Donald Trump welcomed Canada’s decision to drop retaliatory tariffs, expressing hope for better relations. He mentioned an upcoming call with Prime Minister Carney after a productive conversation the day before. On the topic of Russia, Trump noted that President Putin might go to the World Cup and voiced his concerns about a recent pipeline attack. He predicted that developments regarding Russia and Ukraine would become clearer in two weeks.

Mixed Feelings About Russia

Trump’s remarks showed mixed feelings: he expressed interest in inviting Putin but emphasized needing strong American security. He used a friendly tone when mentioning the Russian leader. While maintaining sanctions on Russian oil to encourage peace, he criticized the pipeline disruptions, even though they can be repaired. Russia is continuing its military buildup, raising worries about potential harm to civilians, especially with the damaged pipeline. Regarding economic matters, Trump commented on Powell’s monetary actions, calling them delayed. Powell had introduced three rate cuts of 50 basis points each over the previous months to tackle economic issues before and after the presidential election. The improved relationship with Canada could lead to a period of more stability for cross-border assets. In late 2024, the Canadian dollar gained strength against the U.S. dollar after the removal of these tariffs. With trade tensions easing, options on currency ETFs may show lower implied volatility, making it less risky to invest in companies with substantial Canadian-American supply chains.

Geopolitical Tensions and Market Volatility

The situation with Russia signals potential market volatility in the next two weeks. Trump’s mention of a specific timeline is unusual and serves as a clear warning for traders. We saw West Texas Intermediate crude futures rise over 4% after the pipeline strike, highlighting how sensitive energy markets are to these events. This geopolitical uncertainty makes trading the CBOE Volatility Index (VIX) a key focus. The VIX spiked above 35 during the early stages of the conflict in 2022, and a similar increase could occur if conditions worsen in early September 2025. Options strategies like straddles on major indices or energy ETFs may offer a way to trade expected price shifts without committing to a specific direction. Additionally, the Federal Reserve is perceived as reactive. The rate cuts from September, November, and December of last year are now past events, and the market is questioning if these actions were sufficient to stabilize the economy. With July 2025 CPI data indicating inflation remains above 3%, any sign of slowing in the upcoming jobs report could prompt the Fed to act, leading to notable movements in interest rate futures. Create your live VT Markets account and start trading now.

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