The Asia-Pacific session was mostly calm, with little change in key asset classes. China and Kazakhstan are working to strengthen trade relations, while the EURUSD could reach 1.20 due to a weaker USD. The Russian central bank is considering changing interest rates due to rising inflation. GBP and EUR pairs may experience fluctuations ahead of PMI data. Gold futures are down as of August 21, 2025. The UN is calling for a ceasefire in Gaza, and Meta has paused AI hiring after a company reorganization.

Current Financial Partnerships

Today, the PBOC set a stronger USD/CNY mid-point at 7.1287, which was above expectations. CME and FanDuel are teaming up to provide event contracts for financial markets. Nomura is betting against the USD as the Jackson Hole event approaches, and Japan’s flash manufacturing PMI increased to 49.9. The PBOC is expected to set the USD/CNY rate at 7.1748. Nordea foresees a decline in USDNOK and an increase in EURNOK. The session remained stable with limited market movements, as previous Fed events didn’t have a significant impact. The AUD is the weakest currency today, with the EUR leading. The ASX200 rose by 0.68%, while the Nikkei fell by 0.49%. Oil prices increased by 0.35%, and gold prices decreased by 0.26%. Next, the focus will shift to flash PMI data from the EU, UK, and US, along with US claims data, before the awaited Jackson Hole symposium and Powell’s speech.

Market Uncertainty Before Jackson Hole

The market is quiet now, but we are anticipating the Jackson Hole symposium. The last Fed minutes seem outdated, as they do not reflect the recent significant changes in labor market data. This uncertainty may prompt us to consider buying volatility, as Powell’s speech could lead to a significant market reaction. We’ve seen similar situations before, like in August 2022 when Powell’s brief, stern speech caused the S&P 500 to drop over 3% in one day. Buying straddles on major indices like the SPX or on currency pairs like USD/JPY could be a wise approach to prepare for any sharp market movements. This strategy benefits from significant price changes, regardless of direction. There is a strong expectation that the US dollar will weaken, with some analysts predicting a EUR/USD target of 1.20. This outlook is backed by recent Eurozone CPI data for July 2025, which shows core inflation remaining steady at 2.8%, indicating that the ECB may need to maintain a hawkish stance longer than the Fed. We might look into buying EUR/USD call options to take advantage of this potential upward trend. We’re closely monitoring China after the PBOC set a stronger-than-expected reference rate for the yuan today. This decision follows China’s manufacturing PMI for July 2025, which was 49.5, signaling ongoing economic slowdown that the authorities are trying to control. The Australian dollar is already showing weakness today, so we could consider using put options on AUD/USD to navigate this regional uncertainty. In the short term, all attention is on the flash PMI data from the UK and Europe. We expect implied volatility to rise ahead of these reports, similar to what we saw before the significant drop in sterling after disappointing PMI results in late 2024. Purchasing short-dated options on GBP/USD could be an opportunity to capitalize on immediate price movements following the announcement. Create your live VT Markets account and start trading now.

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