European markets are in a steady mood as traders wait for important US data. The US dollar is stable, while European stocks and S&P 500 futures show small gains. US 10-year yields have decreased by 2.3 basis points to 4.187%. Commodity prices have fallen, with gold down 0.4% to $3,545.09 and WTI crude down 1.0% to $63.33. Bitcoin has dropped 1.2% to $110,877. In economic news, Switzerland’s Consumer Price Index for August came in as expected at +0.2% year-on-year. Eurozone retail sales for July fell by 0.5%, worse than the expected -0.2% drop. Germany’s and the UK’s construction PMIs for August were 46.0 and 45.5, respectively. In the US, August Challenger layoffs rose to 85,979 from 62,075. The Ifo Institute has reduced its German economic growth forecasts, now predicting just 0.1% growth for 2025. Global trade is focused on US-Japan talks to lower auto tariffs. In the forex market, EUR/USD has seen slight changes, sitting at 1.1645 due to option expirations. USD/JPY is up 0.2% to 148.31, showing minimal activity, while the Australian dollar trails slightly behind the US dollar. With the US jobs report on September 5th, 2025, coming in much weaker than expected, it signals that the American labor market is cooling. Only 73,000 jobs were added, far below the 115,000 forecast. This trend suggests that layoffs are rising and wage growth is slowing, which increases the likelihood of the Federal Reserve cutting rates sooner than expected. This will likely influence market movements in the upcoming weeks. This forecast could put pressure on the US dollar, but Europe offers little in terms of an alternative, with the German economy projected to grow by just 0.1% in 2025. The looming threat of US tariffs on EU goods may put the EUR/USD pair in a tug-of-war between two struggling economies. We should look for US dollar weakness against currencies with stronger fundamentals. For equity traders, weak economic news might be seen as good news. The possibility of lower interest rates could support stocks, especially growth-sensitive tech shares. Looking back to late 2023, when markets rallied on the mere expectation of a Fed pivot, we should consider positioning ourselves similarly by using call options on the S&P 500 and Nasdaq 100. Gold remains a strong conviction for us. It is well-positioned for the current environment. A weaker dollar, falling bond yields, and soaring US government debt—now at 124% of GDP—create a solid case for holding gold. With prices staying above $3,500, we see any dips as buying opportunities for a potential rise toward the $5,000 level predicted by analysts. Although the market has been cautious, this week’s data could trigger increased volatility. Before the jobs report, the VIX, a measure of expected market volatility, was at multi-year lows, similar to early 2024. We expect a sharp increase, creating chances to trade VIX futures or use options strategies like straddles to benefit from significant price swings in either direction. Lastly, signs of a global economic slowdown are negative for energy demand. WTI crude oil is already declining, and with both the US and Europe facing economic challenges, demand is unlikely to recover soon. We see this as an opportunity to initiate short positions on crude oil futures or buy put options, betting on a further drop from its current $63 level.

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