Financial markets remain calm on Monday as participants prepare for central bank events and key data releases later in the week. Statistics Canada will release November’s CPI data, and comments from Federal Reserve officials are eagerly anticipated.<\/p>\n
The US Dollar Index continues to decline, staying slightly below 98.50, after recent policy announcements from the Fed. In the meantime, US stock index futures rise by about 0.3% during the European morning, indicating a positive risk sentiment.<\/p>\n
The USD\/CAD pair remains steady above 1.3750 as Canadian CPI inflation is expected to increase from 2.2% to 2.4% in November. The EUR\/USD pair maintains a consolidation phase below 1.1750 after closing last week above 1.1700.<\/p>\n
The USD\/JPY pair experiences bearish pressure, declining toward 155.00 and losing 0.5% on Monday. In commodities, gold maintains a bullish stance, climbing toward $4,350 after a 2% rise last week.<\/p>\n
GBP\/USD corrected lower from its recent peak and struggles to regain traction above 1.3350 early in the European session. The Bank of England’s interest rate decision will be announced on Thursday.<\/p>\n
With markets so quiet ahead of major central bank and jobs data, we see this as a chance to position for future volatility. Implied volatility is low, making options relatively cheap, which is ideal for betting on a breakout later this week. We remember similar calm periods in 2023 just before major data releases caused significant market swings.<\/p>\n
The US dollar’s three-week decline has been the main story, and derivative pricing suggests traders expect this weakness to continue. We must be cautious, however, as the upcoming Nonfarm Payrolls report could easily reverse this trend if it shows surprising strength, a pattern we saw in late 2023. Any firming tone from Fed speakers would also trigger a sharp rally in the dollar from these lower levels.<\/p>\n
The Canadian dollar stands out as this month’s strongest currency, and today’s inflation data could add more fuel to that move. An increase in the annual CPI to 2.4%, as forecast, would pressure the Bank of Canada to keep its policy tight. This makes selling put options on USD\/CAD an interesting strategy to take advantage of further Canadian dollar strength.<\/p>\n
In Europe, both the Euro and the Pound are waiting for their central bank meetings on Thursday. The price action in EUR\/USD and GBP\/USD is likely to remain contained until then, but options markets are pricing in a big move for Thursday. The main question we have is whether the ECB or BoE will sound more hawkish than the US Federal Reserve.<\/p>\n
The positive geopolitical news from Ukraine is creating a risk-on mood, which is putting downward pressure on the safe-haven Japanese Yen. This helps explain why we are seeing USD\/JPY fall towards the 155.00 level. Gold’s continued climb above $4,300 is unusual during a risk-on period, suggesting its move is being driven more by the falling dollar and inflation hedging.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Markets steady as investors await CPI data, central bank decisions; USD weakens, gold extends gains.<\/p>\n","protected":false},"author":62,"featured_media":17021,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36837","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36837","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36837"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36837\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17021"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36837"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}