The United States MBA mortgage applications increased by 7.1% as of October 24, contrasting with a previous decline of 0.3%. This reflects a change in consumer behaviour in the mortgage sector.

Market Focus

Market focus includes the Federal Reserve’s anticipated interest rate decision and its effects on currency pairs and assets like the EUR/USD and gold. The GBP/USD is testing levels around 1.3200, with currency performance under consideration.

Other points of interest are the BoC Governor Macklem’s outlook and EUR stability amidst Federal Reserve and European Central Bank developments. Gold remains above $4,000, with federal decisions impacting investor sentiment.

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Federal Reserve Decision

The Federal Reserve is widely expected to cut interest rates this week, a significant shift after the aggressive hiking cycle we saw back in 2022 and 2023. Recent data showed US GDP growth for the third quarter of 2025 slowing to just 0.5%, creating pressure on the Fed to act. This pivot towards easing is the most important factor for all markets right now.

We are seeing clear signs of anticipation in the housing market, where mortgage applications surged 7.1% last week. This isn’t a signal of economic strength, but rather a rush of activity as borrowers try to lock in rates ahead of the Fed’s decision. Derivative traders should view this as confirmation that the market is fully pricing in a dovish turn from the central bank.

The US Dollar is consequently under pressure, which explains why we see EUR/USD challenging 1.1650 and GBP/USD testing 1.3200. With the Bank of Canada already cutting rates, a global easing trend is forming, but the Fed’s move carries the most weight. Options traders could anticipate heightened volatility in major currency pairs, especially around the time of the announcement.

Gold holding firmly above $4,000 an ounce highlights a significant flight to safety among investors. This price level, a historic high, reflects not just the expectation of a weaker dollar and lower yields, but also geopolitical anxieties surrounding the upcoming Trump-Xi meeting. Gold futures and options will likely see high volumes as traders position for a sustained move higher if the Fed signals a series of cuts.

Given the setup, traders should be prepared for sharp movements following the Fed’s statement. Volatility derivatives, such as options on the VIX index, could be used to hedge against unexpected outcomes or a more aggressive-than-expected dovish message. The key will be not just the rate cut itself, but the Fed’s guidance on its future policy path.

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