The Japanese yen gained strength as traders reacted to Japan’s recent election. Meanwhile, European stocks showed little excitement, focusing on ongoing US-EU trade talks. Bitcoin stayed above key levels, though its momentum has slowed. The US Treasury Secretary highlighted the value of quality over timing in trade agreements, while Japan’s political changes are being closely watched for their impact on tariff discussions.

Japan’s Political Influence

Ishiba from Japan expressed a wish to discuss trade solutions with the US President soon. The EU is focusing on reaching tariff agreements with the US. A recent ECB survey showed 1-year inflation expectations falling from 2.9% to 2.5%. China kept its lending rates steady, while sight deposits at the Swiss National Bank climbed to CHF 475.3 billion. The Japanese yen appeared stronger, while the US dollar was weaker, leading to slightly negative European stocks. US 10-year bond yields dropped by 5.7 basis points, and gold rose by 0.7% to $3,371.79. WTI crude oil increased slightly to $67.47, and Bitcoin went up 1.0% to $118,439. European markets remained steady with ongoing trade developments in focus. US S&P 500 futures increased by 0.2%, as tech shares drew attention with upcoming earnings reports from Google/Alphabet and Tesla. Gold advanced to $3,371, and cryptocurrencies like Bitcoin and Ethereum continued to show strong growth. The political changes in Japan are causing notable market movements, with the yen’s strength being a key trend. We plan to capitalize on this by purchasing put options on the USD/JPY pair, anticipating further declines. Historically, political uncertainty in Tokyo often boosts the yen, and recent spikes in implied volatility suggest more sharp movements are ahead.

Market Strategies and Trends

With the US Treasury Secretary signaling possible delays in trade agreements, the dollar’s recent weakness may continue. We are increasing our EUR/USD call options because the euro seems likely to benefit from this situation. The dollar index (DXY) has already dropped over 2% in the past month, and a delay past the August 1st deadline could push it down further. We remain cautious about European stocks as tariffs are starting to affect corporate profits. To safeguard our portfolio, we are buying put options on ETFs in the European automotive sector. Conversely, US tech stocks appear more protected, so we will keep our long call positions on key companies ahead of their earnings this week. The crypto rally shows great momentum, and we are involved by holding call options on both Bitcoin and Ethereum. However, after Ethereum’s rapid 50% rise, we are also selling some far out-of-the-money covered calls to lock in profits and generate income. Recently, open interest in CME bitcoin futures exceeded $8 billion for the first time, indicating strong institutional investment fueling this surge. The bond market indicates a flight to safety, as US 10-year yields have significantly decreased. This makes it a very bullish environment for gold, as lower real yields heighten the appeal of non-yielding assets. We are increasing our investment by purchasing call options on major gold ETFs to take advantage of a move past $3,400 an ounce. Create your live VT Markets account and start trading now.

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