Insights 
VT 
Brazil’s FIPE inflation index decreased to 0.27% in October from 0.65% in the previous month. This reduction indicates a slowdown in inflationary pressures for the country during the month.
The EUR/USD currency pair continues its descent, reaching new three-month lows below the 1.1500 mark. This decline has persisted despite a lack of impactful data, with market focus shifting to upcoming central bank announcements.
UK Market Trends
In the UK, concerns about borrowing costs have weighed on the GBP/USD, driving it to its lowest since April, below 1.3100. Gold remains below $4,000 despite increased market caution, struggling to capture safe-haven demand amid less expectation of a Federal Reserve rate cut.
In contrast to the broad market correction, privacy coins such as Dash and Zcash have seen a sharp increase. Their market capitalisation temporarily exceeded $25 billion.
DeFi platforms face close examination after a $120 million exploit affected the decentralized exchange, Balancer. The breach exploited older liquidity pools which the exchange was unable to halt promptly.
Given today is November 4, 2025, the sharp drop in Brazil’s October inflation to 0.27% is a significant signal for us. This deceleration is much faster than anticipated and suggests the Banco Central do Brasil (BCB) may accelerate its interest rate cutting cycle. We should therefore consider positioning for lower domestic rates in the coming weeks.
Implications for Brazilian Markets
This outlook puts downward pressure on the Brazilian Real, especially as the US Dollar continues to show broad strength. With the USD/BRL pair already testing multi-month highs near 5.40, we see an opportunity in buying call options on the currency pair. This move is supported by recent data showing non-commercial traders increasing their net long positions on the US Dollar Index for the fifth straight week.
Conversely, the prospect of more aggressive rate cuts is bullish for Brazilian equities. Lower borrowing costs should boost corporate earnings and sentiment, providing a tailwind for the Ibovespa index, which has already climbed over 4% in the last month to around 135,000 points. We should look at buying Ibovespa futures or call options to capture this potential upside.
This Brazilian divergence is happening against a backdrop of global risk aversion and a strong dollar. The euro breaking below 1.1500 and the pound sterling hitting its lowest level since April reinforces the theme of US economic outperformance, a dynamic we haven’t seen this strongly since the Fed’s aggressive hiking cycle back in 2023. Derivative strategies should continue to favor dollar strength against European currencies.
Even with market uncertainty, gold is struggling below $4,000 because of the strong dollar and firm US interest rates. The 10-year US Treasury yield holding firm above 4.8% is making non-yielding bullion less attractive for now. This suggests we should be cautious with long gold positions and perhaps consider selling out-of-the-money call options.
