The United States Consumer Price Index (CPI) Core rose to 328.66 in July, up from 327.6 in June. This increase highlights ongoing changes in the economy and their effects on prices. In other economic news, the AUD/USD regained strength after a rate cut by the Reserve Bank of Australia, while US CPI figures varied in July. At the same time, the EUR/USD improved, nearing 1.1700, following a weaker US Dollar and speculation about future Federal Reserve decisions.

Gold Market Trends

Gold has bounced back to around $3,350 per troy ounce from a low of about $3,330. This rise is due to pressure on the US Dollar and changing US yield curves. The Bank of England also cut rates by 25 basis points to 4%. Even with this cut, there are worries about high inflation lasting longer, which suggests the end of the easing cycle might be near. In cryptocurrency news, Ripple (XRP) fell slightly to $3.18. This change comes as the crypto market prepares for more US inflation data. According to July 2025 data, the US Core CPI continues to rise, reaching 328.66. Inflation remains a key concern. The market is now predicting a higher chance of Federal Reserve action, with futures data from August 11 indicating a 60% likelihood of a rate cut before the year ends to prevent a hard landing. Expect increased volatility around upcoming Fed announcements.

Currency Market Opportunities

The weakness of the US Dollar is a major theme to trade. With the EUR/USD moving towards 1.1700, we are exploring call options with a 1.1800 strike for September to take advantage of this trend. This is further supported by the European Central Bank, which kept rates steady in early August 2025. In the currency markets, the AUD/USD’s rebound is significant, especially since it happened despite a rate cut from the Reserve Bank of Australia. This indicates that the market may be more focused on selling the US Dollar than the Australian Dollar. We see this as an opportunity to look for continued AUD strength against the Dollar, particularly if US economic data remains mixed. Gold’s return to the $3,350 range reinforces its position as a hedge against inflation and US Dollar pressure. Historically, high inflation and a declining Dollar, like in the late 1970s and more recently in 2022-2023, have boosted gold prices. We believe that taking long positions in gold futures or call options on gold ETFs is a smart strategy. The Bank of England’s decision to cut rates to 4% indicates their concern about a slowing economy rather than just high inflation. This puts downward pressure on the British Pound against the US Dollar. As a result, we see potential in positioning for a lower GBP/USD exchange rate through put options in the weeks ahead. Lastly, the slight drop in Ripple to $3.18 suggests that the crypto market is uneasy and responsive to macroeconomic news. Implied volatility for major cryptocurrencies has increased over 15% in the first week of August 2025 as traders prepare for the upcoming US inflation report. This indicates that volatility-based trades, like straddles, could be lucrative as a sharp price move is anticipated. Create your live VT Markets account and start trading now.

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