Insights 
VT 
Susan Collins, the President of the Federal Reserve Bank of Boston, provided insights into the economy at the Greater Boston Chamber of Commerce. She noted that the Federal Reserve’s policy is flexible, with scenarios that could maintain steady rates. Collins expects growth, a slight unemployment rise, and continued inflation, with financial conditions benefiting households.
Collins mentioned that risks to the job market have increased, but inflation is expected to ease as tariffs’ impacts lessen. Despite tariff pressures, inflation risks are more contained, and the policy would remain restrictive. Future normalising of rates is anticipated, with potential further easing being considered due to job market outlooks. She predicts a modest unemployment increase with improved hiring over time.
Currency Movements
The US Dollar saw varied changes against major currencies. It showed a 0.26% decrease against the Euro, a 0.29% fall against the Pound, and a 0.51% rise against the Yen. The currency valuations and their daily fluctuations can be understood with the provided currency heat map, serving as a guide for evaluating forex market movements.
The Federal Reserve is signaling more rate cuts are likely on the way. Boston Fed President Collins suggests another 25 basis point cut might be appropriate given rising job market risks. This reinforces the view that the peak of the rate-hiking cycle is firmly behind us.
These comments align with recent data, as we saw in the September 2025 jobs report which showed payrolls grew by only 65,000, far below the average from last year. Core inflation has also moderated to 2.8% year-over-year, giving the Fed more room to ease policy. The market is now pricing in a high probability of a cut at the December meeting.
For derivative traders, this suggests positioning for lower short-term interest rates. We should consider long positions in Secured Overnight Financing Rate (SOFR) futures or Fed Funds futures, as their prices will rise if the Fed cuts as expected. Options strategies that profit from falling yields, such as buying calls on Treasury note futures, also look attractive.
Dollar and Interest Rate Impact
The prospect of further easing makes holding long US dollar positions less appealing. We are seeing the dollar weaken against the Euro and Yen today, and this trend is likely to continue. Traders could use options to bet on further downside for the dollar, such as buying puts on the Dollar Index (DXY) or calls on pairs like EUR/USD.
A weaker dollar and lower real interest rates are very supportive for precious metals. Gold is already trading above $4,150 an ounce, and this dovish pivot from the Fed could be the catalyst to push it toward new records. Long call options on gold futures or related ETFs offer a way to capitalize on this expected upward move.
This policy shift is also a tailwind for equity markets, which have been struggling with restrictive rates since the aggressive hiking cycle of 2023-2024. We could see implied volatility, as measured by the VIX, continue to decline from its recent highs. Call options on major indices like the S&P 500 could perform well if the Fed successfully engineers a soft landing.
