Insights 
VT 
Canada’s housing starts for September recorded 279,200 units, surpassing predictions of 255,000. This marks a notable increase compared to expectations.
In the currency market, the EUR/USD rose above the 1.1680 mark, indicating a weekly high. Meanwhile, GBP/USD showed a recovering trend, touching the 1.3450 region driven by UK data.
Gold’s Strong Performance
In commodities, gold’s value approached the $4,300 mark per troy ounce. The market for gold remains robust due to US economic concerns and geopolitical tensions.
The cryptocurrency market witnessed a decline, with Bitcoin around $110,500. Other cryptocurrencies such as Ethereum and Ripple appeared suppressed during the period.
Solana’s value aimed for over $200 after recent volatility, with Bitcoin and Ethereum also showing signs of market improvement. The overall narrative in cryptocurrencies is cautious.
Stock market sentiment remained mixed, with the S&P 500 experiencing an “inside day” pattern. This resulted from past fluctuations and indicates market indecision among traders.
Federal Reserve Rate Cut Expectations
With markets now pricing in an 85% probability of a Federal Reserve rate cut in December, we should expect ongoing softness in the US dollar. The latest US Consumer Price Index data for September, which came in at 2.8% year-over-year, reinforces this view that inflation is no longer the Fed’s primary concern. Derivative strategies that benefit from a declining dollar, such as call options on the Euro or Pound Sterling, are gaining traction.
The strong Canadian housing starts figure suggests the Canadian economy has a resilience not seen in the US right now. This data, combined with Canada’s unemployment rate holding steady at 5.7% last month, indicates the Bank of Canada is likely to lag the Federal Reserve in cutting rates. This policy divergence makes selling USD/CAD futures or buying puts on the pair an interesting proposition for the next several weeks.
Gold’s push toward $4,300 is a direct response to escalating trade tensions and the flight to safety. Central bank purchases have been a huge driver, with official net buying hitting a record 1,250 metric tons over the last four quarters, far surpassing the previous highs we saw back in 2022. We believe using call options to speculate on a move towards $4,500 offers a limited-risk way to capture further upside.
In equity markets, the recent indecision in the S&P 500 reflects deep uncertainty following the administration’s new tariff announcements. The CBOE Volatility Index (VIX) has been elevated, closing yesterday above 22, which is significantly higher than its average earlier this year. We think traders should consider buying VIX futures or S&P 500 put spreads as a hedge against another wave of selling.
