The US Commodity Futures Trading Commission reports that S&P 500 net positions are at $-163.2K, an improvement from $-168.5K. This reflects a change in trader sentiment for this popular stock market index. In the currency markets, EUR/USD has climbed past 1.1550, supported by weak US employment and manufacturing data. Similarly, GBP/USD is now above 1.3250 after a six-day slump due to these same economic indicators. Precious metals are gaining traction as gold hits a weekly high near $3,350, benefiting from falling US Treasury yields. This trend follows a reevaluation of the Federal Reserve’s interest rate policies after disappointing employment figures. In the cryptocurrency realm, Bitcoin and some altcoins are struggling despite July’s all-time highs. Bitcoin has dropped below $115,000 as market pressures grow, raising concerns about more potential declines. The euro area’s economy is showing unexpected strength, helped by agreements between the EU and US, along with increased spending in Germany. However, there might still be a chance for a rate cut later this year or early 2026, depending on wage developments. The recent changes in S&P 500 net positions indicate that while overall sentiment remains bearish, there is some easing of pressure. Moving from $-168.5K to $-163.2K suggests that short sellers are taking profits after the index’s late July decline. We may want to sell out-of-the-money puts to earn premium, betting that the market has found a temporary base thanks to the weak economic data. The US dollar is weakening significantly after July 2025’s non-farm payroll report showed only 95,000 jobs added, far below the expected 180,000. This disappointing employment data, along with a manufacturing PMI that dropped to 48.5, supports strength in other currencies. We think buying EUR/USD and GBP/USD call options is a smart way to capitalize on this dollar weakness in the coming weeks. Gold is behaving as expected, surpassing $3,350 as US 10-year Treasury yields fell from 4.1% to 3.8% this past week. This movement resembles what we saw in late 2023 when fears about the Fed’s policies drove investors towards gold. We should consider adding to long gold futures positions, aiming for the $3,400 level if yields stay low. In the crypto market, we see a typical “risk-off” response even with a weaker dollar, as traders cash out profits after the July 2025 highs. Bitcoin’s fall below $115,000 suggests that during times of economic uncertainty, money tends to flow into traditional safe havens like gold rather than digital assets. We should remain cautious and think about buying protective puts for our Bitcoin and Ethereum holdings. The euro area’s surprising economic resilience makes the euro particularly appealing against the dollar right now. The recent EU-US trade agreements have provided a notable boost, contrasting with the slowdown in the US. While we’re optimistic about the euro for now, we need to monitor upcoming wage growth data, as any weakness there could lead to discussions about an ECB rate cut for late 2025.

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