Insights 
VT 
In August, South Korea’s money supply growth increased from 6.4% to 6.8%. This data highlights changes in the country’s monetary environment.
The EUR/GBP currency pair moved close to 0.8700 as the French government considered delaying pension reforms. Silver prices, represented by XAG/USD, experienced a rebound towards $52.50, remaining within an overbought zone.
Gold’s Value and Yen’s Performance
Gold’s value neared $4,200, showing potential to continue its upward trend. The Japanese yen maintained its gains against a weakened US Dollar, with 151.00 being a crucial point.
USD/CHF decreased, approaching near 0.8000, as the US Dollar’s decline continued. EUR/CAD appeared to be ready to test a multi-year top, around 1.6400.
The EUR/USD currency pair showed strength, reaching above 1.1600 following Jerome Powell’s comments on potential rate cuts. GBP/USD also improved to approximately 1.3350, reflecting increased speculation about Federal Reserve rate cuts in 2025.
Gold pulled back from record highs but remained well-positioned amid US-China trade tensions and Federal Reserve rate cut expectations. Bitcoin, Ethereum, and Ripple recovery halted at key technical barriers as traders monitored their potential momentum.
Signals from the Fed
We are seeing clear signals from the Fed that more rate cuts are likely in 2025, which is keeping the US Dollar under sustained pressure. Futures markets are now pricing in an over 85% probability of another cut before the year ends, especially after last week’s Core PCE data came in below expectations. This broad dollar weakness is setting the stage for many of our trading strategies in the coming weeks.
Given the dollar’s slide, buying call options on pairs like EUR/USD and GBP/USD looks attractive, targeting strikes above 1.1700 and 1.3400 respectively. The policy difference is clear, as the Bank of England, unlike the Fed, has not signaled an imminent easing cycle. This strategy allows us to gain upside exposure if the dollar’s decline picks up speed.
While gold is nearing $4,200, we must be cautious as the rally seems overextended, with its 14-day RSI staying above 80 for several weeks. We are seeing a rotation into silver, where call spreads could offer a better risk-reward as it plays catch-up to gold. The gold-to-silver ratio has already dropped from a high of 85 to below 80, supporting the view that silver has more room to run.
We’re also watching Asia, where South Korea’s money supply growth accelerated to 6.8% back in August. This kind of monetary expansion, combined with a weak US dollar, has historically been a tailwind for South Korean equities. We should consider buying call options on KOSPI futures as a way to play this potential regional strength.
Despite the bullish trends, risks like the renewed US-China trade tensions mean we need to remain hedged. The VIX index, while off its recent highs, is still holding above 18, indicating that underlying market uncertainty persists. Holding some long volatility positions or buying puts on USD/JPY can provide a useful buffer if market sentiment suddenly shifts.
