BP expects global oil demand to rise by about 1% in both 2025 and 2026. This prediction indicates that the oil market is moving towards a more balanced state, where demand growth matches the supply growth from non-OPEC producers. The slight increase in non-OPEC production will not fully meet the growing demand. This means that OPEC+ is likely to have more control over oil prices soon.

OPEC+ Influence on Oil Prices

With non-OPEC supply growth stabilizing, OPEC+ could have a greater impact on market prices. If global demand continues to rise, this environment may support higher oil prices. BP’s analysis suggests stability with no major unexpected demand increases. Historically, BP has favored rising oil prices, which aligns with recent comments from the CEO. The oil market appears to be rebalancing, as supply growth outside the leading producer group is leveling off. This shift allows OPEC+ to take charge of pricing again. We should prepare for a more controlled market in the coming weeks. The forecast of 1% demand growth for this year and next appears strong, backed by recent data. The International Energy Agency’s July 2025 report showed that second-quarter demand exceeded expectations, mainly due to a rebound in Asian travel. This stable demand sets a solid floor for prices.

Strategic Market Approaches

On the supply side, we have seen signs of a plateau for several months. The U.S. Energy Information Administration reported a slowdown in growth from the Permian Basin for the second consecutive quarter of 2025. With less new oil coming from outside OPEC+, the group’s production choices hold more significance. Given this outlook, strategies that benefit from stable or rising prices could be valuable. Buying call options on crude futures may capture potential gains if OPEC+ restricts supply further. Selling out-of-the-money put options is another way to profit, betting that OPEC+ will protect certain price levels. A similar strategy worked well for the producer group not long ago. Looking back to 2021-2022, their disciplined supply management was a crucial factor in driving oil prices up significantly. The current situation feels similar to that period. It’s important to note that this outlook matches the interests of major producers who gain from higher prices. While the overall trend looks positive, we can expect short-term volatility to increase around OPEC+ meetings, such as the one in July 2025 that confirmed current cuts. This creates opportunities for traders who focus on volatility, not just price direction. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Apple’s share price has recently gone up. This increase comes after news of a 100% tariff on chip and semiconductor imports. Companies that invest in U.S. manufacturing will be exempt from this tariff. In response, Tim Cook, Apple’s CEO, announced a $600 billion investment in U.S. manufacturing over the next four years.

Apple’s Investment Pledge

This investment is a significant jump from the $43 billion Apple invested over the last four years. Following this announcement, Apple’s stock rose about 2.3% in after-hours trading. Apple’s price reaction reflects concerns about the new semiconductor tariff and the $600 billion investment promise. This spike appears mostly based on headlines. The market seems to overlook that this investment is more than ten times Apple’s actual capital spending in recent years. Such headline-driven spikes increase implied volatility, making options trading more expensive. Now, implied volatility on Apple options has risen over 30%, the highest level since late 2024’s earnings reports. For traders, this makes buying puts more costly, but there’s a good chance to sell out-of-the-money call spreads to bet against any further irrational price increases. It’s hard to fully trust the $600 billion investment promise when we consider the facts. The whole U.S. CHIPS and Science Act of 2022, a major government initiative, set aside just over $52 billion to boost the entire domestic semiconductor industry. One company claiming to invest over ten times that amount just for a tariff exemption stretches our belief.

Policy-Driven Market Reactions

We can learn from the trade war escalations of 2018 and 2019. Market rallies driven by single announcements or tweets usually faded within weeks as concrete details remained unclear. The best strategy now is to watch this initial excitement peak before preparing for a pullback to a more sensible valuation. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The People’s Bank of China (PBOC) sets a daily midpoint for the yuan against other currencies, especially the US dollar. This midpoint helps the yuan trade within a “band” that allows for a 2% change. Each day, the midpoint reflects market demand and global currency trends. The PBOC uses a managed floating exchange rate, letting the yuan move within a +/- 2% trading band around the midpoint. This approach allows the yuan to adjust its value during the day while keeping it stable unless significant economic changes occur.

PBOC’s Intervention in the Forex Market

When the yuan approaches the limits of this band or if market activity is unstable, the PBOC may step in. By buying or selling the yuan, the central bank helps keep its value steady. This intervention allows for a smoother adjustment of the yuan’s value in the foreign exchange market. The PBOC is expected to set the USD/CNY rate at 7.1709, signaling a commitment to stabilization. This level suggests that authorities are carefully managing the currency to prevent it from dropping sharply, as it did at times in 2023. For traders, this shows that the PBOC aims to guard against significant depreciation. This policy seems rational based on recent economic data. Earlier this week, reports indicated that China’s exports fell 1.5% in July 2025, highlighting weak external demand. By managing the currency closely, the PBOC seeks to prevent this weakness from leading to chaotic capital flight, a pattern of intervention seen throughout 2025. The global environment is also supportive of this strategy. In the United States, core inflation for July 2025 was reported at 2.8%, slightly below expectations. This suggests that the Federal Reserve is likely to cut rates before the end of the year. A more cautious Fed puts less pressure on the US dollar, making it easier for the PBOC to manage the yuan.

Strategies for Traders

In the coming weeks, traders might consider selling volatility in USD/CNY options as a smart strategy. The PBOC’s clear intent to manage the exchange rate within a tight band is likely to limit large, unexpected price movements. Therefore, strategies that benefit from low volatility, like short strangles or straddles, seem appealing. Keep an eye on the daily fixing compared to market estimates. During tough times in 2023 and 2024, the PBOC often set reference rates higher than expected to influence market sentiment. Following this trend could reinforce the view that the 7.15-7.25 range will be strongly defended for the rest of the quarter. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The U.S. plans to implement a 15% tariff on all imports from Japan, according to a White House source. This new tariff will apply to all products, with no exceptions for those already facing higher tariffs. Initially, it was believed that only items with tariffs below 15% would be impacted. However, the new tariffs will affect every Japanese import, adding an extra 15% charge.

Market Response

This announcement came just after U.S. markets closed, causing some fluctuations. Notably, the yen dropped initially but later stabilized after news about the tariff increase broke. Earlier in the week, there were hints of these changes. Akazawa mentioned that the trade agreement between the U.S. and Japan isn’t legally binding. By Tuesday, Akazawa had not confirmed the agreement on tariffs and was preparing to return to the U.S. for further discussions. As a result of these events, the Japanese yen is under pressure. Due to the yen’s decline, traders are considering derivatives that could profit, such as buying USD/JPY call options. The tariff news is seen as a negative signal for the yen. We anticipate this downward pressure will persist as the market adjusts to the potential impact on Japan’s economy.

Currency and Stock Market Impact

As of August 7th, 2025, the USD/JPY pair has climbed over the 162 mark, the highest since late 2024. This move has broken through key resistance levels, suggesting more upward movement in the near future. The primary strategy is to remain long on the U.S. dollar against the yen. This isn’t just about currency; it represents a major challenge for Japanese stocks. We are considering buying put options on the Nikkei 225 index, as major exporters will likely suffer due to the 15% tariff. A recent survey revealed that over 30% of Japanese manufacturing exports go to the U.S., highlighting the possible damage. We’ve seen similar scenarios during the 2018-2019 trade disputes. Initial tariff threats led to months of volatility and a weakening of the target currency. History suggests that this uncertainty will not resolve quickly, creating an environment ripe for volatility-based trades. This situation arises at a particularly poor time, as Japan’s latest Q2 2025 GDP growth forecast was downgraded to just 0.3% due to weak consumer spending. With limited options available to counter this external shock, the yen’s path appears downward. This underlying weakness reinforces a bearish outlook for the coming weeks. Given the political nature of these announcements, we should prepare for sharp price fluctuations based on headlines and official statements. This makes buying options strategies like straddles on USD/JPY appealing, as they can profit from significant movements in either direction. The only certainty is that market volatility will rise significantly from here. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

McDonald’s Q2 2025 earnings report shows strong results, thanks to budget-conscious consumers. The reported EPS was $3.14, while adjusted EPS (excluding certain items) hit $3.19, beating the estimate of $3.14. Revenue reached $6.84 billion, above the expected $6.7 billion, reflecting a 5% increase compared to last year. Global comparable sales rose by 3.8%, surpassing the forecast of 2.6%. In the U.S., same-store sales grew by 2.5%, recovering from a prior decline of 0.7% year-over-year. Net income increased to $2.25 billion, an 11% rise from last year. The idea of ‘inferior goods’ applies here, as demand for these items rises when people’s incomes decrease. During tough times, consumers often choose cheaper options like fast food, boosting sales for chains such as McDonald’s. The company recognizes ongoing challenges for lower-income consumers, even with real wage growth in the midst of financial worry. McDonald’s has successfully attracted cost-conscious customers in today’s economic climate. Their strong earnings report suggests a positive outlook for the stock soon. McDonald’s is doing well as budget-minded consumers turn to less expensive food choices. This trend is backed by the latest Consumer Confidence Index from July 2025, which fell to 99.5, showing increasing financial stress among households. Given this momentum, we advise traders to consider buying call options for potential gains in the coming weeks. The business seems robust, with recovering U.S. sales and significant global sales growth. This strategy could yield higher profits if the stock continues to rise. However, the implied volatility for McDonald’s options has likely dropped after the earnings announcement. This “volatility crush” makes it cheaper to buy new long positions now than it was before the report. This presents an opportunity to implement bullish strategies at a lower cost. We have seen this trend before during economic hardships. For instance, during the 2008 financial crisis, McDonald’s stock greatly outperformed the S&P 500 as consumers chose more affordable options. Recent retail sales data supports this idea, showing a 0.2% decline in general merchandise but a 0.5% rise in spending at food services and drinking establishments. For traders seeking a more conservative income-generating strategy, selling cash-secured puts below the current stock price can be appealing. This enables one to collect premiums with the belief that the stock will stay above the strike price. If the stock falls, this strategy allows for acquiring shares in a fundamentally strong, defensive company at a bargain price.

here to set up a live account on VT Markets now

The Bank of England is likely to lower its main interest rate from 4.25% to 4.0%. This will be the fifth cut since August 2024, influenced by a weakening job market and ongoing inflation that remains above target. Governor Andrew Bailey and most members of the Monetary Policy Committee are expected to back this quarter-point reduction. However, there may be some disagreement, as some members want a larger cut while others are concerned about inflation.

BoE’s Monetary Policy Strategy

The BoE’s approach, which calls for gradual cuts, may come under scrutiny if inflation rises to 4%. The market expects another rate cut in November, but forecasts only one or two more in 2026. This would keep the Bank Rate around 3.5%, higher than the eurozone’s 2%. The announcement will be made at 1100 GMT, followed by a press conference at 1130 GMT. EUR/GBP is in focus, as the euro is gaining strength against the UK pound ahead of the meeting. Meanwhile, Deutsche Bank predicts more rate cuts from the BoE, contrasting with the European Central Bank’s potential halt in easing.

Economic Signals and Market Expectations

As we approach the Bank of England’s decision tomorrow, a rate cut is widely anticipated despite mixed economic signals. The market is ready for a quarter-point reduction, but the real concern lies in finding a clear path forward. This decision comes amid a slowing economy and persistent inflation. Recent data shows inflation stubbornly at 3.8% in July 2025, with unemployment rising to 4.5%. This reflects the impact of last year’s tax policies and ongoing trade tensions. The Monetary Policy Committee faces the challenge of controlling inflation while also needing to support economic growth. A split vote is possible, which could lead to increased market volatility. Derivative traders may consider options on short-term interest rate futures to prepare for surprises in the bank’s guidance. A divided committee raises the risk of a market reaction to the post-meeting statement. The differing policies of London and Frankfurt make the EUR/GBP exchange rate particularly interesting. While we expect the BoE to cut rates to 4.0%, the European Central Bank has kept its key rate at 2.75% since June and may be done with rate cuts for now. This fundamental difference is likely to strengthen the euro against the pound in the medium term. Looking ahead, even with additional cuts, the market suggests that the UK base rate will only drop to around 3.5% in 2026. This contrasts sharply with the near-zero rates we experienced for over a decade after the 2008 financial crisis, indicating a structurally higher cost of borrowing. This new reality will influence derivative pricing for years. In conclusion, the anticipated 25 basis point cut is likely already factored into the market. What will influence trading in the coming weeks is Governor Bailey’s forward guidance, particularly regarding any changes to the “gradual and careful” pace of one cut per quarter. Any indication that the committee might consider quicker cuts could put immediate pressure on the pound. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Shopify’s stock jumped 20% after it shared impressive second-quarter results. The Canadian ecommerce platform experienced a 30.7% increase in revenue compared to last year, driving shares to a three-year peak. Currently, Shopify’s stock is priced at $152.50. In contrast, the S&P 500 and NASDAQ saw rises of 0.6% and 0.8%, respectively. Meanwhile, India is facing an additional 25% tariff from the US, raising the total to 50% to limit Russian oil trades. For the June quarter, Shopify’s net income, excluding investments, soared to $906 million. This is a significant leap from $171 million last year. The free cash flow margin held steady at 16%, growing from $333 million the previous year to $422 million in Q2. Shopify’s revenue hit $2.68 billion, surpassing Wall Street expectations by $130 million. The company anticipates annual revenue growth in the mid-to-high 20% range for the next quarter and a low-20% rise in gross profit. Shopify’s stock has climbed 43% so far this year, and it has risen 180% over the past year. Although some consolidation might occur, the Relative Strength Index of 68 shows it’s not overbought, indicating potential support around $128 if there’s a pullback. Given Shopify’s remarkable second-quarter results, we see a strong bullish trend for the stock. The 30.7% growth in revenue and increase in net income show solid business health. This momentum, which has pushed the stock to a three-year high, suggests positive sentiment we can capitalize on. To take advantage of this strong performance, we are eyeing call options with September and October 2025 expiration dates. Recent option flow data from August 5th indicates call volume is nearly three times the daily average, particularly for the $160 and $170 strike prices. This shows widespread market expectations for further gains in the coming weeks. However, the 20% surge in one day has raised the stock’s implied volatility, making call options pricier. This increase in cost means that while the stock’s direction is favorable, entering a simple long call strategy has become more expensive. We should therefore explore strategies to reduce these high costs. A bull call spread could be a smarter choice, allowing us to express a bullish outlook while keeping down costs and risks. This involves buying a call at a lower strike price and selling another at a higher strike price, thereby reducing the net premium paid. This strategy benefits from a consistent, steady rise in the stock price toward our higher strike. For those of us optimistic about the long-term but expecting possible short-term consolidation, selling cash-secured puts could be appealing. We could sell September 2025 puts with a strike price near the $128 support level. This way, we collect a premium now while having the chance to buy the stock at a discount if it drops. Looking back at similar earnings boosts in the tech sector between 2023 and 2024, we often saw a brief consolidation after a major increase before the next upward movement. This historical trend suggests that patience might pay off. We shouldn’t be surprised to see the stock trading sideways before aiming for new highs. We also need to consider the broader market, as new US tariffs on India might create economic uncertainty. A report from the US Census Bureau in July 2025 indicated a slight slowdown in online retail sales growth, which could be a challenge for the entire ecommerce sector. This highlights that even strong company performance can be influenced by macroeconomic factors. The company’s forecast of mid-to-high 20% revenue growth reassures us about its business strength. The Relative Strength Index is at 68, which, although high, isn’t in the extreme overbought zone above 70, suggesting there’s still potential for the stock to rise. We’ll plan our trades to reflect this positive outlook while managing the risk associated with high volatility.

here to set up a live account on VT Markets now

The GBP/USD exchange rate rose by 0.37%, reaching about 1.3342 before the Bank of England’s meeting. The Bank is expected to lower the Bank Rate by 25 basis points to 4%. However, a split decision among Monetary Policy Committee members is likely. The UK’s fiscal situation is strained with a £50 billion deficit, prompting NIESR to recommend urgent tax increases. Meanwhile, Fed officials in the U.S. are making speeches, with Mary Daly hinting at possible future policy easing.

Impact Of Economic Data On Market Sentiment

Nonfarm Payrolls data and ISM Services PMI figures play significant roles in shaping market sentiment. The PMI shows signs of stagflation, which is affecting U.S. stocks. Neel Kashkari from the Minneapolis Fed predicts two rate cuts this year. Upcoming U.S. economic releases will include Initial Jobless Claims. The GBP/USD technical outlook hints at potential bullish momentum. Still, it needs to surpass key SMA resistance levels for further progress. If it falls below 1.3300, it could trend down to 1.3141. The British Pound is currently stronger against several major currencies, especially the U.S. Dollar. With the Bank of England’s expected 25-basis point cut to 4.00% now behind us, the split vote shows deep uncertainty within the committee. This division suggests future policy changes are unpredictable, creating challenges for the pound. The market’s muted initial reaction reflects this uncertainty. Across the Atlantic, the U.S. Federal Reserve has taken on a notably dovish tone. Recent speeches from Fed officials, along with last week’s Initial Jobless Claims data which came in at 225,000—slightly above expectations—support the idea of policy easing later this year. This sentiment is limiting any considerable strength in the U.S. dollar for now.

Fiscal Problems And Trading Strategies

However, the UK economy faces serious challenges, particularly the £50 billion fiscal gap that the Chancellor has not addressed. This situation is reminiscent of the fiscal problems of late 2022, which caused sharp declines in sterling assets. This weakness argues against any sustained rally in the pound. Given these mixed signals, the best strategy is to trade volatility instead of focusing solely on direction. Using options, we can set up straddles or strangles on GBP/USD futures to profit from significant price movements, regardless of whether they go up or down. The current implied volatility remains reasonable, providing a good entry point for these strategies. For traders leaning in a specific direction, we recommend using spreads to manage risk. Bullish traders might explore call spreads targeting a breakthrough above key moving average resistance. In contrast, bearish traders should consider put spreads if GBP/USD convincingly drops below 1.3300. These positions can help avoid sharp reversals seen in the mixed-signals environment of 2023. We will closely monitor the upcoming U.S. Nonfarm Payrolls report, as it could be a major catalyst. A weak report would boost Fed rate cut expectations and could drive GBP/USD higher, while a strong report might reverse recent dollar weakness. The pair is finely balanced, and this next data point could lead to a decisive move. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

China’s Position of Power

Trump is thinking about adding a 25% tariff on China because of its ongoing oil purchases from Russia. He hasn’t shared many details, but this action may come after the 25% tariffs he just announced for India for the same reason. On Wednesday, Trump doubled the tariff on Indian goods to 25%. This decision was made in response to India’s continued oil trade with Russia. Trump hinted that other countries, with China being a likely target, could face similar tariffs. China is in a strong position and may challenge Trump’s threats. This situation highlights the ongoing tensions and complexities in global trade. Today, August 6, 2025, these new threats against China indicate potential market instability. We are looking at VIX options, as the CBOE Volatility Index could quickly rise from its current low of around 15. History from the 2018-2019 trade war shows that just talking about tariffs can boost the VIX by 5 to 10 points overnight. China’s quickest response may be to weaken its currency, making exports cheaper to offset any new tariffs. Traders should keep an eye on the offshore yuan, as futures on the USD/CNH pair look promising. If China acts, the yuan could move past the 7.35 level, which we haven’t seen since late 2023.

Market Reaction Expected

For equity indices, the easiest path may be downward, especially for tech-heavy Nasdaq. Companies like Apple, which earned nearly 19% of its revenue from Greater China last year, are especially vulnerable. We are thinking about buying out-of-the-money puts on the QQQ ETF as a hedge or a speculative bet on a sharp decline. We also expect a reaction in the commodities market, with possible Chinese tariffs on U.S. agricultural products. Soybean futures could drop sharply, as China is the biggest importer and might switch back to Brazilian suppliers, just like during the last trade war. In this uncertainty, gold futures are likely to gain support as a traditional safe-haven asset. The market shouldn’t take these threats lightly, especially in light of recent events with India. When India doubled its tariffs last Wednesday, the Nifty 50 index fell over 3% in just two days, and the rupee weakened against the dollar. This offers a recent example of how markets can respond to sudden protectionist actions. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Oklo Inc is making significant waves in the energy sector, boasting over 300% gains since April 2025. This performance is reminiscent of the early days of solar technology. Analyzing the stock using Elliott Wave patterns shows a solid upward movement, with prices surpassing previous highs. Experts expect this trend to continue, projecting future stock values between $106 and $141. Daily analysis from April 2025 highlights a clear Elliott Wave pattern, indicating that Oklo is poised for further growth. The stock is currently moving through Wave ((3)), backed by several supportive factors. These developments make Oklo a promising investment, where short-term dips could present buying opportunities. For traders, applying an Elliott Wave strategy during price pullbacks can help pinpoint ideal entry points. This approach involves entering after completing a corrective sequence of 3, 7, or 11 swings. By combining this method with an advanced system, traders can enhance their ability to spot favorable trading conditions. While trading offers the chance for significant returns, it also comes with risks, making it crucial for traders to understand their goals and risk tolerance. Oklo’s remarkable performance shows over 300% gains since April 2025, driven by positive news like the favorable Safety Evaluation Report from the Nuclear Regulatory Commission for Oklo’s Aurora powerhouse design in late July 2025. The stock recently reached a new all-time high of $72.50. For derivative traders, the analysis indicates that the strong upward trend, or Wave ((3)), is not finished. In the options market, we see significantly more interest in September and October 2025 call options at strike prices of $80 and $90 compared to puts, suggesting confidence that the stock will continue climbing toward the projected $106 valuation. The main strategy should be to use any short-term pullbacks as buying opportunities. Given that implied volatility remains high, over 80%, buying call options during price surges can be costly. Therefore, it’s wiser to wait for the mentioned corrective dips to establish new long positions or sell cash-secured puts to take advantage of the premium. This growth pattern evokes memories of the breakout phases of transformative energy stocks from previous decades. Additionally, the recent announcement of a partnership with a major data center provider in early August 2025 adds a solid foundation to Oklo’s demand narrative. This suggests that the strong upward trend is backed by both robust technical indicators and a compelling growth story.

here to set up a live account on VT Markets now