In July, China’s Producer Price Index (PPI) dropped to -3.6% year-on-year, falling short of the expected -3.3%. This information is important for understanding China’s economic situation, as it shows the changes in prices that domestic producers receive for their goods. In financial markets, the EUR/USD pair rose above 1.1650, recovering slightly alongside a mild increase in the US Dollar. Meanwhile, the GBP/USD pair approached the 1.3450 mark, buoyed by recent decisions from the Bank of England and a general decline in US Dollar strength.

Gold Prices and Cryptocurrency Markets

Gold has been stabilizing around $3,400 per troy ounce, influenced by US tax news about certain gold bars. The cryptocurrency market looks favorable, with Bitcoin trading near $116,525, following a recent upward trend that faced minor resistance. The Bank of England lowered interest rates by 25 basis points to 4% due to ongoing concerns about inflation. This decision suggests that the central bank is being careful with monetary policy changes in today’s economic environment. China’s weak producer prices in July indicate ongoing deflationary pressures, hinting at a slowdown in global demand. This is reminiscent of the deflation worries from the mid-2010s, which often led to instability in industrial sectors. We might want to consider buying put options on commodity-linked currencies like the Australian Dollar or on major mining stocks. The Bank of England’s rate cut to 4%, while anticipated, adds complexity to the currency market. Recent data showed that UK inflation is just beginning to ease. This uncertainty around future rates suggests potential fluctuations for the Pound. We might explore long strangles on the GBP/USD pair, a strategy aimed at profiting from significant price movements in either direction.

EUR/USD Pair and Gold Stabilization

With the EUR/USD pair climbing, the main reason appears to be the general weakness of the US Dollar, especially after the US Non-Farm Payrolls report for July revealed only 150,000 jobs added, well below expectations. This could lead the Federal Reserve to pause its tightening measures. Traders might think about buying near-term call options on the EUR/USD to take advantage of a continuing dollar decline. Gold’s price stability around $3,400 an ounce is happening in a high-price environment, driven by strong demand. The World Gold Council’s recent Q2 2025 report showed that central banks continued to be net buyers, adding over 200 tonnes to their holdings. For traders who believe this price will hold, selling covered calls against current holdings could be a good way to earn income. In cryptocurrency, Bitcoin is struggling near the $116,500 resistance level after its recent increase. Options data from significant exchanges indicates that the put/call ratio has risen to 0.65, suggesting that traders are proactively buying puts for protection. This could be a good opportunity to hedge long positions by purchasing put options with a strike price around $110,000 as a safeguard against a possible decline. Create your live VT Markets account and start trading now.

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