Colombia’s Consumer Price Index (CPI) for November was reported at 5.3% year-on-year. This figure is lower than the anticipated 5.45%.
In other financial news, the EUR/USD pair consolidates at 1.1650, impacted by US inflation and potential European Central Bank actions. Meanwhile, the GBP/USD pair recedes to the 1.3320 zone after a failed bullish attempt.
Gold Prices And Cryptocurrencies
Gold prices are currently holding strong at $4,200 per troy ounce, amid building anticipation of potential Federal Reserve policy easing. Bitcoin steadies above $91,000, while Ethereum remains above $3,100 ahead of the Federal Reserve’s upcoming meeting.
Ripple continues its decline, trading at $2.06, as sentiment remains low despite steady inflows into XRP spot ETFs. The upcoming week sees the Fed expected to announce a rate cut, while other central banks such as the RBA, BoC, and SNB also have meetings scheduled.
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With the Federal Reserve meeting on December 10th, we see a rate cut as almost fully priced into the market. The real risk for traders is not the cut itself, but the accompanying dot plot and forward guidance. Any hint of a “one and done” policy could spark a violent repricing, so buying short-term volatility through options on the SPX or VIX futures is a prudent way to prepare for a surprise.
The US Dollar And Hedging Strategies
The US Dollar’s weakness is the dominant theme, pushing pairs like EUR/USD higher. However, this has become a crowded trade, making it vulnerable to a sharp reversal if the Fed delivers a hawkish cut. We should consider hedging long forex positions by purchasing out-of-the-money put options on pairs like the EUR/USD, providing cheap insurance against an unexpected dollar rally.
Gold is holding strong at $4,200 an ounce, a level that seemed distant after it first broke through $2,400 back in the spring of 2024. With so much optimism baked in, outright long futures positions carry significant risk. A better approach would be using bull call spreads, which limit potential upside but significantly lower the cost of entry and define risk if the Fed’s commentary disappoints gold bulls.
In crypto, Bitcoin is consolidating above $91,000 after its massive run, which started with the ETF approvals of 2024. Implied volatility for options expiring after the Fed meeting is high, reflecting the market’s uncertainty. We can take advantage of this by selling covered calls against existing Bitcoin holdings to generate income from the elevated premiums.
The latest inflation data from Colombia, showing a fall to 5.3%, reinforces the global disinflation trend we’ve watched develop since rates peaked in 2023, when Colombian inflation was still above 10%. This improves the outlook for emerging market currencies that have been weighed down by high inflation. This makes futures on the Colombian peso look increasingly attractive against the dollar.
