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In July, the US ISM Services New Orders Index fell from 51.3 to 50.3.
The United States ISM Services New Orders Index fell to 50.3 in July, down from 51.3. This drop signals a slowdown in new orders for the services sector.
The EUR/USD found solid support around the 1.1400 level as the USD continued to gain strength. At the same time, gold prices remained strong, staying close to $3,400 per troy ounce.
In July, the ISM Services Employment Index in the United States dropped from 47.2 to 46.4.
The ISM Services Employment Index in the United States fell to 46.4 in July, down from 47.2 in the prior month. This index shows trends in employment within the service sector.
An index below 50 usually signals a decline in employment activity in the service industry. The drop in this number highlights some difficulties faced by the sector recently.
Cooling US Labor Market
The drop in the ISM Services Employment index to 46.4 signals a cooling U.S. labor market. This is the second month in a row where we’ve seen a contraction, suggesting an accelerating economic slowdown. Derivative traders should view this as part of a larger trend, not just a single statistic. This information aligns with the July 2025 Non-Farm Payrolls report released last Friday, which indicated job growth of only 150,000. This figure is much lower than economists expected. The unemployment rate also rose to 4.1% in that report, the highest it has been in over a year. Together, these pieces of data reinforce the view of a weakening job market. As a result, we believe the Federal Reserve is unlikely to consider another interest rate hike in September. In fact, futures markets now predict a nearly 40% chance of a rate cut by December 2025, which is a big change from just weeks ago. Traders might look into interest rate options or futures that could benefit from stable or lowering rates.Defensive Posture in Equity Markets
In the equity markets, we are taking a more defensive approach in the coming weeks. A weaker labor market puts pressure on consumer spending and corporate profit forecasts. We are thinking of buying put options on broad market ETFs like the SPY to protect against a potential market decline. The CBOE Volatility Index, or VIX, has risen to just over 18, which shows increasing uncertainty. We recall the market unease in late 2023. Historically, late August and September can be volatile for stocks. This situation may make long-volatility strategies, like VIX call options or straddles on individual stocks, more appealing. We are also monitoring the U.S. Dollar closely. It might weaken if traders believe the Fed will cut rates sooner than other central banks. This could create opportunities in currency derivatives, such as buying call options on the euro or Japanese yen against the dollar. The decline in service sector employment might indicate wider U.S. economic challenges. Create your live VT Markets account and start trading now.Moynihan from Bank of America says Trump wants proper regulations and predicts economic growth and rate cuts.
Economic Predictions
Bank of America’s Moynihan spoke on CNBC about the economy and noted Trump’s focus on industry laws and regulations. Bank of America’s economists predict that the US economy will grow by about 1.5% this year, without expecting a recession during this time. They believe the Federal Reserve will not cut interest rates soon because inflation remains high. A rate cut is only expected in 2026.Market Discrepancy
However, market analysts suggest a strong chance of rate cuts happening soon. There is a 91% likelihood of a cut in September, bringing rates down to between 4.00% and 4.25%, and a 58% chance of another cut in October. Many expect additional cuts by the year’s end. 2025-08-05T19:26:23.331Z We see a significant gap between what the market expects and our economic outlook. The market believes a rate cut is certain for September, but we project steady 1.5% growth for the US economy this year and no signs of a recession. This stability, combined with ongoing inflation, means the Federal Reserve has no immediate reason to cut rates. The latest inflation report from July 2025 shows core inflation at 3.4%, which is still above the Fed’s target. Also, the recent jobs report indicated the economy added a healthy 210,000 jobs, supporting the Fed’s decision to remain cautious. Therefore, we think the market is overly optimistic about when any rate cuts will occur. Traders in derivatives should think about selling interest rate futures, like December 2025 SOFR futures, which are priced low right now. If the Fed maintains its current stance, these contracts will gain value as market expectations change. Another strategy is to use options to prepare for higher rates lasting longer. We could buy put options on long-term Treasury bond ETFs, which would profit if bond prices drop as hopes for rate cuts fade. This situation reminds us of 2023, where traders consistently misjudged when the Fed would pivot. The political landscape, emphasizing reduced regulations, supports a stable economy without a recession. This decreases the need for the Fed to intervene to boost growth. Therefore, it makes sense to bet against the anticipated rate cuts that the market is so confident about. Create your live VT Markets account and start trading now.Crude oil futures fell by $1.13 to settle at $65.16, marking a 1.7% decrease.
Crude oil futures closed at $65.16, down $1.13 or 1.7% for the day.
This price drop shows the ongoing ups and downs of the market. It highlights how quickly things can change in the commodity sector.
Impact On Various Sectors
These fluctuations affect many sectors and are closely watched by trade analysts. The drop to $65.16 raises concerns about economic demand. Last week’s EIA report showed an unexpected rise in U.S. crude inventories of 3.1 million barrels, contrary to predictions of a decrease. This suggests that supply is exceeding demand as the busy summer driving season comes to an end. Some traders might look to buy put options to protect themselves or profit from a further price decline. The International Monetary Fund recently lowered its 2025 global growth forecast to 2.8%, which adds to these bearish sentiments. Additionally, weak manufacturing data from China in July has lowered the outlook for industrial fuel use in the world’s largest oil importer.Potential Upside Risk
On the bright side, we are entering the peak of the Atlantic hurricane season, which could push prices up. If production in the Gulf of Mexico gets disrupted, similar to what happened during Hurricane Ian in 2022, prices could spike quickly. In this situation, using strategies like straddles — which profit from big price shifts in either direction — might be a smart choice. We are also keeping a close watch on OPEC+. They’ve been having difficulty sticking to the production cuts they agreed on late in 2024. With prices at $65, which is below the breakeven level for many member countries, there may be added pressure for them to step in and support the market. This price indicates a significant drop from over $120 per barrel in 2022, showing the current market weakness. Given these mixed signals, traders should be cautious about making large bets in one direction. The CBOE Crude Oil Volatility Index (OVX) has recently risen to 35, signaling the market expects sharper price changes. Selling covered calls against long positions or buying protective puts could help manage risk in the weeks ahead. Create your live VT Markets account and start trading now.In July, the S&P Global Composite PMI for the United States surpassed expectations at 55.1
The S&P Global Composite PMI for the United States was 55.1 in July, higher than the expected 54.6. This indicates strong economic growth for the month.
The EUR/USD rose, trading close to 1.1600, as the US Dollar weakened. Meanwhile, GBP/USD hit daily highs above 1.3300, thanks to changes in market trends.
Gold prices continued to rise, reaching around $3,380 per troy ounce. This was linked to fluctuations in the US Dollar and varying US Treasury yields.
The DeFi market is gaining popularity again, fueled by an increase in Total Value Locked (TVL) and more users. Investors are moving money from Bitcoin to leading layer-1 cryptocurrencies like Ethereum and Solana.
In the euro area, the economy showed unexpected strength due to an agreement between the EU and the US and Germany’s spending plans. However, if wage indicators continue to weaken, the European Central Bank (ECB) may decide to cut rates later this year or early next year.
The US economy keeps performing well, with the July Composite PMI at a strong 55.1. This is backed by last Friday’s jobs report, which added 215,000 jobs and exceeded expectations, indicating ongoing economic strength. We think this makes a rate cut from the Federal Reserve unlikely in the near term, which traders should consider when making decisions about US index positions.
Despite the strong data, the dollar is losing ground. The Euro is approaching the 1.1600 level, a peak not seen since late 2021. This suggests that traders are anticipating other factors, possibly looking forward to next week’s important inflation data. For now, strategies that bet on continued dollar weakness against the Euro and Pound, like long call spreads, could be appealing.
Gold is gaining from this dollar weakness and uncertainty, now trading around $3,380 an ounce. This continues the rally that began in 2024, driven by ongoing inflation and geopolitical tensions. We think maintaining long positions or buying call options on gold miners is a smart move in this climate.
In the digital assets space, there’s a clear shift towards risk-taking as money flows from Bitcoin into Ethereum and Solana. Total Value Locked in DeFi has surpassed $250 billion, showing renewed confidence that started growing late last year. This trend suggests that long positions on these top layer-1s might do better than Bitcoin in the coming weeks.
Across the ocean, the Eurozone has shown surprising resilience, but signs of slowing are appearing. Wage growth reportedly decreased in the second quarter, strengthening the case for the ECB to cut rates later this year. We see this as an opportunity to create trades that could profit from a weaker Euro in the medium term, possibly using put options for late 2025.
The S&P Global Services PMI for the United States meets expectations at 55.7, exceeding projections
The S&P Global Services PMI for the United States hit 55.7 in July, exceeding predictions of 55.2. This number shows how well the services sector is doing, with scores above 50 meaning it’s growing.
The EUR/USD is gaining strength, approaching the 1.1600 level, as the US Dollar weakens. This rebound follows market reactions to possible changes in the US Federal Reserve leadership.
GBP/USD has moved past 1.3300, with attention turning to the upcoming Bank of England meeting. This rise aligns with the US Dollar losing power.
Gold prices are steady, staying around the $3,400 mark per troy ounce. Its performance depends on mixed U.S. yields and uncertain US Dollar trends.
DeFi is seeing renewed interest, attracting attention due to the rising Total Value Locked (TVL) and an increasing user base. This trend is partly due to a capital shift from Bitcoin to Ethereum and Solana.
In the euro area, there’s optimism driven by agreements between the EU and the US. However, trends in indicators may prompt further economic policy actions possibly by 2026.
With strong growth in the US services sector, the Federal Reserve might not lower interest rates quickly. The July PMI data at 55.7 is the highest this year and suggests economic strength. This could be a good time to consider derivatives that benefit from a strong economy, like call options on service-focused stock indices.
The weakness of the US Dollar is a significant trend to watch, especially since the Dollar Index (DXY) has fallen below 95, contrasting sharply with the 103-104 levels seen in early 2024. As the EUR/USD moves closer to the important 1.1600 level, there’s potential for bull call spreads to take advantage of this upward trend. Approaching 1.1600 marks a multi-year high, stepping out of the narrow ranges observed in the last 18 months.
Similarly, GBP/USD is moving past 1.3300, a level not consistently held since early 2023. With UK inflation stubbornly around 3.5%, the upcoming Bank of England meeting could lead to significant price fluctuations. We should prepare by looking at volatility strategies, like long straddles, to profit from potential sharp moves in either direction.
Gold is holding steady near the $3,400 mark, a historically high level well above the previous record of around $2,400 set in 2024. This stability, combined with uncertain US Treasury yields, creates opportunities to use options to manage risk or generate income on current holdings. We could consider setting up collars to protect gains or writing covered calls against gold ETFs.
The DeFi sector is showing renewed strength, with Total Value Locked recently surpassing $250 billion, breaking its previous peak from 2021. This indicates a significant influx of capital, favoring platforms like Ethereum and Solana over Bitcoin. We should think about this shift by exploring strategies like a pairs trade, going long on ETH or SOL derivatives while potentially shorting BTC futures.
In the euro area, the positive outlook gives us reason to be optimistic about European stocks. With regional inflation cooling to about 2.5%, the European Central Bank might be ready to act on policy sooner than the US Fed. We can position ourselves using longer-dated call options on indices like the Euro Stoxx 50 to capture potential gains as we move toward 2026.
Citi expects gold to reach $3,500 per ounce in three months due to economic uncertainty and rising tariffs
Citi has adjusted its gold price target for the next 0–3 months to $3,500 per ounce. They predict gold will trade between $3,300 and $3,600 soon. This update comes after a declining outlook for the US economy and surprising tariff effects.
Rising US tariffs are causing inflation pressures that are stronger than expected. Additionally, labor market data is getting worse. There are rising concerns about the Federal Reserve’s independence and the reliability of US economic data.
Gold As A Hedge
Citi is now more optimistic about gold than before, adjusting its forecast from a range of $3,150 to $3,500. They believe gold will break out because of recent economic changes. Gold is viewed as a safeguard against inflation, political instability, and global uncertainty. Citi expects gold prices to remain strong, predicting they will reach new record highs as the US economy worsens. The appeal of gold as a safe investment is likely to increase. With the US economy in decline, gold is expected to move out of its current trading range. The new target of $3,500 an ounce indicates previous strategies of trading within a range are outdated. We need to focus on capturing upward momentum over the next three months. Recent economic data backs this positive outlook. Last week, initial jobless claims rose to 265,000, a nine-month high, signaling a weakening labor market. This, along with inflation pressures from new 15% tariffs on European goods, creates an ideal situation for gold as a safe haven.Derivative Trading Strategy
For those trading derivatives, it’s time to establish long positions through call options. We are considering options that expire in September and October, with strike prices around $3,400 and $3,500, to take advantage of the expected price increase. The immediate goal is to bet on gold rising before the fourth quarter. To manage costs and risks, we recommend using bull call spreads. For example, buying a $3,350 call while simultaneously selling a $3,500 call for October delivery offers a strong risk-reward setup. This strategy allows us to define our profit zone while lowering the upfront cost. Gold market volatility is rising, with the GVZ index close to 19. Although this is higher than before, it is still below the peaks seen during the 2024 election cycle. This suggests that purchasing options remains affordable, though this opportunity may not last long. Concerns about the Federal Reserve’s independence and the credibility of economic data are gaining traction. This growing distrust creates a strong incentive for investing in gold, which wasn’t as prominent during the inflation scares of the early 2020s. Because of this, we are also protecting our current long futures positions. We are buying out-of-the-money puts with a strike price around $3,300 as a form of portfolio insurance. This will shield us from unexpected downturns if the breakout fails. Create your live VT Markets account and start trading now.In August, the year-on-year Redbook Index for the United States rose to 6.5%, up from 4.9%
The United States Redbook Index rose to 6.5% year-on-year as of August 1, up from 4.9% previously. This indicates an increase in retail sales over the past year.
In market news, the EUR/USD has climbed back toward the 1.1600 level. This recovery is driven by a weakening US dollar and ongoing trade assessments.
GBP/USD Gains Momentum
GBP/USD is gaining ground, crossing the 1.3300 level. This rise coincides with the US dollar losing strength, as focus shifts to an upcoming Bank of England event. Gold remains strong, hovering near $3,400 per ounce. Even though it pulled back to about $3,380, this precious metal benefits from the uncertain state of the US dollar and fluctuating US yields. Decentralized finance (DeFi) continues to grow, with Total Value Locked (TVL) increasing and more users joining. We are seeing capital being shifted from Bitcoin to other cryptocurrencies like Ethereum and Solana. The euro area economy is resilient, supported by an EU-US agreement and rising spending in Germany. However, there are still risks of a further interest rate cut, potentially in late 2025 or early 2026.Continued Consumer Strength
The strong US retail sales reported by the Redbook Index suggest ongoing consumer strength. However, the July 2025 Non-Farm Payroll report showed an increase of 195,000 jobs, slightly below expectations, contributing to the recent decline of the dollar. It might be wise to use options to guard against possible, but likely volatile, dollar weakness in the coming weeks. The euro has demonstrated notable strength, pushing the EUR/USD closer to 1.1600. This is supported by recent positive data showing German industrial production rose by 0.5% in June, exceeding forecasts. We think buying call options on the euro for September is a smart way to take advantage of this upward trend. Sterling is also gaining from the dollar’s decline, with GBP/USD now above 1.3300 ahead of the next Bank of England meeting. UK inflation recently increased to 2.8%, suggesting a hawkish stance from the central bank, similar to its approach during the 2022-2023 tightening cycle. This indicates more potential for the pound, making call options on the currency appealing. Gold’s position near $3,400 an ounce remains solid, helped by a weaker dollar and varying US bond yields. The latest US Producer Price Index (PPI) data shows inflation is moderating, reducing pressure on the Federal Reserve to act aggressively and supporting non-yielding assets. This might be a good time to hold or add to bullish positions using call options on gold futures. In the cryptocurrency space, we see a clear shift of capital away from Bitcoin. DeFi platforms on Ethereum and Solana are capturing much of this investment, with Ethereum’s share of the total crypto market cap recently surpassing 25%. Traders should consider buying call options on Ether (ETH) to take advantage of this trend, as it has been outperforming Bitcoin. While the Eurozone economy seems stable for now, we should keep an eye on the long-term risk of a potential interest rate cut in late 2025 or early 2026. While we are optimistic about the euro for the next few weeks, it may be prudent to consider longer-term strategies to hedge against a downturn next year. This could mean buying puts that expire in early 2026. Create your live VT Markets account and start trading now.Soft Eurozone PMI data leads to Euro decline against the British Pound, falling below 0.8700
The Euro has weakened for two days in a row against the British Pound, with the EUR/GBP now below 0.8700. The Eurozone’s Composite PMI for July is 50.9, slightly lower than the expected 51.0 and down from June’s 51.0. In contrast, UK PMI data surpassed expectations, with the Composite PMI rising to 51.5 and the Services PMI reaching 51.8.
The Euro’s drop is partly due to weaker Eurozone PMI data and concerns over a US-EU trade deal that seems more favorable to the US. Meanwhile, the British Pound is stable ahead of the Bank of England’s monetary policy decision, boosted by stronger PMI figures.
EUR/GBP Decline
In early trading, the EUR/GBP crossed dipped below a crucial level, hitting around 0.8684, marking a decline of about 0.30% for the day. The latest PPI data from the Eurozone showed a monthly rise of 0.8%, indicating ongoing inflationary pressures, despite a generally weak economic outlook. Germany’s PMI data showed slight economic improvement, with both Composite and Services PMIs rising. At the same time, the European Central Bank has kept interest rates steady, and expectations for rate cuts are cautious given mixed economic signals. The UK’s PMI data suggests modest growth, providing some support to the Pound. Despite this, current market expectations hint at possible cuts from the BoE in their upcoming decision. Given the Euro’s decline against the Pound, we expect the EUR/GBP cross to continue downward over the coming weeks. Economic data shows a clear divergence, with the Eurozone economy showing signs of stalling while the UK displays unexpected strength. This fundamental weakness in the Eurozone makes it hard to see a sustained rebound from here.Central Bank Dynamics
Our view is supported by recent official statistics. Eurostat’s final July Harmonised Index of Consumer Prices (HICP) confirmed an inflation rate of just 2.0%, missing forecasts and indicating weakening price pressures. In contrast, the UK’s latest labor market report from late July 2025 showed firm wage growth at 4.5%, giving the Bank of England less room to cut rates aggressively. Central bank dynamics are essential for our strategy. While the market anticipates a rate cut from the Bank of England, strong UK data may lead to a “hawkish cut,” meaning the bank would cut rates but signal a slower pace for future reductions. The European Central Bank, on the other hand, is limited by weak industrial performance in Germany, which unexpectedly contracted in June 2025. We’ve seen this kind of divergence before. In late 2023, the UK economy consistently outperformed dismal forecasts while the Eurozone, especially Germany, struggled with the aftermath of the energy crisis. During that time, the EUR/GBP pair was under pressure for several months, showing how persistent these trends can be. We are considering strategies that would profit from a further decline in the EUR/GBP pair. Buying put options on EUR/GBP with expirations in late September or October 2025 appears prudent, as it allows us to benefit from the trend while defining our maximum risk. We should look for entry points, especially if there are small bounces in the pair before the Bank of England’s decision. However, we must be alert for unexpected changes in comments from either central bank. A sudden improvement in German sentiment or a more dovish than expected Bank of England could lead to a sharp but likely temporary reversal. Monitoring upcoming inflation data from both regions will be crucial to support our outlook. Create your live VT Markets account and start trading now.Carney announced that Canada will provide C$700 million in loan guarantees to support the lumber sector.
Canada is set to provide C$700 million in loan guarantees to help its softwood lumber industry due to US-imposed tariffs. An extra C$500 million will be used to speed up product development and explore new markets.
This decision shows Canada’s aim to reduce reliance on US demand and expand its export business. Ongoing talks suggest the country is looking for new markets and opportunities for its lumber sector.
