Canada’s Consumer Price Index (CPI) Core rose by 0.3% in September, compared to 0.2% previously. This rise in CPI reflects the underlying inflation pressures within the Canadian economy, which policymakers closely monitor.

Gold prices fell sharply, nearing multi-day lows in the sub-$4,100 region per troy ounce. This decline was driven by a stronger US Dollar, profit-taking activities, and diminished enthusiasm regarding US–China trade developments.

Currency and Inflation Dynamics

The GBP/USD pair remained under pressure, falling below 1.3400. The firming US Dollar, aided by easing US–China trade worries, left the British Pound struggling as traders awaited Wednesday’s UK inflation report to gauge the Bank of England’s potential actions.

Bitcoin, along with Ethereum and Ripple, declined amidst a backdrop of macroeconomic uncertainty and geopolitical tensions. The extended US government shutdown also contributed to the uneasy global market environment affecting cryptocurrencies.

Recent developments show that the global economy is performing better than anticipated despite the US tariff impacts. Meanwhile, the corporate asset ownership landscape has changed over the past five years, with Bitcoin becoming prevalent as a reserve asset on corporate and government balance sheets.

Market Strategies and Sentiment

The hotter-than-expected Canadian core inflation of 0.3% suggests the Bank of Canada will be forced to maintain its restrictive stance. However, the US dollar’s overwhelming strength, recently supported by a strong September Non-Farm Payrolls report showing over 250,000 jobs added, is the dominant factor in currency markets. We believe this makes it prudent to use options to bet on continued USD strength against the Canadian dollar.

Sterling remains weak below 1.3400 ahead of the UK’s own critical inflation data. After the August 2025 report showed Consumer Price Inflation remained stubbornly high at 3.8%, another elevated reading will increase pressure on the Bank of England. Given the robust dollar, traders should consider buying puts on GBP/USD as a hedge against further downside.

Gold’s sharp reversal from the $4,100 level signals that the recent rally, driven by the three-week US government shutdown and geopolitical flair-ups, is over for now. This price level was built on historic central bank buying throughout 2024, which saw them accumulate a record of over 1,200 metric tonnes. With short-term risks easing, selling call options to collect premium appears to be a viable strategy.

Bitcoin’s decline is a direct result of a “higher for longer” interest rate environment, making non-yielding assets less attractive. This trend is now magnified by the fact that corporate and sovereign balance sheets hold over $200 billion in BTC, according to recent industry estimates. These large holders are now more sensitive to macroeconomic shifts, creating a new source of potential selling pressure.

Underlying market anxiety persists despite signs of economic resilience. We saw the VIX jump to over 25 during the recent shutdown scare, and it remains elevated compared to the calm we experienced in early 2024. This suggests traders should keep positions nimble and use derivatives to protect against the poorly understood “tectonic shifts” that could trigger sudden market dislocations.

Create your live VT Markets account and start trading now.