On August 8, 2025, the Nasdaq index set a new record high and reached an intraday peak. The S&P index came close to its all-time high, marking a solid week with the Nasdaq up by 3.87% and the S&P up by 2.43%. In the currency markets, the US dollar generally got stronger, but it dipped a little against the British pound, the top-performing currency of the week. The euro rose by 0.21%, and the Japanese yen increased by 0.46% against the dollar.

Federal Reserve Commentary

Fed’s Musalem raised concerns about how tariffs could affect inflation, while other Fed members were less aggressive after the US jobs report. Canada saw a loss of 40.8K jobs, much worse than the expected gain of 13.5K, which affected the USDCAD exchange rate. The British pound surged after a close 5-4 vote by the Bank of England to cut rates by 25 basis points. The US dollar remained strong against the Australian dollar and the Swiss franc, which faced pressure due to increased tariffs to 39%. US yields went up today, with significant rises across all time frames. For the week, yields increased after a sharp drop last week, triggered by disappointing US jobs data. The dollar’s performance was mixed against major global currencies. The upcoming summit between Trump and Putin is a major event that may lead to uncertainty in the markets. This could cause significant price movements in either direction. We recommend using options strategies like straddles on the S&P 500 to profit from large price swings, regardless of direction.

Market Outlook

With the Nasdaq reaching new highs, there may be a sense of complacency. The CBOE Volatility Index (VIX) is currently around 15, a level that often signals market pullbacks. This indicates that buying protective puts on the QQQ ETF could be an affordable way to safeguard portfolios against a potential correction in the upcoming weeks. Increasing US bond yields point to a more hawkish stance from the Federal Reserve. The uncertainty about the next Fed Chair could lead to further interest rate volatility. We remember the market’s sharp revaluation during the Fed’s pivot in 2022, and believe there is value in options on SOFR futures to bet on future policy changes. While the pound has been the strongest currency, we wonder if it can maintain this momentum. The Bank of England’s “hawkish cut” seems to be factored in, and positions may be crowded. We are considering buying GBP/USD puts with a medium-term expiration to position for a potential reversal. Canada’s disappointing jobs report, showing a loss of over 40,000 jobs, puts pressure on the Canadian dollar. This report confirms the slowing trend we’ve noticed in the past two quarters, with the labor participation rate dropping to 65.1%. We see potential for more upside in USD/CAD and will look to buy call options if the pair moves decisively above the 1.3760 resistance level. Create your live VT Markets account and start trading now.

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