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Today’s economic data is quite uninspiring, but there’s a symposium expected later this week.
Today, August 18, 2025, is a calm day for economic data, following a generally slow week.
In the Asia-Pacific region, the only release is the July Business Services Index.
As the week begins, initial FX pricing indicates slight strength in the euro and weakness in the dollar.
As the new week begins, early FX rates show small changes. The euro (EUR) seems a bit stronger, but the move is very slight.
The initial pricing suggests the US dollar (USD) is weaker overall. However, these early numbers might change as the session moves on.
Soft Start To The Week
We’re starting the week slowly, with the US dollar dipping slightly against most currencies. The euro is gaining a bit of strength, but it’s barely noticeable. This suggests that traders are cautious and not ready to make big moves just yet. This caution makes sense after last week’s data. The latest US Consumer Price Index (CPI) for July 2025 showed a rate of 3.1%, slightly below expectations. This supports the idea that the Federal Reserve is likely to keep rates steady. Also, comments from European Central Bank officials hint at one more rate hike possibility in September. Everyone is now focused on the Jackson Hole symposium at the end of the month. This important event is expected to give clearer direction on future policies for the year. We believe that market volatility will stay low until we get more information from central bank leaders.Opportunities For Derivative Traders
For derivative traders, this calm period creates opportunities. Implied volatility in major currency pairs like EUR/USD has decreased, with one-month volatility dropping to 5.8%. This is the lowest level we’ve seen since before the hiking cycles started in 2022. Buying options, such as straddles or strangles, could be a smart move to prepare for the price shifts we expect around the symposium. We’re also noticing a growing difference in policy between the Fed and the ECB. With Fed funds futures showing a less than 10% chance of another hike in 2025, the easiest path for the dollar seems to be sideways or down. Traders might want to consider longer-term options that benefit from potential sustained strength in EUR/USD as we approach the fourth quarter. Create your live VT Markets account and start trading now.US stocks ended mixed as Trump and Putin meet in Alaska to discuss peace amid economic worries.
US retail sales in July rose by 0.5%, which met expectations and followed a revised increase of 0.9% in June. Import prices also went up by 0.4%, exceeding predictions amid tariff concerns. However, the University of Michigan consumer sentiment index fell short of expectations at 58.6, while inflation expectations grew, with the 1-year outlook at 4.9% and the 5-year at 3.9%.
Expectations for a Federal Reserve rate cut in September have dropped to 84%, down from 100% earlier in the week. Fed officials are cautious due to mixed inflation data, especially from the service sector. US yields increased, with the 2-year yield at 3.752% and the 30-year yield at 4.921%.
Presidential Meeting In Alaska
Amid these economic updates, President Trump and President Putin are meeting in Alaska to discuss peace regarding Ukraine. US stocks ended the day mixed: the Dow rose by 34.86 points, while the S&P and NASDAQ fell. Crude oil prices decreased, reflecting hopes for a peaceful resolution between Russia and Ukraine. Key upcoming events include Fed Chair Powell’s speech at the Jackson Hole Symposium and New Zealand’s expected rate cut, along with more economic indicators to be released throughout the week. The Trump-Putin meeting carries significant risk, with crude oil prices already dropping due to optimism about a potential deal. Caution is necessary, as a breakdown in talks could lead to sharp declines in risk assets and a spike in energy prices. We recall that the VIX volatility index jumped from around 20 to over 35 in early 2022, making it wise to consider buying protection through index puts or oil calls.Market Concerns About Inflation
With the high 0.9% Producer Price Index (PPI) and rising inflation expectations, the market has rightfully lowered the odds of a rate cut in September to 84%. All attention is now on Fed Chair Powell’s speech at Jackson Hole, which often significantly impacts the market. His hawkish tone in August 2022 led to a sharp market sell-off, so we should be prepared for potential volatility in both bond and stock markets. The increase in the 10-year yield to 4.319% indicates real concern about persistent inflation, especially given the rise in import prices. While July’s retail sales were strong, the disappointing consumer sentiment reading of 58.6 suggests this growth may not continue. This disparity calls for caution before making any long-term bullish bets on consumers. Create your live VT Markets account and start trading now.US equities had mixed results due to retail performance and inflation concerns affecting the markets.
U.S. stocks had mixed results as worries about inflation countered hopes for peace and potential interest rate cuts. The Dow Jones avoided a decline, mainly thanks to UnitedHealth Group, which jumped 11.98% after Berkshire Hathaway bought its shares.
During trading, the Dow reached a high of 45,203.52, fueled by excitement over UnitedHealth’s news. However, as investors took profits, the index dropped back, closing at 44,946.12, below its earlier record from the week.
Mixed Market Performance
The overall market showed mixed results. The S&P 500 and Nasdaq Composite had different outcomes, with tech sectors struggling while some cyclical sectors remained stable. Without UnitedHealth’s boost, the Dow might have fallen like the other indices. Closing levels were: – Dow: up 34.86 points or 0.08% to 44,946.18 – S&P: down 18.74 points or 0.29% to 6,449.80 – NASDAQ: down 87.69 points or 0.43% to 21,622.98 – Russell 2000: down 12.55 points or 0.55% to 2,286.52 For the week, the Dow increased by 1.74%, outpacing the S&P 500’s 0.94% and Nasdaq’s 0.81% gains. The market is caught between hopes of a Federal Reserve rate cut and fresh concerns about inflation. Although the Dow set a new record this week, it didn’t hold, indicating weak confidence. The latest Import Price Index surged 1.2% month-over-month, marking the sharpest rise since the inflation spikes in 2022.Market Strategies and Sector Performance
This uncertainty suggests that volatility may be underestimated, which could be important in the coming weeks. The CBOE Volatility Index (VIX) rose to 17.5 after mainly trading below 15 in July, signaling increased trader anxiety. This environment might make long straddles or strangles on broad indices like the S&P 500 appealing, as they benefit from significant price changes in either direction. The limited market rally is another warning sign, as the Dow’s rise was largely due to one stock. Market breadth is weakening, with the NYSE’s advance-decline line not confirming the Dow’s new highs. For traders with long positions, this is a moment to consider hedging by buying protective puts on the SPY ETF. A clear shift seems to be happening, with strength in healthcare and weakness in technology and small-cap stocks. While Fed funds futures show a 65% chance of a rate cut at the September meeting, the current market momentum favors defensive sectors. This trend could be leveraged by using call options on the healthcare sector ETF (XLV) and put options on the Nasdaq 100 ETF (QQQ). Create your live VT Markets account and start trading now.According to Greg Michalowski, the NZDUSD shows a slight bearish tendency as the week comes to a close.
Technical Analysis
The NZDUSD is finishing the week with a slight bearish trend, trading below important technical levels. The price is below the 100-day moving average and under the 100 and 200 bar moving averages on the four-hour chart. This indicates that the downward momentum may continue soon. This technical weakness matches recent economic data from New Zealand. Last week, it was reported that New Zealand’s GDP growth for Q2 slowed to 0.3%. Additionally, the latest Fonterra Global Dairy Trade auction on August 5th showed a 2.8% drop in average prices. Earlier this month, the Reserve Bank of New Zealand kept interest rates steady, but their statement was more cautious than expected. In contrast, the US dollar remains strong. The US added 205,000 jobs in July, according to the Non-Farm Payrolls report released on August 1st. Furthermore, recent comments from the Federal Reserve confirmed their intention to keep current interest rates unchanged for the rest of the year. This difference in policy is putting pressure on the NZDUSD pair, similar to trends seen throughout 2024.Strategic Considerations
In this situation, derivative traders might think about buying put options on the NZDUSD. We suggest considering puts with expiration dates in September 2025 and strike prices below the current spot rate, as they may present a good risk-to-reward opportunity. This approach would profit from a further decline in the currency pair over the coming weeks. We are focusing on key support levels from early 2025 as potential targets. A significant drop below the year’s low could speed up the downward movement. Traders should keep an eye on next week’s US retail sales data, as strong results could boost the dollar and create additional pressure on the NZDUSD. Create your live VT Markets account and start trading now.This week, the EUR/USD showed fluctuations, with buyers holding control above important support levels.
The EURUSD pair saw ups and downs this week. At one point, the price fell but found support at its 200-hour moving average, a broken trendline, and the high of a swing area. This support helped the price rise on Friday.
Upward Momentum
The upward momentum pushed the price above a swing area between 1.1692 and 1.1703, reaching a high of 1.0714. Although there was some downward movement, the price stayed above the swing area, which will act as strong support for the coming trading week. If this level holds, buyers will likely remain in control. If the price does drop, it will target the 100 and 200-hour moving averages at 1.1666 and 1.1649. Holding these levels would still show that buyers are present, though their strength may lessen. The next key upside target is 1.1787, which aligns with the swing high from July 24 and is similar to levels seen in early July. The overall technical outlook currently supports buyers. Buyers have control of the EURUSD, keeping the price above the crucial area of 1.1692 to 1.1703. As we move into the following weeks, this level is critical. Staying above it suggests the upward momentum will continue. Technical strength is supported by fundamental news. Recent data indicated that Eurozone inflation for July 2025 was higher than expected at 2.5%, making a rate cut by the European Central Bank less likely. This is in stark contrast to the news from the United States.Fundamental Drivers
On the other side, the latest US Non-Farm Payrolls report for July 2025 showed only 160,000 new jobs, far below the 200,000 predicted. This weak labor data increases the chances that the Federal Reserve might consider reducing interest rates before the year ends. This difference in policy is pushing the EURUSD higher. For traders using derivatives, buying call options with a strike price close to the next target of 1.1787 might be a good strategy. A bull call spread could also help reduce trade costs while limiting potential profits. These positions would benefit if the upward trend continues as expected. However, we need to keep an eye on the downside. If the price breaks below the support zone at 1.1700, the bullish outlook will weaken. In that case, traders might consider buying put options or creating bear put spreads to hedge against or bet on a drop toward the 1.1649 moving average. Looking back, we observed similar patterns throughout 2024 as the market reacted to inflationary and employment data from both central banks. The sharp interest rate hikes in 2022 and 2023 created a sensitive environment where any signs of economic weakness can quickly shift expectations for policy. This is the environment we are navigating today. Create your live VT Markets account and start trading now.Oil rigs increase to 412 while gas rigs decrease, keeping total steady
The weekly Baker Hughes rig count shows some small changes this week. The oil rig count went up by one, making it 412. Meanwhile, the gas rig count dropped by one to 122. Overall, the total rig count remains steady at 539.
In the oil market, crude oil prices have slightly fallen. Prices are down by $0.72, or 1.13%, now at $63.24. Last week, prices didn’t change much, closing at $63.33.
Current Market Signals
The unchanged rig count, with only one new oil rig added, suggests that U.S. producers aren’t eager to expand operations while crude oil is near $63 per barrel. This lack of action indicates that the market is waiting for clearer price signals before starting new drilling. This hesitation leads to a period of steady prices for now. This caution is understandable given recent economic data. Manufacturing PMI data from July 2025 revealed ongoing slowdowns in both China and Europe, which is affecting fuel demand. Additionally, the latest EIA report showed a smaller-than-expected draw of only 1.2 million barrels from crude inventories last week, indicating that consumption isn’t strong enough to significantly raise prices. On the supply side, there appears to be a price floor around the low $60s. OPEC+ has agreed in their June 2025 meeting to maintain production cuts through the end of the year to avoid a major price drop. The current low U.S. rig count, which is nearly 20% below the highs seen in mid-2023, suggests that U.S. output might remain flat or decline in the coming months, tightening future supply even further.Potential Trading Strategies
For the next few weeks, this likely points to a market that will stay within a range, caught between weak demand and limited supply. Traders might want to try strategies that benefit from low volatility, such as selling iron condors with strike prices around $60 and $68 on near-term options contracts. This strategy bets that crude oil prices won’t shift significantly in either direction. However, this balance probably won’t last long. We could consider buying longer-term straddles, which would allow us to profit from a large price change in either direction before the year ends. The current low implied volatility also makes these positions cheaper to enter, setting up for a potential breakout when demand improves or supply cuts start to have a bigger impact. Create your live VT Markets account and start trading now.European indices end the week mixed, with some reaching record-high closings amid performance fluctuations
European stock markets had mixed results at the end of the trading day. The German DAX decreased by 0.07%, while France’s CAC increased by 0.67%. The UK’s FTSE 100 dipped by 0.42%, but Spain’s Ibex rose by 0.47%. Italy’s FTSE MIB saw a notable gain of 1.1%.
Over the past week, major European markets saw overall growth. The German DAX went up by 0.81%, and France’s CAC jumped by 2.33%. The UK’s FTSE 100 climbed by 0.47%, reaching a record high. Spain’s Ibex recorded a 3.05% increase, reaching its highest level since December 2007. Italy’s FTSE MIB improved by 2.47%, marking the best performance since June 2007.
Investor Confidence Grows
The substantial weekly gains, particularly for Spain and Italy, indicate strong investor confidence, as these indices are reaching levels not seen since before the 2008 financial crisis. This surge seems to be supported by the latest Eurozone flash Consumer Price Index (CPI) for July 2025, which registered at a manageable 2.1%. This data has reinforced the European Central Bank’s more cautious stance, increasing the appetite for risk. However, the mixed results on Friday, with slight declines in the DAX and FTSE 100, suggest that some investors might be taking profits at these record highs. This could mean we are entering a phase of consolidation or a small pullback in the coming days, which is a normal response after such a rapid rise. European volatility, as shown by the VSTOXX index, has dropped to 14.5, well below its five-year average of around 19. This low level of implied volatility makes options contracts more affordable, offering a chance to establish positions for potential future movements with a favorable risk-reward balance.Options Strategies to Consider
Given the strong market trend, selling out-of-the-money put spreads on indices like the CAC 40 or DAX for September 2025 expiration may be a wise choice. This strategy allows us to earn premiums while expecting that the market won’t experience a significant decline in the next few weeks. It profits from a rising or stable market and the passage of time. For those with significant long equity positions, buying protective puts on an index like the FTSE 100 is now more affordable due to the low volatility. Reflecting on the market correction in autumn 2023, we see how quickly investor sentiment can change from record highs. Having a small allocation to puts can provide essential protection against sudden downturns. Create your live VT Markets account and start trading now.Atlanta Fed keeps Q3 GDP projection steady at 2.5% after recent adjustments
The GDPNow model from the Atlanta Fed estimates the GDP growth for the third quarter of 2025 at 2.5%. This estimate hasn’t changed after the economic data released on August 15.
Recent information from important US institutions shows that personal consumption spending for the third quarter has increased from 2.0% to 2.2%. On the other hand, growth in gross private domestic investment has been lowered from 7.3% to 6.6%.
Economic Data Contributors
These figures use the seasonally adjusted annual rate, incorporating data from the US Census Bureau and the Bureau of Labor Statistics. The Federal Reserve Board and the Treasury’s Bureau of the Fiscal Service also significantly contribute to this data. An updated GDPNow estimate will be available on August 19. For those interested in tracking economic growth, future release dates can be found in the “Release Dates” section. With the GDPNow estimate steady at 2.5%, it reflects a strong US economy. This number suggests there’s neither a sharp slowdown nor significant overheating, likely allowing the Federal Reserve to maintain its current policy. For traders, this indicates that large interest rate cuts are not likely coming soon. This stability may reduce overall market volatility for a while, a trend we’ve observed throughout much of the summer. The CBOE Volatility Index (VIX) has been around 14, well below its average of about 19, which makes options cheaper. This could be a good time to buy protective put options on major market indices or create long-volatility trades for potential market changes later this quarter.Trading Strategies
The report shows differences we can trade on: personal consumption is growing, while private investment is declining. This suggests strategies favoring consumer discretionary sectors over those sensitive to capital spending, such as industrials or commercial real estate. We might look at call options on consumer ETFs and put options on industrial sector funds to capitalize on this divide. Looking ahead, an important event this month is the Jackson Hole symposium at the end of August. Given steady growth and the recent July 2025 Consumer Price Index (CPI) data showing core inflation at 3.1%, any hawkish comments from Fed officials could shake the market’s calm. Traders should be prepared for potential volatility around that event. Growth staying above 2% supports the Fed’s decision to keep rates steady after the hikes in 2022-2023. This likely means options on short-term interest rate futures will continue to reflect expectations that rates will remain high for an extended period. Thus, betting against rate futures could be a smart strategy. Create your live VT Markets account and start trading now.This week, USDCAD showed little movement as prices remained near the 100-day moving average.
USDCAD went up this week, moving within a tight range of 70–75 pips. The lowest point was on Monday, while the highest came on Thursday, near a previous peak from August 1.
Today, there was a slight pullback that tested the rising 100-hour moving average at 1.37807. The price dipped to 1.3788 but quickly bounced back. From Monday to Thursday, the price hovered near the 100-day moving average, acting like a magnet instead of providing strong support or resistance.
