**Japan’s Wage Growth** In June, Japan’s nominal wages rose at their quickest pace in four months. However, this increase did not meet expectations. Real wages in Japan have now fallen for the sixth month in a row. Asia-Pacific stocks showed improvement, even though Wall Street had a less impressive session. The ASX 200 grew by 0.6%, while the Nikkei 225 finished 0.5% higher. Both the Hang Seng and Shanghai Composite gained 0.3%. U.S. equity index futures saw gains after earlier losses caused by disappointing earnings from AMD and SMCI. In geopolitical news, Russian and Chinese naval ships are set to patrol the Asia-Pacific region after conducting drills in the Sea of Japan, according to Interfax. **Currency Market and Geopolitical Risks** The Reserve Bank of New Zealand plans to cut rates on August 20, and the market is already responding. Recently, New Zealand’s inflation data for Q2 2025 came in at 3.8%, slightly below expectations. This clear trajectory for the RBNZ suggests that traders should consider options strategies that benefit from low volatility in the NZD/USD, as the main event is anticipated. The overall weakness of the U.S. dollar is related to last week’s softer-than-expected jobs report for July 2025. Payrolls only grew by 150,000, missing the forecast of 190,000. This has led us to believe the Federal Reserve will likely maintain current rates for the rest of the year. We suggest selling out-of-the-money call options on the U.S. Dollar Index in the upcoming weeks. In Japan, the continued drop in real wages makes it challenging for the Bank of Japan to justify raising interest rates. Despite political pressure for hikes, the economic data does not support such a move. Buying inexpensive, long-term call options on the yen could provide a low-cost hedge against an unexpected policy shift. The positive sentiment in Asian equities and U.S. futures seems tied to the weaker U.S. dollar, which alleviates global financial pressure. Yet, disappointing earnings from tech companies like AMD remind us of the high stock-specific risks. We believe purchasing VIX call options is a smart way to protect against a sudden drop in market sentiment. We should also keep an eye on the joint naval patrols by Russia and China in the Asia-Pacific region. This activity brings a geopolitical risk that might prompt sudden movements towards safer assets. It may be wise to hold some gold or Swiss franc exposure to safeguard a portfolio against any unforeseen escalations. Create your live VT Markets account and start trading now.

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