The US Producer Price Index, which excludes food and energy, increased by 3.7% year-on-year in July. This is higher than the expected 2.9%, indicating stronger-than-expected wholesale inflation. In currency news, the AUD/USD dropped below 0.6500 due to a strong US Dollar and talks about potential Federal Reserve rate changes. On the other hand, EUR/USD seeks to gain more ground because of the Dollar’s strength and rising US wholesale inflation.

Gold And Commodity Markets

As of Thursday, gold prices are under pressure, trading around $3,330 per troy ounce. This is linked to rising US yields and a strong Dollar. Ripple’s price has been very volatile, significantly impacting cryptocurrencies. XRP is down about 5% at $3.12. Moreover, discussions about Trump’s trade policies could further influence global economic growth. For those interested in trading EUR/USD, several brokers offer competitive spreads and quick execution. Keep in mind, currency trading carries substantial risks, including the possibility of losing all your invested capital. It’s vital to understand these risks before diving into the forex market.

Inflation And Interest Rates

The July 2025 US Producer Price Index indicates that inflation is still a concern. The core increase of 3.7% year-on-year is much higher than the 2.9% predicted, showing that price pressures remain strong. This situation is reminiscent of what we saw during the 2022-2023 period, which led to significant actions by the central bank. Given this persistent inflation, it’s likely that the Federal Reserve may need to keep interest rates high or raise them again. The derivatives market is already showing this shift, with the chance of a rate hike in September 2025 rising to over 60%, up from around 35% a week ago. We expect to see more activity and price changes in interest rate swaps and Treasury futures options as traders adjust their strategies. The strong US Dollar is also affecting foreign exchange markets, particularly as the Australian Dollar drops below the crucial 0.6500 mark against the US Dollar. This has acted as a key support level several times since late 2023. For both EUR/USD and AUD/USD, we are looking at buying put options to profit if the US Dollar continues to strengthen. Gold is losing its appeal as US government bond yields rise, with the 10-year Treasury yield reaching 4.8%, its highest this year. Holding gold, which offers no interest, is becoming less attractive, as reflected in its current price near $3,330 per ounce. We anticipate that derivative traders will continue using futures contracts to bet on lower prices or to hedge their physical gold holdings. This market shift is also affecting riskier assets such as cryptocurrencies. Ripple’s 5% drop to $3.12 contributes to a broader trend where the overall crypto market has lost over $100 billion in value in just one day. This indicates a move away from risk, prompting traders to bet against crypto assets or use options for portfolio protection. Create your live VT Markets account and start trading now.

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