The United States Employment Cost Index for the second quarter came in at 0.9%, which is higher than the expected 0.8%. This figure shows changes in wages and benefits that employers pay, which can affect inflation and monetary policy. The EUR/USD pair saw some ups and downs, hitting around the 1.1450 level after the US employment data was released. Similarly, GBP/USD also fluctuated, rising above 1.3200 after an initial drop, amid renewed selling pressure on the US Dollar.

Gold And Bitcoin Movements

Gold has struggled to maintain its upward trend, finding it hard to go past the $3,300 mark. Meanwhile, Bitcoin has remained stable within the $116,000-$120,000 range, thanks to significant buying from big investors and clearer regulations. The Federal Open Market Committee is currently discussing how tariffs might affect the economy, weighing the risks to labor markets against inflation. This disagreement shows the ongoing uncertainty about the economic effects of tariff policies. The higher-than-expected Employment Cost Index indicates that wage inflation is not slowing down as quickly as the Federal Reserve hopes. With the June 2025 CPI at 3.1%, there’s more pressure for tighter monetary policy. Now, there’s a higher chance of another rate hike before the year ends, which seemed unlikely just a month ago. In this situation, playing with volatility is a smart choice, especially with the ongoing Fed debates about tariffs creating uncertainty. Strategies that benefit from price swings, like long straddles on the SPX or VIX call options, look appealing in the coming weeks. We remember the market swings during tariff debates in the late 2010s, and this internal Fed division hints at a similar unpredictable period ahead.

Market Reaction To Economic Indicators

The weakness of the US Dollar, despite strong wage data, is noteworthy. It seems the market is paying more attention to the European Central Bank’s recent assertive tone and the potential for a US economic slowdown due to trade tensions. We should be careful about staying long on the dollar and consider call options on the EUR/USD, with the aim of targeting the 1.1550 resistance level. Gold’s struggle to break the $3,300 level is a key indicator, particularly with a weaker dollar. Since real yields have stayed positive following the Fed’s rate hikes from 2022 to 2024, there’s less incentive to hold non-yielding gold. This suggests that any increases in gold prices could be a chance to sell or buy put options. On the other hand, Bitcoin is showing a different trend by maintaining its price range. The recent wave of institutional investment, following the 2024 spot ETF approvals, continues to support its price. The contrast between struggling gold and stable Bitcoin indicates a growing preference for digital assets as an inflation hedge among major players. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now