The SEC is suggesting an end to quarterly earnings reports, which could change how financial information is shared. In Canada, retail sales in July dropped by 0.8%, contrary to an expected rise of 1.5%. Meanwhile, the US GDP Nowcast increased slightly to 2.1%, and gold prices rose by $39, reaching $3683.

Currency And Commodity Movements

Gold’s rally and positive news from US-China trade talks strengthened the Canadian dollar (CAD), making it the top performer, while the British pound (GBP) struggled. The US oil rig count increased by two, but WTI crude oil fell by 84 cents to $62.73. The S&P 500 gained 31 points, closing at 6664, setting a new record and continuing its upward trend since the financial crisis. Notable stock performers included Oracle (+4.3%), Amgen (+3.3%), and Apple (+3.1%), while Intel dropped by 3%. In the currency market, USD/JPY remained unchanged despite expected interest rate changes from the Bank of Japan. Stocks stabilized during trading before gaining momentum, setting new records for indices. While the stock market keeps reaching new highs, it’s wise to use options for protection against rapid changes in investor sentiment. The S&P 500 is up over 30% this year, and the VIX is at 14.5, a level often seen before short-term market downturns. We can consider buying put options on major indices like the SPX or SPY with late October or November expirations to safeguard our long positions.

Implications Of SEC Proposal

The SEC’s proposal to end quarterly earnings reports could significantly impact how we trade company profits. If approved, implied volatility for options related to the new semi-annual reporting dates might increase. Over the coming weeks, we might want to buy long-dated straddles or strangles on companies expected to grow significantly, as fewer updates could result in larger price fluctuations when information is finally made public. Gold has exceeded $3,600 an ounce, a development that signals serious inflation concerns. The latest Consumer Price Index for August shows core inflation stubbornly at 3.8%, challenging the Fed’s view that price pressures are temporary. Considering this, we should look into call options on gold miners or gold ETFs to capitalize on the trend, as the market seems to be anticipating ongoing currency depreciation. Positive news on US-China trade is beneficial for the market, and the Canadian dollar’s strength in response is especially notable. Despite poor retail sales data in Canada, the loonie strengthened, indicating how responsive currency markets are to trade news. We could take advantage of this by trading options on currency pairs like AUD/USD, which is also sensitive to China’s economic performance. The Federal Reserve has lowered interest rates, but the 10-year Treasury yield is still rising, creating a complicated landscape for interest rate derivatives. We remember how the Fed had to change its stance back in 2022 and 2023 when inflation turned out to be stickier than expected. Traders should exercise caution and could explore options on bond ETFs like TLT to prepare for the possibility that the bond market is accurately anticipating higher inflation. Crude oil prices remain unexpectedly low around $62 a barrel, even with a modest increase in rig counts. This suggests that the market is more concerned with global growth issues than with supply, particularly as the US Strategic Petroleum Reserve is at its lowest since the early 1980s. Low prices could create a chance to buy long-dated call options on oil futures, betting that any positive economic surprises or supply issues could lead to a sharp price increase. Create your live VT Markets account and start trading now.

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