In the United States, continuing jobless claims were slightly lower than expected. For the week ending July 11th, the actual number was 1.955 million, compared to a forecast of 1.96 million. In the Forex market, the Euro to US Dollar (EUR/USD) traded around 1.1770. This follows mixed economic data and growing hopes for a US-EU trade deal.

Pressure on the British Pound

The British Pound to US Dollar (GBP/USD) fell again, reaching the low 1.3500s. Recent mixed economic data from the UK played a role in this drop. Gold dipped to intraday lows below $3,350 but made a slight recovery, staying under $3,400. The stronger US Dollar, higher yields, and reduced trade concerns impacted the precious metal. In the cryptocurrency market, Bitcoin climbed back above $118,000. However, other cryptocurrencies like Ethereum and Ripple reflected cautious sentiment, with Ethereum stabilizing around $3,630, a 6% drop from recent highs. Trump’s second presidency has seen a shift in policies focusing on “America First.” These changes happen alongside strong market reactions and ongoing discussions about their effects.

Signs of a Strong Labor Market

The small decrease in continuing jobless claims suggests a resilient labor market, which may lessen the urgency for the Federal Reserve to lower interest rates. Recent data shows continuing claims below 2 million, indicating a trend of tightness that began in early 2024. Because of this, we anticipate a period of higher yields, making interest rate futures an important area of focus. The Euro is facing mixed economic signals and speculation about a trade agreement, creating volatility. Trade policies from the previous administration led to significant currency fluctuations, like the tariff disputes in 2018-2019 that caused unpredictable moves. We believe it is wiser to use options contracts to capitalize on potential price swings rather than picking a direction. Pressure on the British Pound reflects ongoing worries about the UK economy, as recent reports indicate flat growth. This fundamental weakness compared to the US leads us to anticipate further declines in the GBP/USD pair. Traders might consider buying put options to profit from a downward trend toward the low 1.30s. Gold’s struggle to hold its highs can be attributed to a stronger US Dollar and easing trade tensions. The traditional inverse relationship, where a rising U.S. Dollar Index pressures gold, continues to drive the market. We see this as an opportunity to sell out-of-the-money call options, generating income while expecting gold prices to remain capped. The strength of Bitcoin relative to other cryptocurrencies indicates a “flight to quality” in the market. This is evident in the Bitcoin Dominance Index, which has stayed above 54%, showing capital flowing into the main asset. We recommend a pairs trade: go long on Bitcoin futures and short on Ethereum futures to take advantage of this market sentiment divergence. Create your live VT Markets account and start trading now.

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