The session has been slow, with limited news and anticipation surrounding the results of the US-China trade talks. The latest UK labor market report showed the highest job losses since May 2020 and lower-than-expected wage growth. As a result, traders have pushed back their forecasts for Bank of England interest rate cuts from November to September. There are hopes for positive outcomes from the US-China negotiations, possibly including mutual concessions and plans for further discussions. However, a major deal or breakthrough seems unlikely at this time.

Market Stability Amid Anticipation

The markets are stable as traders await key events like the US-China talks and the US Consumer Price Index report coming out tomorrow. Until then, price movements are likely to remain steady. In the American session, key activities will include the US Redbook data and a 3-year auction, which are not expected to change market expectations. The focus will still be on the US-China negotiations, with traders on the lookout for important news. Bitcoin is an exception, having reached new highs following a significant technical breakout. Given the slow movement in today’s markets, let’s break down what this means for those dealing with short-term instruments linked to underlying prices. The recent disappointing UK employment data, with the worst job cuts since spring 2020, suggests that monetary policy expectations will shift. The decrease in wage growth reinforces this belief. As a result, the timeline for potential cuts from the Bank of England has moved forward; these cuts are no longer far off. American and Chinese officials in the trade talks have set modest expectations. There isn’t likely to be a groundbreaking announcement or finalized treaty, but even a simple commitment to continue discussions or reduce some barriers could generate momentum. What matters is not just how they communicate, but also their commitment to following through. If this commitment is clear, short-term contracts might adjust quickly.

Waiting for US Consumer Price Index

We are likely to remain in a holding pattern until the US Consumer Price Index figures are released. Inflation is crucial for the Federal Reserve’s future decisions, especially since housing and services inflation have been persistent. If the data shows continued decrease, the longer-term rate curve may start to anticipate a more accommodating stance. For now, activities during American hours are mostly focused on secondary releases, such as retail data and a government bond sale, which usually don’t affect markets significantly. However, we should stay alert for any headline risk — any leaks or speculations from the negotiation rooms could create volatility, especially in currency and rate products sensitive to future policy changes. Meanwhile, Bitcoin seems to be on a unique path. Its recent surge, driven by fulfilling expected technical patterns, shows that its connection to traditional risk assets is currently unstable and can sometimes vanish completely. Short-term price ranges have held, but this balance largely depends on what happens next. Those of us involved in near-term derivatives should prepare for possible changes if the data or sudden shifts in rhetoric trigger a decisive movement. Patterns indicate that once a direction is set, it often moves quickly. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now