Foreign portfolio investment in Canadian securities experienced an increase from $25.92 billion to $31.32 billion in September. This rise reflects growing interest and activity in the Canadian market during this period.

Market activities elsewhere include the Dow Jones Industrial Average extending its decline due to weaker stocks, while the USD/JPY remains near nine-month highs as the US Dollar gains strength. Similarly, while silver edges up, it continues to face limits below $51.00 amidst mixed market signals.

Eur and Gbp Movement

The EUR/GBP saw a retreat due to profit-taking and comments from the Bank of England despite initially reaching highs. Meanwhile, the GBP/USD hovers around 1.3165, held back by ongoing UK fiscal concerns and anticipation of US jobs data.

Gold is currently in a holding pattern below $4,100 as traders pull back on expectations for additional Federal Reserve rate adjustments. Bitcoin and major altcoins show modest signs of recovery amid continued deleveraging, with Bitcoin trading above $95,000.

As the new week begins, attention shifts to upcoming US economic data and the tech sector’s performance, with Nvidia’s potential impact being a focal point. Chainlink maintains its position above $14.00 despite low retail interest and a subdued derivatives market.

Impact of Us Dollar Strength

The recent jump in foreign investment into Canadian securities, which hit $31.32 billion in September, points to a strong Canadian dollar. Looking back, we see this trend has persisted, as Statistics Canada confirmed last week that October inflows remained robust at over $28 billion. This continued demand for Canadian assets should make us cautious about taking positions against the loonie in the coming weeks.

At the same time, the US dollar is showing considerable strength, and we see markets are now pricing in less than a 10% chance of a Federal Reserve rate cut in December. This sentiment was solidified after last week’s October CPI report showed core inflation remaining stubbornly above the Fed’s target at 3.4%. Derivative strategies that are long the US dollar seem well-positioned, as a hawkish Fed provides a strong tailwind.

This dollar strength is pushing down on other major currencies, with the EUR/USD trading below 1.1600 and the pound sterling on the defensive around 1.3160. Lingering worries over the UK’s fiscal health, which haven’t improved since the budget debates back in the summer of 2025, continue to weigh on the pound. We should consider this weakness when structuring currency pair trades against the dollar.

Gold has been stuck below $4,100 an ounce because a strong dollar and firm US interest rates make holding a non-yielding asset less attractive. The metal has been in a similar holding pattern since late 2024, failing to break out whenever expectations for rate cuts diminish. For now, options strategies that profit from low volatility, like selling strangles, could be more effective than betting on a clear direction.

While Bitcoin has shown a tentative recovery above $95,000 following last month’s sharp sell-off, the derivatives market is signaling caution. We’re observing that open interest in crypto futures is still down roughly 25% from its peak in the third quarter of 2025. This suggests that while prices are moving up, there’s a lack of conviction from larger traders, making this recovery fragile.

Create your live VT Markets account and start trading now.