performance, geopolitical instability, and interest rates. Typically, Gold and the US Dollar move in opposite directions, with Gold generally increasing when rates are low. Central banks continue to hold significant Gold reserves, diversifying to stabilize their currencies. Data from 2022 shows record purchases by several emerging economies.
With the Federal Reserve’s rate decision coming tomorrow, Gold is steady in a narrow range. The market has almost fully accounted for a 25 basis point cut, so the actual cut probably won’t lead to a big price shift. The main focus will be on guidance for 2026 and any signs of a “hawkish cut.”
Given the current uncertainty, making large bets ahead of the announcement is risky. Instead, we should explore strategies that benefit from significant price movements, regardless of direction. Options strategies like a long straddle or strangle might work well, as they can profit from the increased volatility we expect after the Fed speaks.
A hawkish surprise is possible, especially with recent economic data showing some strength. The latest CPI report from November indicated core inflation at 3.8%, still above the Fed’s target. This persistent inflation, paired with strong JOLTS job openings data from October, gives Powell reasons to be cautious about future cuts.
Key levels to watch are strong resistance at $4,250 and solid support between $4,180 and $4,200. If the price breaks these boundaries after the announcement, it will indicate the market’s next direction. We could set up options trades with strike prices around these levels to capture potential breakouts.
If the Fed’s guidance is more dovish than expected, we might see a breakout above $4,250, making call options appealing. On the other hand, if the Fed takes a hawkish stance and signals a pause, the price could drop below the $4,180 support level, favoring put options. A similar situation occurred in July 2019 when the Fed cut rates but indicated it wasn’t the beginning of a long easing cycle, leading to initial market confusion and volatility.
Underlying all this is the strong support for Gold due to central bank buying. Throughout this year, the World Gold Council data shows that central banks have added over 850 tonnes to their reserves. This ongoing demand, along with unresolved geopolitical tensions in Ukraine, should help support Gold prices and limit potential downside, even if the Fed’s message is hawkish.
Iraq’s West Qurna 2 field restarts production as WTI oil prices drop to around $58.50
The price of West Texas Intermediate (WTI) Crude Oil has dropped to $58.50. This decrease follows the restart of production in Iraq, particularly at the West Qurna 2 field, which produces over 460,000 barrels daily. The increase in supply is putting pressure on prices.
Geopolitical factors are keeping WTI prices from falling too much. The ongoing Ukraine-Russia conflict prevents a resolution, creating a risk premium on oil caused by limits on Russian exports.
Asian Import Dynamics
Changes in Asian imports are shifting global oil flows. China is buying more oil from Saudi Arabia and Iran. At the same time, US sanctions and lower demand have reduced imports from Russia. Market watchers are anticipating a 25-basis-point rate cut by the Federal Reserve. Lower rates may help energy demand by weakening the US Dollar. Traders are also waiting for the American Petroleum Institute’s weekly report for information on US stock levels. A larger than expected increase in inventory could push WTI prices lower, even with ongoing geopolitical tensions. WTI is a high-quality American crude oil. Its price depends on supply, demand, political events, and the value of the US Dollar. Inventory data from the API and the Energy Information Agency (EIA) greatly influence prices, with the EIA’s reports seen as more reliable.Short Term Supply Story
Currently, WTI prices are under pressure, especially around the $58.50 mark, due to increased Iraqi production. However, this situation is likely temporary, with the market focusing on the Federal Reserve’s decision expected tomorrow. There is more than a 90% chance of a 25-basis-point rate cut, which could weaken the dollar and increase demand. Despite the issues in Iraq, the overall supply situation remains tight, helping to support prices. Ongoing geopolitical tensions linked to the stalled peace talks in Ukraine add a risk premium to the market. Importantly, voluntary production cuts by OPEC+ continue, with over 2 million barrels per day still in effect. These cuts will play a crucial role going into the new year. The American Petroleum Institute (API) report expected later today could be a significant factor in the short term. We are on the lookout for any surprises. Last week’s EIA data showed a surprise increase of 3.6 million barrels in inventory; another rise could temporarily push WTI below $58. This potential volatility suggests that strategies like straddles may be useful for traders aiming to profit from price fluctuations after the data and Fed announcement. The Fed’s expected shift to a more supportive policy is a major positive factor to consider. Looking back to the last rate-cutting cycle that started in 2019, a weaker dollar helped boost commodity prices. A rate cut tomorrow could reinforce this trend, making oil priced in USD more appealing and possibly attracting more investment to the energy sector. Create your live VT Markets account and start trading now.Job openings rose to 7.67 million in October, up from 7.658 million in September.
The US Bureau of Labor Statistics reported an increase in job openings from 7.658 million in September to 7.67 million in October. Job hires and separations stayed steady at 5.1 million. Quits totaled 2.9 million, while layoffs were at 1.9 million.
This data slightly boosted the US Dollar Index, rising 0.19% to 99.29. The US Dollar is performing differently against major currencies, showing strong performance against the Japanese Yen.
The JOLTS Report
The JOLTS report, which was delayed because of a government shutdown, provides key information but has a two-month lag that limits its immediate influence on policy. Experts expected 7.2 million job openings in October, and recent data was just slightly above this estimate. Fed officials and market watchers analyze JOLTS data for insights into the labor market. These insights can influence future economic decisions, such as interest rate forecasts. A stable labor market might lead to rate cuts, which could affect the strength of the US Dollar. The market is also eager for new employment data, which impacts movements in EUR/USD, recently approaching highs from last December. The latest data showed job openings at 7.67 million for October, surpassing the forecast of 7.2 million. This indication, though delayed by the government shutdown, suggests that the labor market isn’t slowing down as quickly as expected. This challenges the idea that a weak job market would push the Federal Reserve to make aggressive rate cuts in early 2026. This report is part of a trend of resilient economic data. Just last Friday, the November Non-Farm Payrolls report revealed that the economy added 195,000 jobs, beating the expected 160,000. The unemployment rate remained steady at 3.9%, easing concerns about a sharp economic slowdown as we approach the new year.The Federal Reserve Announcement
With the Federal Reserve set to announce policy tomorrow, these solid employment figures make their messaging more complicated. We may need to lower expectations for a very dovish statement or a clear signal for a rate cut in early 2026. The Summary of Economic Projections will be important to watch for any upward changes to growth or inflation forecasts. For derivatives traders, this uncertainty means increased volatility is likely in the coming weeks. Considering options that benefit from larger price swings, like straddles on the US Dollar Index (DXY) or major currency pairs before key data releases, could be wise. The difference between market expectations for rate cuts and the actual economic data creates a good opportunity for sharp moves in either direction. Given the supportive data for a stronger dollar, it might be wise to position for near-term USD strength. This could involve buying call options on the USD against weak currencies like the Japanese Yen. Alternatively, selling call options on EUR/USD with a strike price above the significant resistance level of 1.1730 could be a smart move to take advantage of a potential dollar rally. Let’s recall the market dynamics of late 2023 when fast rate cuts expected in 2024 were contradicted by ongoing inflation and a surprisingly strong job market. We learned to be cautious when economic data doesn’t match the prevailing narrative of rate cuts. The current situation feels similar, suggesting we should be careful before betting heavily on lower rates. Create your live VT Markets account and start trading now.This newsletter, developed in collaboration with CMT Association, provides insights on price, trends, and momentum, but does not offer investment advice.
The article explains recent market trends, using a “percentage swing” chart to illustrate them. There were notable market downturns in late 2022 and early 2023, with declines of -7.3% and -7.8%. A larger drop of -18.9% occurred in early 2025, which is referred to as “The Tariff Crash.” Between spring 2024 and spring 2025, there were no significant drops beyond -5%.
Market analysis shows a general upward trend starting in summer 2024, with no major reversals until the “Tariff Crash.” By examining the 50 and 200-day moving averages, we can see ongoing market strength and a consistent upward trend. However, there are signals of possible corrections due to current market conditions. Still, momentum analysis indicates confidence in continued upward movement.
Long Term Strategies
The article encourages focusing on long-term strategies, recommending the use of the 200-day and 50-day moving averages for market analysis. It advises ignoring short-term fluctuations and media forecasts. Investors should create a personalized investment strategy based on their timeframe or consider hiring a professional advisor. The key takeaway is to stick to a chosen investment strategy while staying informed about market conditions. Looking back, it is clear that the market has been in a strong uptrend since the notable correction in spring 2025. The -18.9% “Tariff Crash” reset expectations, and since then, the easiest path has been upward. The minor -5% dip in November was just a brief concern, as the primary trend has remained stable. As of December 9, 2025, the S&P 500 is firmly above both its 50-day and 200-day moving averages, which is a strong indicator. The index is around 6250, while the 50-day moving average is about 6050, and the 200-day average is much lower at 5600. This large gap between the current price and the long-term average suggests we might be overextended, raising the chances for a pullback or sideways movement. The November pullback caused the VIX to spike above 25, but it has since calmed down to about 17, which is below the historical average. This drop in implied volatility makes buying options cheaper, while selling them becomes less profitable. In the coming weeks, we should consider strategies that take advantage of the ongoing uptrend while also acknowledging the risk of a short-term drop.Viable Trading Strategies
Given the strong underlying trend, selling out-of-the-money put credit spreads is a good strategy for the upcoming weeks. For example, with the S&P 500 at 6250, a trader could sell a January put spread with strikes at 6100/6050. This position will be profitable if the index stays above 6100, which is well above the 50-day moving average support level. Due to the large gap between the current price and the 200-day moving average, a period of sideways movement is likely as the market adjusts to recent gains. An iron condor could be an effective way to trade this expected range-bound action. This strategy involves selling a put spread below the market and a call spread above it, creating a defined range for the index to trade within. The key level to watch is the 50-day moving average, currently around 6050. As long as the market stays above this line, the bullish trend remains healthy, and pullbacks can be seen as buying opportunities. A decisive break below this level would serve as the first major warning sign of a trend shift. We should concentrate on these price levels rather than getting swayed by news about a potential “A.I. Bubble.” Market sentiment can change quickly, but trends and key moving averages offer a more reliable guide. The upcoming Federal Reserve interest rate decision may lead to some volatility, so positions should be structured to handle potential short-term spikes. Create your live VT Markets account and start trading now.Job openings in the United States reached 7.658 million in September, exceeding the forecast of 7.2 million.
In September, the United States had 7.658 million job openings, exceeding the expected 7.2 million. This shows strong demand in the job market, even with some economic uncertainties.
Gold prices remain high at about $4,200 per troy ounce. Although the strong US dollar affects the gold market, expectations of a Federal Reserve rate cut are helping support prices.
In currency markets, the EUR/USD exchange rate is nearing the 1.1600 support level. The GBP/USD pair is also under pressure, dropping below 1.3300 due to the dollar’s strength and mixed signals from officials.
In the world of cryptocurrency, Bitcoin is trading above $90,000, despite a tough market. Ripple (XRP) is holding above the $2.00 support level, even with broader market uncertainties.
Looking ahead to 2026, there are growing risks for global economic recovery, particularly regarding trade and public debt. Even though recent data shows resilience, these issues suggest a concerning outlook for the global and European economies.
The unexpected rise in job openings is creating tension in the market. However, the Federal Reserve’s expected 25 basis point rate cut tomorrow is seen as the main driver of market sentiment. This difference between data and expectations may create new opportunities in the coming weeks.
The rise in gold prices to over $4,200 is linked to falling real interest rates. The U.S. 10-year yield has already decreased by more than 50 basis points this past quarter, anticipating Fed easing. Options on gold and silver look attractive, as the market suggests this easing cycle has only just started, offering potential buying opportunities in precious metals.
The recent strength of the US dollar, pushing the DXY index towards 104, seems to be temporary, influenced by the surprising jobs data. We expect that a confirmed rate cut will weaken the dollar, making put options on the dollar or call options on pairs like EUR/USD worth considering. The Fed’s statements will be crucial; any indication of further cuts could speed up the dollar’s decline.
Equity markets are on edge, as reflected by the CBOE Volatility Index (VIX) staying above 18 last week. A dovish rate cut could lead to a relief rally, making short-term call options on major indices like the S&P 500 a smart move. Traders may also think about selling volatility through options spreads after the announcement, assuming the Fed meets market expectations.
Job openings in the United States hit 7.67 million, surpassing expectations of 7.2 million.
The United States Job Openings and Labor Turnover Survey (JOLTS) reported that there were 7.67 million job openings in October, surpassing the expected 7.2 million. This shows a strong demand for workers in the U.S. economy, indicating a robust job market.
This information leads analysts to think about how it might affect the Federal Reserve’s monetary policy, especially when it comes to future interest rate decisions. The higher number of job openings could lead to changes in interest rates due to pressures from the job market and inflation.
Implications of Strong Job Openings
The high number of job openings suggests that the U.S. economy may remain strong, even with inflation and global economic issues. The JOLTS report provides important insights into job market trends, which can influence economic predictions and policy-making. These JOLTS figures could play a significant role in economic discussions before upcoming Federal Reserve meetings. As new information becomes available, market and investment strategies may change. The data for October job openings was much stronger than expected, indicating that the job market is not slowing down as quickly as previously thought. This is especially relevant after the November Consumer Price Index showed inflation rising to 3.1%. This challenges the idea that the Federal Reserve will cut rates anytime soon. Now, it seems possible that interest rates could stay higher for a longer time than the market anticipated.Market Adjustments and Strategy
As a result, the derivatives market is quickly adjusting its expectations for Federal Reserve policies into early 2026. Current Fed funds futures suggest only a 20% chance of a rate cut by March, down from 65% just a week ago. This situation is similar to the market uncertainty seen in 2023, when strong economic data continuously made the Fed reevaluate its course. In the coming weeks, it may be wise to prepare for increased market volatility before the next Federal Open Market Committee (FOMC) announcement. Buying put options on interest-rate sensitive indices, like the Nasdaq 100, could help protect against a more aggressive Federal Reserve. The VIX, which has been around a low of 14, is likely to rise, making long volatility strategies appealing. The outlook for a stronger U.S. dollar has also improved, so investing in call options on dollar-tracking ETFs might be a profitable move against other major currencies. At the same time, we should expect further weakness in the bond market as yields adjust to this shift. Shorting Treasury futures reflects the growing belief that the Federal Reserve won’t ease policy anytime soon. Create your live VT Markets account and start trading now.Copper hits record high of nearly $11,800 per ton with a 33% increase thanks to strong Chinese exports
Copper prices have surged to nearly $11,800 per ton, marking a 33% increase since the start of the year. China’s exports have also shown strong growth, rising by nearly 6% compared to last year, which led to China’s third-largest monthly trade surplus. Recent statements from the Politburo have fueled expectations for economic support in China, the top market for copper sales.
While overall copper figures provided limited encouragement, there was a notable improvement in copper ore imports, which increased by almost 13% from last year and nearly 8% in the first eleven months. However, China’s refined copper production rose by 12.5% until October, outpacing copper ore imports and contributing to material shortages at smelters.
Imports of copper and its products dropped below 430,000 tons in November, the lowest level since February. In the first eleven months, these imports were down 4.5% compared to last year. Despite increased production, China continues to be the largest importer of refined copper, representing 42% of global imports in 2024, according to the Australian Department of Industry, Science and Resources.
With copper reaching a new high of nearly $11,800, market sentiment appears very strong, largely driven by robust Chinese export statistics. This rally has been significant, with prices climbing 33% since the year began. Traders with long positions have seen notable profits from this trend.
However, it’s important to remain cautious of warning signs beneath the surface. In November, China’s imports of refined copper and copper products fell to their lowest point since February. This is concerning because it suggests that demand within the world’s largest consumer is not as robust as prices might indicate.
Supporting this concern, data from the London Metal Exchange shows that warehouse stockpiles have increased for three consecutive weeks, exceeding 115,000 tonnes. Additionally, last week’s Caixin survey for China’s construction sector slipped to 49.2, indicating a downturn in a major copper-consuming industry. These factors do not suggest a market with booming physical demand.
A similar situation unfolded during the bull run of 2021 when sentiment and expectations for stimulus drove prices to record highs, even as physical demand indicators weakened. That rally was followed by a significant price drop over the following year.
Given the soaring prices and these clear warning signs, traders should consider using options to safeguard their existing long positions. Buying downside protection, such as put options that expire in January or February 2026, could help lock in recent profits. This strategy allows traders to benefit from any future price increases while managing the risk of a sharp decline.
Alternatively, for those who believe this rally may be approaching its peak, strategies that profit from a price stall could be effective. Selling call options with strike prices at or over $12,000 could generate income, based on the idea that a new psychological limit is being established. The key takeaway is that the gap between the hot paper market and the cooling physical market is now too significant to overlook.
Japanese Yen weakens against US Dollar amid low market activity, falling behind G10 currencies
The Japanese Yen (JPY) is slightly weaker against the US Dollar (USD) and is falling behind other G10 currencies as investors wait for the Producer Price Index (PPI) data. Technical analysis shows that USD/JPY may be moving away from its recent overbought state, with 155 being an essential support level in the short term.
Currently, the JPY has decreased by 0.1% against the USD and is underperforming compared to all G10 currencies in a quiet trading environment. Economic news has been limited, and the focus is on the upcoming PPI data set to be released at 6:50 PM ET.
Yield Spreads and Technical Outlook
Yield spreads remain stable, supporting the JPY at current low levels. Risk reversals are evening out and show a slight premium towards JPY strength. The bullish outlook for USD/JPY appears to be fading, indicating that it could move to more neutral levels. The 155 mark is critical for short-term support, according to strategists at Scotiabank. With USD/JPY around 157.20, the yen is lagging in a quiet market as we approach the year’s end. A key indicator is the surprisingly low cost to buy protection against yen strength. This points to traders being too relaxed and not ready for a sudden fall in the dollar-yen pair. Since one-month implied volatility for the pair has dropped below 7%, a level not seen since before the 2024 policy changes, purchasing JPY call options (or USD/JPY puts) is a promising low-cost strategy. These options would profit from a technical shift back toward the 155 support level. The upcoming PPI data might trigger such a movement if the results are weaker than expected.Speculative Positions and Market Vulnerability
Speculative short positions against the yen are near multi-year highs, as per recent CFTC data from early December 2025. This crowded positioning makes the market vulnerable to a short squeeze, similar to what we observed during intervention fears in 2024. A drop below the 155 support could lead to a rapid activation of stop-loss orders. For those expecting a slow drift rather than a sharp decline, selling out-of-the-money USD/JPY call spreads is a way to earn premium. Creating positions with strikes above the 158.50 level would take advantage of the easing upward momentum and the likelihood that the pair will consolidate. This strategy benefits from the anticipated cooling off from currently overbought conditions. Create your live VT Markets account and start trading now.A BIS report shows that retail investor speculation has distorted typical gold price behaviors.
The Bank for International Settlements (BIS) report notes a sharp rise in gold prices, fueled by retail speculation, which strays from gold’s usual role as a safe-haven asset. This shift is similar to trends seen in riskier investments like stocks, which contradicts how things have typically worked in the past.
Initially, institutional investors turned to gold because of high stock market valuations. This interest later pulled in retail investors, shifting gold into a more speculative investment. The BIS highlights a growing interest in gold ETFs, showing that gold and stocks have recently moved together in ways not seen in the past 50 years.
The report warns of a potential sharp correction, likening it to events in 1980. However, there are key differences: the 1980 drop was caused by rising US interest rates, which is unlikely to happen now, as the Federal Reserve may cut rates instead.
Data from the CFTC suggests that speculative trading did not heavily influence gold’s record-high prices in October. Speculative net long positions were lower by late October than in early September. Thus, the risk of a quick price correction seems minimal, even though more data is needed due to the US government shutdown in October.
Gold is starting to act more like a tech stock rather than a safe-haven asset, which is unusual. Recently, gold prices hit $2,650 per ounce, mirroring the S&P 500’s climb over 5,800. This synchronized rise is intense and has not happened at such a level in decades, indicating retail speculation through ETFs is driving this price increase.
This has led to warnings about a rapid price drop, similar to what happened in the gold market in 1980. That decline was caused by aggressive interest rate hikes, which differ from today’s circumstances. However, the explosive growth we are witnessing now calls for caution for anyone heavily invested in gold.
One major difference from 1980 is the Federal Reserve’s current approach. The Fed’s November 2025 dot plot signals possible rate cuts in early 2026 to support a slowing economy. This supportive stance is generally good for non-yielding assets like gold, which may help cushion any downturns.
While earlier data suggested little speculative action, the situation has shifted. Recent CFTC data for November 2025, released after the government cleared its data backlog, shows a notable rise in net long positions from managed money. This indicates that large speculators have joined the rally, increasing the risk of a quick unwinding if market sentiment changes.
Given these mixed signals, traders should think about strategies to profit from volatility. Purchasing long-dated put options could protect against a sharp correction, while a long straddle could take advantage of significant price movements in either direction as we move into the new year. The high implied volatility in gold options, now nearing a 12-month peak, reflects this market uncertainty.
