In June, Canada’s Raw Material Price Index exceeded expectations, increasing by 2.7% when a drop of 0.2% was forecasted. This rise indicates significant shifts in raw material costs within the country. The EUR/USD exchange rate has recently hit multi-day highs, surpassing the 1.1700 mark due to growing weaknesses in the US Dollar. This trend is driven by ongoing trade concerns and discussions about the US Federal Reserve’s independence.

Gold Prices Stay Strong

Gold prices remain high, surpassing $3,400 per troy ounce. This increase is supported by falling US yields and a weaker US Dollar, making gold a more attractive investment during uncertain economic times. China’s economy showed a year-on-year GDP growth of 5.2% in the second quarter, fueled by strong trade and industrial activity. However, a slowdown in fixed-asset investment and retail sales, along with declining property values, raises concerns for future growth. Ripple’s XRP is getting closer to its all-time high of $3.66, driven by increasing demand from institutional investors. This rise is supported by growing activity in both spot and derivatives markets, indicating a rising interest in digital assets.

Weakness of the US Dollar

The unexpected increase in Canada’s raw material prices is a positive sign for its currency. With the Bank of Canada focused on inflation, we are considering call options on the Canadian dollar, hoping to profit from its potential rise against the US dollar. Historically, an increase in commodity prices, which make up a large part of Canada’s exports, has often led to a stronger currency. The ongoing weakness of the US dollar presents a clear opportunity in the foreign exchange market. Current data from the CME FedWatch Tool suggests that markets anticipate a greater than 60% chance of a Federal Reserve interest rate cut by year’s end. We are utilizing bull call spreads on the EUR/USD pair to take advantage of this trend while managing our risks. Gold’s performance above key levels is a trend we expect to continue. The US 10-year Treasury yield, an important factor for gold, has dropped over 25 basis points in the past month, enhancing the metal’s appeal since it has no yield. We plan to increase our long positions through futures contracts to benefit from this upward trend. Mixed signals from the Chinese economy suggest that traders should expect considerable volatility instead of picking a direction. While GDP numbers look strong, reports of new home prices declining for eleven straight months reveal serious underlying weaknesses. We are setting up long straddles on major Chinese market ETFs, a strategy that profits from large price changes in either direction. The significant rally of this digital asset toward its previous peak is being fueled by a noticeable uptick in market participation. Recent data indicates that open interest in its perpetual futures has risen over 40% in the last 90 days, showcasing strong institutional interest. To manage potential risks, we are buying protective put options to safeguard our spot holdings against sudden downturns. Create your live VT Markets account and start trading now.

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