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China and Kazakhstan discuss improving trade relations and enhancing cooperation efforts
China’s commerce minister has committed to strengthening trade ties with Kazakhstan, focusing on new sectors and innovative trade methods. The minister highlighted China’s willingness to partner with Kazakhstan to improve their trade relationship.
He stressed the need for cooperation in new areas to speed up these efforts. The objective is to develop fresh trade formats that benefit both countries.
ING predicts EUR/USD may reach 1.20 by year-end due to USD weakness and eurozone growth
**Foreign Demand for Eurozone Assets**
The EUR/USD exchange rate is expected to reach 1.20 by the end of 2025 and 1.22–1.25 by late 2026. However, several risks could affect this prediction, including ongoing US inflation, a strong job market, geopolitical tensions, potential US tariffs on the EU, and European political issues like French fiscal risks. Currently, the exchange rate is just over three figures away from these targets.
With a high chance of a Federal Reserve rate cut in September, we foresee EUR/USD climbing up. The July 2025 jobs report showed a gain of only 95,000 jobs, well below the expected 180,000, indicating a weakening US labor market. Fed Funds futures now suggest an 85% probability of a 25 basis point cut next month, which could weaken the dollar.
Derivative traders might want to position themselves for this rise by targeting the 1.20 level by year-end. Buying EUR/USD call options expiring in December 2025 allows for potential profits from this expected increase while limiting risks. Bull call spreads could also be considered to lower initial costs, especially as implied volatility might rise before the Fed meetings.
**Strength of the Euro Side**
The euro’s outlook looks positive, supporting expectations for the pair to rise. Germany’s ZEW Economic Sentiment index recently reached an 18-month high in August 2025, indicating that potential fiscal stimulus is boosting confidence. This is a sharp contrast to the declining sentiment in the US.
As the Fed begins to cut rates, the costs for holding non-dollar assets will decrease, encouraging large funds to sell US dollar holdings. We are already seeing strong foreign demand for eurozone assets, and this trend is likely to grow. This selling pressure on the dollar may lead to a self-fulfilling rally in the euro.
We must note that the 1.20 level is a significant technical barrier, acting as major resistance due to a double-top formation from early 2021. As we move closer to this level, selling pressure is expected, so traders should plan to take profits or adjust positions. Historical trends suggest that the climb may not be straightforward.
The main risk to this outlook is persistent US inflation, which could cause the Fed to delay or reduce its planned cuts. The latest July 2025 CPI reading of 2.8% has cooled, but it still exceeds the Fed’s target. To hedge against sudden market changes, traders could buy inexpensive, out-of-the-money puts to protect long positions if the US job market unexpectedly strengthens.
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A central bank official suggests potential interest rate cuts this year, but geopolitical inflation risks remain.
The Russian central bank is thinking about lowering interest rates if inflation goes down. However, it might keep the rate at 18% for the rest of the year because of ongoing geopolitical risks.
A high-ranking official from the bank indicated that if inflation falls quickly, the rate could decrease this year. However, the bank’s outlook also suggests that the rate might stay at 18% until the end of the year.
Geopolitical Factors
Geopolitical issues remain a concern, potentially causing inflation to rise. The bank is careful about these inflationary risks, which affect its interest rate choices. The Russian central bank is sending mixed messages, creating a unique opportunity in the derivatives market. They hinted at a possible rate cut, but may also maintain the 18% rate because of ongoing risks. This uncertainty is something traders need to pay attention to in the upcoming weeks. Recently, inflation in Russia has improved, with July 2025 figures showing a drop to an 8.5% annual rate, down from over 11% earlier this year. This supports a potential rate cut since the central bank has noted that lower inflation is necessary for a more relaxed policy. However, a rate cut might put short-term pressure on the ruble. Yet, the geopolitical situation is still a significant risk that could lead the bank to keep rates high to protect the currency. Ongoing talks about tightening energy sanctions have kept the markets on edge. In 2022, the central bank quickly raised rates to stabilize the ruble, reminding us of how rapidly they can act.Market Volatility
This uncertain outlook is causing increased price volatility. One-month implied volatility for USD/RUB options has surged to over 35%, a jump from the low 20s just a month ago. This increase shows that the market expects considerable movement for the ruble, but is unsure which way it will go. Given this high volatility, traders might want to explore strategies that benefit from significant price changes in either direction. Buying option straddles or strangles on the ruble could be effective, as they would gain from either a surprise rate cut or a geopolitical shock causing a sharp move. The current pricing indicates that a period of calm is not likely. For those focused on interest rates, this uncertainty offers clear opportunities. Traders are engaging in interest rate swaps that would profit if the central bank keeps rates steady at 18% through the end of the year. Others, however, are betting on a series of cuts starting as soon as the next meeting. Create your live VT Markets account and start trading now.Implied volatility levels for GBP and EUR pairs provide insights on support and resistance ahead of data.
Implied volatility levels for GBP and EUR currency pairs are important to watch before the release of the EU and UK flash PMI data. Key levels for pairs like GBPUSD, EURUSD, and EURGBP give clues about potential market movements.
For EURUSD, resistance is at 1.1700 and support is at 1.1600. In EURGBP, resistance is 0.8680 and support is 0.8630. EURJPY has resistance at 172.400 and support at 170.900. GBPUSD shows resistance at 1.3520 and support at 1.3400. The GBPCHF pair has resistance at 1.0850 and support at 1.0760, while GBPJPY lists resistance at 199.00 and support at 197.00.
Dynamic Indicators Of Support And Resistance
These levels come from 1-month implied volatility, which acts as dynamic indicators of support and resistance. When combined with technical analysis tools like pivot points and Fibonacci retracements, they help to pinpoint potential entry, profit-taking, or stop-loss levels. Implied volatility provides a data-driven price range that supports technical analysis. Implied volatility ranges are tightening as we approach today’s key flash PMI data from the UK and Eurozone. These reports serve as a crucial economic check for August and will shape expectations for the central bank meetings in September. For derivative traders, the 1-month volatility levels indicate expected limits for currency fluctuations in the coming weeks. The market is especially focused on the Eurozone’s manufacturing PMI. This has struggled to stay above the vital 50-point mark for most of the past year. Earlier, in early 2025, a weak PMI reading of 46.5 led EURUSD to break through its expected support level. With the ECB set to decide on rates on September 11th, a poor reading today might drive traders to buy put options below the 1.1600 support level in EURUSD. For the pound, the scenario differs slightly. The recent UK services PMI data has shown resilience, often exceeding forecasts. The one-month range for GBPUSD between 1.3400 and 1.3520 suggests uncertainty in the market’s direction. If the UK services number is strong while the EU manufacturing figure weakens, we could explore strategies that capitalize on EURGBP dropping below its 0.8630 support.Investment Strategies Based On Volatility
Given the current uncertainty, placing trades that profit from a significant price change—regardless of its direction—could be wise. This is particularly true for pairs like GBPJPY, which has an expected range of 200 pips between 197.00 and 199.00. A surprise in the PMI data could lead these currency pairs to break out of their implied volatility bands, benefiting traders prepared for such movements. These volatility-based levels are most useful for determining option strike prices for the month ahead. For example, if we anticipate weakness in the pound following the Bank of England’s meeting on September 18th, the 1.3400 level in GBPUSD could be a critical strike price for put options. Merging these objective data points with our technical insights allows us to create a stronger trading strategy. Create your live VT Markets account and start trading now.Current gold futures show a bearish trend, highlighting key price thresholds and strategies.
Trade Management Principles
Trade management involves a few key methods to help minimize risk and secure profits. One strategy is to take partial profits at logical points. Another important step is to move stop-loss orders to the entry point after hitting the second profit target. This method focuses on protecting profits and reducing exposure, rather than chasing the market. TradeCompass’s approach, used by investingLive.com, encourages trading discipline and clarity without giving financial advice. Traders need to keep an eye on their risk and capital, making independent trades that align with their risk tolerance. Currently, gold futures are around 3384.6. Our immediate direction is influenced by the 3388.9 level. As long as we are below this level, we expect prices to go down. The first targets to watch are at 3383.1 and the value marker from yesterday at 3377.4. This short-term decline should be viewed as a part of a larger rally, with gold still up over 28% since the start of 2025. The current dip seems like a healthy pause after such a big rise, indicating that the market is taking a break rather than reversing its trend.Impact of Economic Indicators
The recent pullback is linked to last week’s US CPI data, which showed inflation at 3.1%, slightly below the 3.3% that economists expected. This eased inflation worries and caused the dollar to strengthen temporarily, which affected gold prices. Additionally, comments from the central bank last month suggested that rate cuts may not happen as soon as the market anticipated. For traders in derivatives, this situation offers multiple opportunities in the upcoming weeks. Bears might consider short dated puts targeting the 3350 level, while bulls might see this as a chance to sell puts at lower levels, like 3320, to earn premiums during this dip. If prices break above 3394.5, it would change the current bearish outlook and indicate that the consolidation phase has ended. We’ve observed similar patterns in the past, especially during the surge we saw in 2020. Sharp rallies were often followed by brief pullbacks that served as buy opportunities for those who had a longer-term positive outlook. This historical pattern suggests that being patient could pay off once this selling pressure eases. Therefore, we need to stick to our strategy and treat the 3394.5 level as a crucial pivot point. Until we reclaim that level, we should adhere to the short-term bearish trend and manage our risk appropriately. A rise above it would indicate that bulls are back in charge and the larger upward trend could continue. Create your live VT Markets account and start trading now.China’s central bank sets yuan’s mid-point at 7.1287, diverging from the forecast of 7.1748
The People’s Bank of China (PBOC) has set the USD/CNY midpoint at 7.1287, which is higher than the expected 7.1748. The yuan uses a managed floating exchange rate system, allowing its value to change within a +/- 2% range from this midpoint.
The previous closing rate for the yuan was 7.1834. The central bank plays a key role in setting this midpoint to keep the currency stable.
Central Bank’s Strong Signal
The much stronger yuan fixing at 7.1287 sends a clear message from the central bank. This action aims to stop the yuan’s recent decline and sets a boundary against further weakness. Those betting against the yuan now face increased risks in the coming weeks. This strong defense follows recent reports showing that China’s industrial production for July 2025 increased by only 3.1%, which fell short of expectations and raised concerns about the economy. Additionally, the US Federal Reserve has indicated it will maintain a strict monetary policy, adding pressure on the yuan. The PBOC is clearly countering these market forces. Given this strong signal, now might be a good time to sell short-dated call options on USD/CNY. The central bank has essentially put a temporary cap on the exchange rate, making it unlikely to rise significantly in the near term. This strategy could benefit from the expected drop in upward volatility.Historical Context
We’ve seen similar tactics before, especially in late 2023 when the PBOC used strong fixes to defend the 7.30 level. History shows that when the central bank takes such decisive action, it can maintain this position for weeks or even months. This historical pattern suggests we shouldn’t expect a quick return to yuan weakness. For those looking to follow the central bank’s direction, buying put options on USD/CNY could be a smart move. This approach allows investors to profit from a possible further rise in the yuan, as guided by the PBOC’s strong intervention. It’s a direct bet that the PBOC will successfully push the exchange rate lower. Create your live VT Markets account and start trading now.CME Group and Flutter’s FanDuel team up to launch event contracts for financial market betting
FanDuel is teaming up with CME Group to launch affordable event contracts by late 2025. This will allow people to bet on financial metrics like the S&P 500 or oil prices for as little as $1. The project will be carried out through a new joint venture that acts as a non-clearing futures commission merchant.
These contracts will cover daily changes in prices for the S&P 500, oil, gold, and other economic indicators. Interest in event contracts surged after the 2024 U.S. presidential election, attracting more attention from everyday investors and the industry.
Flutter Expertise
Flutter, the parent company of FanDuel, brings experience from Betfair, which is known for its innovative betting exchange similar to event contracts. However, event contracts have drawn regulatory attention. For example, KalshiEX faced legal issues with the CFTC concerning election contracts, and Robinhood halted Super Bowl-related contracts after a CFTC intervention. Critics believe that event contracts might confuse financial trading with gambling, potentially harming public trust. This model is similar to binary options, which offer set payouts for yes/no outcomes and have also faced regulatory hurdles. However, they could provide valuable insights into retail investor sentiment, which can be beneficial for those looking to go against retail trends, depending on how data and odds are presented. With the introduction of FanDuel and CME Group event contracts expected in late 2025, a new flow of market data will emerge. These low-cost contracts on indices like the S&P 500 will attract a crowd of everyday investors, distinct from standard futures traders. The main advantage for us will be using this platform as a real-time measure of Main Street sentiments. We should consider using this as a contrarian signal. For instance, data from Vanda Research shows that spikes in retail investor net flows into instruments like the SPY ETF often happen right before short-term market peaks. If we observe a very bullish sentiment on this new platform—like 90% of contracts betting on the S&P 500 to rise—it could indicate a chance to counter that optimism.The Trend Toward Micro-Speculation
The trend of micro-speculation isn’t new, but this partnership brings it to a larger scale. Products like CME’s Micro E-mini futures have become popular, regularly exceeding 2 million contracts in daily trading. This venture makes the same gambling impulse accessible to a wider audience, offering a clearer yet noisier sentiment signal. Looking back, there was a spike in prediction market volume during the 2024 U.S. election, showing retail interest in event-based outcomes. We can anticipate a similar influx into these financial contracts, providing a rich dataset on retail biases from the start. This raw data could be as useful for our short-term strategies as traditional sentiment surveys. However, we must keep in mind the regulatory risks. The history of binary options in the U.S. includes many crackdowns, and we witnessed the CFTC intervene in similar event contracts as recently as early 2025. Any sudden regulatory actions could quickly eliminate this data source and lead to unpredictable market reactions. In the upcoming weeks, we must determine how to access and analyze the odds and volume data from this new joint venture. We should be prepared to integrate this sentiment information into our models as soon as it launches. This proactive approach will be crucial for understanding the predictable behaviors of retail market participants. Create your live VT Markets account and start trading now.Nomura keeps a short position on the USD, expecting declines due to upcoming events.
Nomura expects the USD to weaken further if Powell hints at a sluggish labor market during the Jackson Hole event. Recent weaker data on NFP and CPI suggests that the Fed may reduce rates, with a 25 basis point cut in September as a likely scenario. The stronger July PPI is considered a temporary issue.
Market Positioning
Market positioning looks manageable, indicating the dollar could drop if Powell indicates a softer policy or if new data remains weak. Risks include stronger-than-expected August data, more foreign investments in US assets, or an increase in USD demand related to China. At Jackson Hole, if Powell mentions a weaker labor market, we could see further dollar decline. If not, markets may wait for September NFP and CPI data for direction. Right now, our position is short on the USD, while staying aware of potential risks from upcoming events and data that could change market sentiment soon. We firmly believe the dollar will weaken more as the Federal Reserve plans to cut rates. July’s jobs report, which showed only 155,000 new jobs, backs our view that the labor market is slowing. Core inflation has also dropped to a two-year low of 2.8%, making a September rate cut likely. In the coming weeks, purchasing put options on the US dollar index (DXY) with a September expiration provides a way to limit risk while positioning for a possible sharp drop after the Jackson Hole symposium. This method helps us profit from a potential decline while keeping our losses limited to the option premium, making it a safer choice than directly shorting futures given the short-term risks.Speculative Positioning
We see potential for this shift, as the Commitment of Traders reports indicate speculative positioning is not as crowded as it was for shorting the dollar in late 2023. That time offers a useful comparison for how quickly the currency can decline once the market senses a genuine Fed shift towards easing, suggesting that the current trend can extend if data continues to align. However, we must stay alert for risks that might boost the dollar. Strong manufacturing or services PMI reports in August or renewed concerns about China’s economy could prompt a flight to safety. Such scenarios would quickly invalidate bearish positions on the dollar, making stop-losses on futures positions vital. The key moment will be Fed Chair Powell’s speech at Jackson Hole. If he openly acknowledges the softening labor market, we expect the dollar to drop immediately. If he is non-committal, traders in derivatives should prepare for range-bound trading until we receive the next inflation and employment updates in early September. Create your live VT Markets account and start trading now.Japan’s flash manufacturing PMI increased to 49.9, while the services PMI decreased to 52.7, and the composite PMI rose to 51.9.
Japan’s flash manufacturing PMI has risen to 49.9, up from 48.9. This shows a small improvement in the manufacturing sector.
On the other hand, the flash services PMI has dipped slightly to 52.7, down from 53.5. The composite PMI, however, has increased to 51.9 from 51.5.
Economic Rebalancing
As of August 21, 2025, Japan’s economy shows signs of careful rebalancing. The rise in the manufacturing PMI to 49.9 is a positive sign, indicating the sector is stabilizing after a challenging period. Yet, the slight drop in the services PMI to 52.7 suggests that the domestic recovery may be losing momentum. This mixed report likely means the Bank of Japan will maintain its current course for now. After ending negative interest rates in early 2025, officials will want to see stronger, consistent growth before making any changes. The current data may allow them to be patient, lowering the chances of an immediate rate hike. For traders monitoring the yen, it seems the USD/JPY pair might stay within a range. There is less reason for significant yen weakness, especially since Japan’s core inflation has remained above 2% for over two years. Consider buying short-dated call options on the yen to prepare for any unexpectedly strong data soon.Equity and Currency Strategies
In the stock market, the strong composite PMI of 51.9 should support the Nikkei 225 index. The better outlook for manufacturing is good news for Japan’s major exporters. Selling out-of-the-money put options on the Nikkei could be a smart way to earn premium, as this report makes a sharp downturn less likely. The main point is that the data does not provide a strong directional signal, which may result in lower implied volatility. This environment favors strategies that benefit from time decay and stable prices. We recommend traders focus on range-trading strategies for both currency and index derivatives until a clearer economic trend appears. Create your live VT Markets account and start trading now.PBOC expected to set USD/CNY midpoint at 7.1748, according to Reuters estimate
The People’s Bank of China (PBOC) sets a daily midpoint for the yuan (RMB) as part of its managed floating exchange rate system. This system allows the yuan to fluctuate by +/- 2% around the midpoint. This method helps manage the yuan’s exchange rate against a group of currencies, focusing especially on the US dollar.
