In September, Japan’s jobs-to-applicants ratio aligned with forecasts, standing at 1.2. This ratio indicates the number of available jobs for each job seeker in the country, providing insight into the labour market’s status.

Currency markets observed the EUR/USD defending the 1.1550-1.1540 support range, with slight trading gains around the 1.1575 mark. Meanwhile, GBP/USD experienced a dip to six-month lows, moving towards 1.3100, with the British Pound dropping over 2% against the US Dollar in October.

Gold And Cryptocurrency Market

Gold aimed for recovery by consolidating above $4,000 after losses, while facing resistance at the 21-day SMA. In the cryptocurrency sector, the 17th anniversary of Bitcoin’s whitepaper was commemorated, documenting its evolution to a $2 trillion market asset.

Trade relations between the US and China saw no surprises following a framework deal, affecting tariffs and exports. In the cryptocurrency market, Zcash maintained bullish momentum, trading at approximately $360 despite broader market challenges.

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The diminishing expectations for more Federal Reserve rate cuts are fueling significant US Dollar strength across the board. Recent data shows US inflation remains persistent, with the last CPI reading for September coming in at a stubborn 3.8%. This environment suggests that maintaining long dollar positions, especially against currencies with struggling economies, is the primary strategy.

Impact On Commodity Linked Currencies

China’s economic softness is directly weighing on commodity-linked currencies like the Australian and New Zealand Dollars. The official NBS Manufacturing PMI for October registered at 49.8, marking a second consecutive month of contraction and signaling caution. For derivative traders, this points toward considering put options on the AUD/USD or looking for bearish entry points on any short-term rallies.

The Pound Sterling is particularly vulnerable, recently hitting a six-month low against the US Dollar as it fell through the 1.3100 level. We see the UK struggling with stagflationary pressures, as recent figures showed inflation at 4.5% while quarterly GDP growth was a mere 0.1%. This backdrop favors strategies that profit from further GBP weakness or heightened volatility.

Gold remains elevated above $4,000, but it faces a difficult path forward with a strong US Dollar and fading rate cut bets. We remember how the Fed aggressively hiked rates back in 2022 and 2023 to tame inflation, and they will be hesitant to ease policy prematurely this time. The metal’s high price is likely sustained by ongoing geopolitical risks and concerns over the US national debt, which recently crossed the $40 trillion mark.

Meanwhile, Japan’s jobs-to-applicants ratio of 1.2 indicates a stable, albeit not booming, labor market. This stability in Japanese data, contrasted with volatility elsewhere, could make the JPY an interesting funding currency for carry trades. Derivative traders might also see this as an opportunity to sell volatility on yen pairs that are not at the center of the current market turmoil.

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