Insights 
VT 
The United States ISM Manufacturing Employment Index has increased from 45.3 to 46 in October. This reflects a slight improvement in the manufacturing sector’s employment conditions.
The Canadian Dollar is experiencing further weakness, while the Dow Jones Industrial Average is witnessing a dip despite AI investments boosting the broader market. Meanwhile, the Federal Reserve is maintaining policies to reduce inflation pressures, according to Fed’s Cook.
USD/JPY Stability and EUR/USD Pressure
USD/JPY remains stable near multi-month highs as the US Dollar loses momentum following the ISM release. Conversely, USD/CHF has reached a three-week high attributed to inflation misses and US Dollar strength.
EUR/USD is under pressure, trading near the crucial 1.1500 support as expectations for a Fed rate cut diminish. Similarly, GBP/USD stays defensive, consolidating below 1.3150 amidst Greenback gains and pre-BoE caution.
Gold has declined towards $4000 due to a firm US Dollar, rising US Treasury yields, and easing US-China trade tensions. XRP is trading above $2.40, experiencing sell-off pressure in a risk-off market environment.
Cardano price has dropped 6%, trading below $0.58, continuing a previous 10% decline. The decrease in on-chain activity and increased short trading positions reflect a bearish market mood.
Strong US Dollar and Market Volatility
We are seeing the US Dollar strengthen as traders reduce their bets on a Federal Reserve rate cut before year-end. Recent data from October showed core inflation remains sticky, coming in at 3.4%, which supports the Fed’s cautious stance. This environment suggests traders should consider strategies that benefit from a stronger dollar, such as call options on the Dollar Index (DXY).
The EUR/USD pair is under significant pressure, testing the key 1.1500 support level. This is driven not only by dollar strength but also by diverging economic outlooks, as Eurozone inflation has cooled to 2.1%, raising expectations for the European Central Bank to adopt a more dovish tone. A break below this support could trigger further selling, making put options on the Euro an attractive proposition.
While the ISM Manufacturing Employment Index did climb to 46, we should not misinterpret this as a sign of robust health. This figure still indicates a contraction, continuing a trend of manufacturing weakness we have observed since the slowdown back in 2023. This underlying softness could increase market volatility, making straddles on industrial ETFs a viable strategy to play potential price swings.
Gold is losing its shine, falling towards the $4,000 mark due to the combination of a firm dollar and rising bond yields. The 10-year Treasury yield has pushed back above 4.8%, increasing the opportunity cost of holding a non-yielding asset like gold. For derivative traders, this could signal a time to consider bearish positions, such as buying puts on gold futures.
The sharp sell-off in cryptocurrencies like XRP and Cardano points to a broader risk-off sentiment in the market. We’ve seen the Crypto Fear & Greed Index dip back into “Extreme Fear,” with a reading near 20, as retail traders exit their positions. This sustained bearish momentum suggests that shorting crypto futures or buying protective puts on major coins could be prudent.
