In September, Canadian building permits saw a rise of 4.5%, surpassing the expected 1%. This points to a stronger than anticipated performance in the construction sector for the period.
Elsewhere, the Dow Jones Industrial Average reached a new peak, influenced by gains in banking and healthcare. In currency markets, the USD/JPY remains near nine-month highs, and GBP/USD experiences volatility with movements around 1.3100.
Commodities and Cryptocurrency Trends
In commodities, gold prices continued their upward trend, nearing the $4,200 mark, amid optimism about a potential reopening of the US government. Meanwhile, the cryptocurrency market showed recovery signs, with Bitcoin trading above $104,000 and altcoins rising.
Within European markets, a positive sentiment persists as the FTSE 100 shows a small decline in contrast to other indices. In the realm of regulations, observers eyed movements in the bond market, with implications for political scenarios such as those involving Starmer.
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Economic Indicators and Market Strategies
The surprise jump in Canadian building permits for September points to a stronger-than-expected economy. This gives us reason to believe the Bank of Canada will hold rates higher for longer, especially with recent Statistics Canada data showing core inflation remaining sticky around 3.5%. We see potential in buying call options on the Canadian dollar, particularly against the yen, given Japan’s ongoing fiscal challenges.
Fed commentary continues to signal a tough stance on inflation, making a near-term policy pivot unlikely. The October CPI report that just landed showed inflation at a stubborn 3.8%, reinforcing the Fed’s hawkish position and supporting the dollar’s strength. This suggests that puts on interest rate-sensitive assets could be a prudent hedge against the Fed holding firm through the winter.
Despite the Dow hitting new highs, the recent US government shutdown scare and gold prices surging past $4,200 show underlying market anxiety. We have seen the VIX index settle back to around 18, but this is still elevated compared to the lows we experienced back in 2024, indicating traders are pricing in more uncertainty. Consequently, strategies that benefit from price swings, such as buying straddles on major indices ahead of upcoming political deadlines in Washington, should be considered.
