US crude oil stocks fell by 3.859 million barrels for the week ending July 11. This decline was larger than the expected drop of 1.8 million barrels. The AUD/USD pair rebounded past the 0.6500 level due to the US Dollar’s decline. A significant shift in US monetary policy contributed to this change.

Market Impact on USD and EUR

The EUR/USD rose as pressure on the dollar eased temporarily. Investors are now looking ahead to the upcoming US Retail Sales data and labor market statistics. Gold prices climbed to three-week highs around $2,380 per troy ounce, boosted by the dollar’s decline. This change was influenced by ongoing political and economic tensions affecting the dollar. Australia is expected to have added 20,000 jobs in June, a stark contrast to May’s loss of 2,500 jobs. The Australian Bureau of Statistics will announce these numbers soon. China’s GDP grew by 5.2% year-on-year in the second quarter, supported by trade and industry. However, concerns persist due to slowdowns in investment and retail sales, along with falling property prices.

Opportunities and Strategies

The dollar’s decline is a key focus for the coming weeks, offering opportunities in currencies and commodities. Recent US Consumer Price Index data for June showed inflation cooling to 3.0%, which was below expectations. This reinforces the idea that the Federal Reserve may soon ease its policies. This shift prompts us to consider strategies that benefit from ongoing dollar weakness. With the AUD/USD recovering, we see further potential for growth, especially after the latest job data. The Australian Bureau of Statistics confirmed a robust addition of 39,700 jobs in June, far exceeding forecasts and indicating a resilient domestic economy. We will also keep an eye on EUR/USD, as upcoming US Retail Sales and labor market data will likely create market volatility. Gold has risen to three-week highs around $2,380 per troy ounce in response to these market dynamics. Historically, periods of dollar weakness and falling real yields have supported gold strongly. We expect call options on gold to perform well if geopolitical tensions and a softer dollar continue. The significant reduction in US crude oil stocks suggests strong demand, which should support energy prices. This unexpected draw lends weight to taking bullish positions, such as buying call options on WTI futures. This demand signal is coinciding with OPEC+ maintaining its production cuts, helping to create a favorable environment for prices. Although China’s GDP growth appears strong, we remain cautious due to the slower investment and retail sales figures. This slowdown could pose challenges for commodity-linked currencies like the Australian dollar if domestic demand in China weakens further. Holding some protective put options on Australian assets may be a wise strategy. Create your live VT Markets account and start trading now.

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