Insights 
VT 
The United States Redbook Index increased to 5.2% year-over-year as of 24th October, up from the previous 5%. This measure indicates changes in retail sales performance across the US.
On the financial markets front, USD/JPY approaches 152.00 as the Yen gains strength due to US-Japan trade developments. Similarly, EUR/USD is holding slight gains amidst anticipation of the Federal Reserve’s interest rate decision.
Oil Prices Decline
Oil prices are experiencing a decline, influenced by OPEC+ production hikes and Russian sanctions offering partial support. The GBP/USD fell below 1.33 due to fiscal concerns in the UK preceding the budget.
The USD/CAD pair is under pressure owing to weak US consumer confidence, with attention on decisions from the Bank of Canada and the Federal Reserve. Meanwhile, USD/CHF has been declining for four consecutive days, with a stronger Swiss Franc and potential Federal Reserve rate cut factors.
In the world of cryptocurrency, Bitcoin is rising above $114,000, while Ethereum and Ripple show stability with expectations for a bullish close to the month. Furthermore, Pump.fun (PUMP) demonstrates growth, crossing the $0.0050 mark as sentiment within the cryptocurrency market turns positive.
The latest Redbook Index shows that retail sales are holding up, coming in at 5.2% year-over-year. Even with this consumer strength, markets are still anticipating an interest rate cut from the Federal Reserve at its upcoming meeting. We’ve seen the annual inflation rate cool to 3.1% in the last report, which is giving the market confidence to bet on the Fed easing policy to support growth.
US Dollar Under Pressure
This expectation is putting pressure on the US Dollar, which has been losing ground against most major currencies. The US Dollar Index (DXY) has reflected this sentiment, dropping to near 103.50 from its highs earlier in the month. We think positioning for further dollar weakness seems prudent, possibly by buying call options on the Euro or the Swiss Franc, which are showing relative strength.
The pressure on the Pound Sterling is a distinct story, driven by worries over the UK’s upcoming budget and slowing growth. Looking back, we saw UK 10-year gilt yields spike dramatically during the 2022 fiscal crisis, and while they are now lower at around 4.1%, the market remains sensitive. Therefore, buying put options on the GBP/USD pair could offer a hedge against further domestic turmoil in the UK.
Crude oil is facing headwinds after the recent OPEC+ decision to increase production quotas, which we saw push WTI prices back toward $82 a barrel. Gold remains a wild card as the softer dollar provides support, but the positive sentiment from the US-China trade truce limits its appeal as a safe haven. For oil, selling call options or establishing bear call spreads on WTI futures could be a way to capitalize on this increased supply.
The general risk-on mood is being fueled by that US-China trade framework and strong inflows into Bitcoin ETFs, which has helped push the VIX down to a relatively calm 14. This suggests that we can cautiously sell out-of-the-money put options on equity indices like the Nasdaq 100 to collect premium while the calm persists. This strategy profits if the market remains stable or continues to climb heading into the end of the month.
