The agenda for the Asian time zone is quite light today. It features some data from South Korea and a speech by a Federal Reserve official. At 7:45 PM ET, Dallas Fed President Lorie Logan will speak at the World Affairs Council event in San Antonio. Many are eager to hear her thoughts on potential changes to the Federal Open Market Committee (FOMC) Fed Funds rate. Most Fed members support keeping rates steady, while only Bowman and Waller want a rate cut. Additionally, Bank of England Governor Bailey is set to speak at 20:00 GMT (4:00 PM ET). His speech text should be available on the Bank of England’s website at that time.

Opportunities In Silence

On July 16, 2025, Asia’s economic calendar offers just a few updates, featuring past results and consensus median expectations for various regions. While today’s calendar may seem empty, the silence is where we can find opportunities. It’s not just about this one quiet day but about the potential it represents. Logan’s comments are more than a typical speech; they provide vital insight into a committee that is clearly divided. The market seems to expect a shift toward lower rates, but the current data doesn’t support that belief, leading to a significant opportunity for us. A key statistic to watch is the Consumer Price Index (CPI), which recently showed a 3.3% annual increase. While this indicates progress, reaching the 2% target is a long process. This figure supports a stance of holding rates steady. For derivative traders, the market’s expectations for rate cuts are overly optimistic. The CME FedWatch Tool shows more than a 60% chance of at least one rate cut by year-end, which we see as a mispricing. A smarter strategy is to bet on rates remaining higher for longer by buying puts on SOFR futures, providing protection against, or profit from, a delayed rate-cut cycle.

Volatility And Trading Strategies

The second part of the equation is volatility. The VIX has been lingering in the low teens, creating a sense of complacency that seems misplaced given the internal conflicts at the central bank and ongoing inflation challenges. This situation is reminiscent of the pre-hike anxiety of late 2021, when the market underestimated the Fed’s determination until it was too late. We believe that buying volatility now is a smart defensive move. A long straddle on the SPX, timed around the next major inflation report or FOMC meeting, could help us capture sharp moves in either direction as the market reconciles hopes with reality. Meanwhile, Bailey’s speech will likely convey a similar message of cautious patience, setting up a potentially stable scenario for major currency pairs like GBP/USD. However, “stable” doesn’t mean “static.” We aren’t seeking a directional breakout at this stage. Instead, we plan to sell premium. Iron condors on the GBP, designed around the current trading range but wide enough to weather data-driven spikes, could offer steady returns as both central banks take their time. Any decrease in implied volatility for the currency pair should prompt us to establish these positions. Create your live VT Markets account and start trading now.

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