Canada’s wholesale sales for May went up slightly by 0.1% compared to April. This was better than the expected drop of 0.4%. The movements in currency pairs and commodity prices show a shaky market. The Australian Dollar fell to the 0.6550 level, influenced by the strong US Dollar and rising trade tensions.

Euro Pressure And Gold Trends

The Euro is under pressure, dropping below 1.1700 due to new tariffs affecting trade. As uncertainty increases, gold remains weak around $3,350 per ounce, despite some recent gains. Ethereum is trading close to $3,000, boosted by large purchases from BitMine. Total ETH inflows reached over $990 million, highlighting changes in the cryptocurrency market. Investors are watching global economic indicators closely, especially the impacts of tariffs and upcoming US inflation data. Ongoing geopolitical issues continue to affect market conditions. Foreign exchange trading is complicated and carries significant risk due to leverage. Traders should assess their financial goals and risk tolerance before getting involved.

Divergence In Central Bank Policies

We see the differences in central bank policies as crucial for derivatives traders in the coming weeks. The small rise in Canadian wholesale sales might distract from the bigger picture: the Bank of Canada was the first G7 central bank to lower its key interest rate to 4.75% in June. This indicates a clear easing trend, especially as inflation slows down. We suggest looking at any strength in the Canadian dollar as an opportunity to sell. Traders might consider buying puts on the Loonie against currencies from more aggressive central banks. The pressure on the Australian Dollar and the Euro comes from a strong US economy and a cautious Federal Reserve. While the European Central Bank also cut rates, the Reserve Bank of Australia is holding steady, showing a clear contrast. The new tariffs aren’t just minor annoyances; they pose a real risk to export-driven economies like Germany, putting further pressure on the Euro. With China’s industrial production for May at 5.6%, below the 6.0% forecast, the main buyer of Australian commodities is faltering. We recommend betting against both the Euro and the Aussie, especially against the dollar. Look for chances to sell on any rallies. We should reassess the negative outlook on gold. The Fed’s “higher for longer” approach—indicated by their recent dot plot showing only one expected rate cut in 2024—does pose a challenge, but gold has remained strong above the $2,300 mark. This is not the situation of 2013. We’re seeing strong central bank purchases and ongoing geopolitical tensions. The latest US CPI reading of 3.3% shows inflation is moderating but still persistent. We believe gold is ready for a breakout. A range-bound strategy, such as selling strangles with strikes outside the $2,280-$2,380 range, could be profitable as we await a significant change, likely due to a shift in the Fed’s messaging. The activity seen in Ethereum is more than just one company’s acquisitions. The key story is the significant change following the SEC’s approval of spot Ether ETFs, which has opened the floodgates for institutional investments. Despite some volatility at first, total inflows into crypto investment products have exceeded $15 billion this year, according to asset managers. This consistent demand helps stabilize the market. We see any dips around the $3,000 mark as opportunities to buy strategically. Purchasing long-dated call options on ETH is an attractive way to gain leveraged exposure during what we believe will be a long-term positive shift for this asset. However, all these positions are held with a close eye on upcoming US inflation and employment data. The market is tuned in to each statement from officials like Powell, and any change to the current narrative will prompt a swift reevaluation. Create your live VT Markets account and start trading now.

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