Canada’s portfolio investment in foreign securities increased to $19.51 billion in August, up from $17.41 billion in the previous month. The increase represents a continued interest in foreign investments by Canadian entities.

The Dow Jones Industrial Average showed growth as market confidence made a comeback. A slight recovery in the US Dollar led to adjustments across various financial markets.

Gold Prices and US Treasury Yields

Gold prices have dropped from near-record highs, moving closer to $4,200 per troy ounce. This decline coincides with rising US Treasury yields and a rebounding US Dollar.

Cryptocurrency markets are facing significant sell-offs, with Bitcoin falling below $105,000. Other cryptocurrencies like Ethereum and Ripple are also experiencing notable declines.

Economic data releases remain the focus, with upcoming CPI and PMI figures set to impact market projections. Inflation data from the UK, Canada, Japan, and the Eurozone could influence central bank policies.

In the cryptocurrency sector, liquidations have surpassed the $1 billion mark. Binance Coin, Solana, and Cardano recorded losses over 10% in the past 24 hours.

Market Volatility and Central Bank Policies

Given the market’s risk-off tone as of October 17, 2025, we see a clear strengthening of the US Dollar. This move is pressuring pairs like EUR/USD, which is nearing 1.1650, and GBP/USD, which is testing the 1.3400 level. Derivative traders should consider strategies that benefit from continued dollar strength, such as buying put options on the euro or the pound for the coming weeks.

With crucial inflation data for the US and UK on the horizon, central bank policy is in sharp focus. The market is pricing in dovish moves from the Fed and the Bank of England, which creates uncertainty and potential for sharp market swings. We believe buying call options on the VIX index could be a prudent way to hedge against or profit from the expected volatility, remembering how the index surged during the uncertainty of early 2020.

Gold is retreating from its recent record highs as a result of the stronger dollar and rising US Treasury yields. As of this morning, it has fallen back toward the $4,200 level. This inverse relationship is a classic market dynamic; we saw a similar pattern in 2022 when a strong dollar rally kept gold prices under pressure for months.

The increase in Canadian portfolio investment abroad, reaching $19.51 billion, suggests a capital outflow that could weigh on the Canadian dollar. This, combined with a risk-averse environment that typically harms commodity-linked currencies, makes a bullish case for USD/CAD. The recent dip in WTI crude oil prices to below $75 a barrel only adds to the potential weakness for the loonie.

The cryptocurrency market is showing significant weakness, with Bitcoin falling below $105,000 and over $1 billion in market liquidations in the last day. This pattern of cascading liquidations in a downturn is reminiscent of the market dynamics during the crypto winter of 2022. Traders should be cautious, as the intense sell-off in altcoins like Solana and Cardano suggests bearish sentiment could persist.

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