Neel Kashkari, the President of the Minneapolis Fed, has suggested that the US might see two interest rate cuts by the end of this year. This possibility arises from a slowing economy, but the effect of tariffs on inflation is still unclear.

Importance of Policy Changes

Kashkari highlights the need to change policy rates soon to help with the economic slowdown. There is uncertainty about future inflation due to tariffs, which could lead the Fed to pause or raise rates instead. Current economic data shows that wage growth is decreasing, indicating a weaker job market. The Fed is aware of this and understands that unemployment numbers can change. Kashkari insists on the validity of economic data and how people perceive the economy in real life. He believes that economic conditions are real, and it’s hard to convince people otherwise using job or inflation statistics. As the Fed hinted at two rate cuts for this year, markets are reacting to the slowing economy. The July 2025 jobs report confirmed this trend, showing weaker hiring and wage growth slowing to 3.5% annually. This has changed expectations for the first rate cut, which might come as soon as the September meeting. However, potential inflation from tariffs poses a significant uncertainty. The July 2025 Consumer Price Index (CPI) rose slightly to 3.4%, reminding us that pricing pressures are still present. This uncertainty suggests that traders might want to consider buying volatility through tools like VIX futures or options straddles on major indices to protect against any unexpected moves by the Fed.

Traders and Market Reactions

Traders are positioning for lower rates by using interest rate derivatives. Currently, futures markets show a high likelihood of a 25-basis-point cut in September and a strong chance of a second cut by December. Those who believe in the slowdown should consider going long on short-term interest rate futures, such as SOFR contracts, to take advantage of this anticipated policy change. This situation feels similar to late 2018 and 2019 when the Fed had to shift quickly from tightening to easing as the economy slowed due to trade pressures. Historical patterns suggest that once the Fed starts cutting rates, changes can occur faster than expected. It’s also important to note that the Fed is paying attention to more than just headline data; they’re focused on the real economic experiences of people. This means that even if inflation remains high, signs of a general slowdown in consumer spending or business investment could prompt a policy shift. We should avoid getting too fixated on any single data point, like CPI, when the overall trend suggests weakness. Create your live VT Markets account and start trading now.

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### GBP/USD Technical Outlook The technical outlook for GBP/USD appears negative. This is due to bearish moving average trends and weak momentum indicators. The recent bear-crosses and the 14-day momentum indicator suggest a potential halt in recovery. Currently, GBP/USD is hovering around the 1.3300 level. This seems to be a phase of pressure building ahead of the Bank of England’s (BoE) decision. The market is quiet, which often leads to significant moves, making the next few weeks crucial. We see this consolidation as a chance to prepare for the volatility that may follow the announcement. ### BoE and Fed Policy Divergence The current technical setup, showing bearish moving averages and weak momentum, indicates that the easiest path may be downward. This view is supported by recent economic news. For instance, UK inflation for July 2025 unexpectedly dropped to 2.1%, reducing pressure on the BoE to act aggressively. Additionally, a report from the Office for National Statistics revealed that UK retail sales fell for the second consecutive month, highlighting a sluggish economy. We see similarities between the current market and late 2023 when similar consolidation took place before the BoE hinted at ending its rate hikes. At that time, the pound sharply declined after the central bank confirmed its dovish approach. The weak UK Construction PMI, which is at its lowest since the 2020 pandemic lockdowns, reinforces the chance of a similar outcome. Given this bearish outlook, we should explore strategies that profit from a potential drop in the pound’s value against a strong dollar. Buying GBP/USD put options with strike prices below the 1.3300 support level, targeting perhaps 1.3200 or 1.3150, allows us to speculate on this move while defining our risk. The premium for these options represents the maximum loss we could face on this trade. The strength of the US Dollar adds another layer to our strategy, as it offers little support for the pound. Recent U.S. data showed that core PCE, the Fed’s preferred inflation measure, remains steady at 2.8% year-over-year. This suggests that the Federal Reserve has no immediate reason to weaken the dollar with interest rate cuts. The policy divergence between a potentially dovish BoE and a steady Fed makes a strong case for a lower GBP/USD in the coming weeks. Create your live VT Markets account and start trading now.

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The Federal Reserve’s Daly suggests that the Fed may need to change its policy in the next few months. She believes they can’t wait for everything to be perfectly clear before making a move. Tariffs are not expected to lead to lasting inflation that would require changes in monetary policy. The job market has weakened, and further slowdown would be problematic.

Monetary Policy Adjustment

The Fed’s monetary policy must adjust to fit the risks to its goals. Daly spoke at the Anchorage Economic Summit about inflation and the slowing economy. She mentioned that inflation is decreasing, excluding the impact of tariffs, as the economy cools and monetary policy stays tight. Further weakening of the job market is a concern since it can decline rapidly once it starts to falter. Daly’s willingness to consider a rate cut shows that FOMC officials are leaning toward this in upcoming meetings. She suggests that two rate cuts in 2025 might be appropriate, and a cut in September is becoming more probable. With increasing signs of a policy shift, traders should prepare for an interest rate cut soon. Key officials are changing their tone, which reduces uncertainty about the Federal Reserve’s next steps. This makes it important to focus on positioning for lower rates.

Labor Market Concerns

Concerns about the labor market are a major factor in this potential change. The unemployment rate rose to 4.2% in July 2025, and last week’s jobless claims were higher than expected, indicating a risk of a quick slowdown. Officials want to act before the labor market deteriorates further, noting it can “fall quickly and hard.” This shift toward a softer stance is supported by easing inflation. The latest Core PCE reading for July was 2.5%, getting closer to the Fed’s 2% target than earlier this year. This allows officials to focus more on employment issues. For equity traders, this means they might want to buy call options on major indices like the S&P 500. Lower rates typically improve stock values and corporate profits, similar to what happened during the market rally in early 2024 when the Fed first hinted at halting rate hikes. The current situation feels much like that previous period of anticipation. The most direct strategy involves interest rate derivatives. It could be wise to go long on Secured Overnight Financing Rate (SOFR) futures, as their prices will increase once the market fully expects a September rate cut. This offers a straightforward way to bet on the Fed’s anticipated policy change. In the currency market, the U.S. dollar may weaken as lower rates make it less attractive. Traders might consider buying futures or call options on currencies like the Euro or the British Pound compared to the dollar. This trade gains from a drop in U.S. interest rate expectations relative to other nations. Volatility is also key to consider, as it has been high due to uncertainties about policy. As the road to a rate cut becomes clearer, we can expect the VIX index to fall. Selling VIX calls or VIX futures could be a profitable strategy for those who believe the Fed’s clearer stance will ease market anxiety. Create your live VT Markets account and start trading now.

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Mary Daly, the President of the Federal Reserve Bank of San Francisco, is preparing to speak to an audience. She recently showed openness to the idea of a rate cut, suggesting that two cuts by the Federal Open Market Committee (FOMC) could be appropriate in 2025. While today’s agenda features crucial data points, the Australian trade balance is currently less significant. Instead, more focus is on the inflation expectations data from the Reserve Bank of New Zealand (RBNZ); a rate cut from them is expected on August 20. This expectation is backed by the latest labor market data from New Zealand.

Economic Calendar Overview

Today’s economic calendar highlights several key data points. All times are in GMT, with figures showing previous results and median expected consensus where applicable. As of August 6, 2025, Mary Daly’s remarks from the Federal Reserve are a clear indication of market direction. When a high-ranking official like Daly refers to two possible rate cuts this year, it grabs our attention. This marks a notable shift towards a more dovish approach from the central bank compared to earlier stances. This change aligns with recent economic data, which indicates a trend of disinflation without a major economic downturn. The core PCE, the Fed’s preferred measure of inflation, has cooled to 2.5% as of June 2025, moving closer to the 2% goal. Additionally, the jobs report for July 2025 showed a softer labor market, with payrolls increasing by only 150,000 and unemployment rising to 4.1%.

Opportunities in Derivatives Trading

For derivatives traders, the upcoming weeks present opportunities to position for lower interest rates in the U.S. This involves looking into options and futures contracts that will increase in value as the chances for a Fed rate cut go up. Taking long positions in short-term interest rate futures, such as those tied to SOFR, could yield profits as their prices rise when yields drop. This climate also favors equity markets since lower borrowing costs tend to enhance corporate earnings and boost stock valuations. We should consider S&P 500 and Nasdaq 100 index call options to take advantage of potential gains. This scenario echoes the market’s response in 2019 when the Fed shifted from raising to cutting rates, triggering a strong rally in risk assets. In addition, the situation in New Zealand presents a timely opportunity as we approach the RBNZ’s meeting on August 20. Weak labor market data has reinforced expectations of a rate cut, making it feel almost certain. Supporting data shows that New Zealand’s unemployment rate for the second quarter of 2025 rose to 4.5%, while quarterly CPI inflation dropped to 3.8%. These numbers provide the RBNZ with a clear path to start easing policy to support the slowing economy. The upcoming inflation expectations data is unlikely to alter this course. Thus, shorting the New Zealand dollar becomes an appealing trade, especially since its central bank looks poised to cut rates sooner than others. We can utilize FX options to bet on a decline of the NZD against other currencies. For example, buying NZD/USD puts could be an effective way to benefit from this anticipated policy shift. Create your live VT Markets account and start trading now.

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The Canadian Dollar is slowly rising against the US Dollar, trading in a tight range. The US Dollar remains weak, influenced by last week’s Nonfarm Payrolls report. A weaker US Dollar, steady oil prices, and a positive risk environment are slightly boosting the Loonie. However, the absence of new driving forces limits price movements, making trade news crucial for the USD/CAD pair. After hitting a high of 1.3879 on August 1, the USD/CAD pair dropped sharply due to a disappointing US jobs report. It is currently trading near 1.3744, showing little change during the American trading session. Fitch Ratings has warned of a declining outlook for Canadian consumers because of a slowing job market. Consumer spending went up by just 0.2% in Q1 2025, and growth is expected to decelerate further in 2025 and 2026. Factors like fewer job openings, layoffs, and trade uncertainties—especially with the US—are affecting consumer confidence. Fitch predicts that Canadian exports will face an effective tariff rate of 10.0% from the US, which could hurt confidence. The Bank of Canada is keeping interest rates steady but may lower them to 2.25% by the end of the year, although persistent inflation poses uncertainty. Key data releases coming up include the Ivey PMI and the July labor market report, which may influence expectations for Bank of Canada rate cuts and the Loonie’s movements. As of August 6, 2025, the US dollar is still on the defensive. The jobs report from last Friday, August 1, showed a gain of only 95,000 jobs, well below the expected 180,000, which has kept the USD/CAD pair stable around 1.3744. The Canadian dollar is getting some support from stable oil prices, with WTI crude steady at around $82 a barrel. This, along with a generally positive risk appetite in global markets, helps support the Loonie. However, these reasons are not strong enough to create significant price movements. Our attention will be on this Friday’s Canadian labor market report for July. We expect the unemployment rate to rise to 6.3%, which could increase the likelihood of a Bank of Canada rate cut this year. This puts the central bank in a difficult position, as core inflation remains high at 2.8%, above its 2% target. In the next few days, we think selling volatility is a wise strategy. Options strategies like iron condors allow us to gain if the USD/CAD pair stays within its current tight range ahead of the jobs data. This approach takes advantage of market indecision. We are also keeping an eye on any differences between the Bank of Canada and the US Federal Reserve. This could be the key driver for a price breakout. In 2015, the Bank of Canada cut rates while the Fed was tightening, which caused the USD/CAD to rise sharply. A similar situation could occur if Canadian data weakens significantly. The main risk for any positive Canadian position is the threat of US tariffs. The forecast of a 10.0% tariff rate poses a significant challenge, dampening enthusiasm for the Loonie. This trade uncertainty makes us cautious about making large, long-term investments until there is more clarity.

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The US Dollar is the official money of the United States and is used widely around the world. It plays a major role in global finance. In 2022, it represented over 88% of all foreign currency transactions, totaling $6.6 trillion daily. The Dollar was once backed by gold, but that changed in 1971 with the Bretton Woods Agreement. The value of the US Dollar is greatly influenced by monetary policy from the Federal Reserve (the Fed). The Fed aims to keep prices stable and maintain employment by adjusting interest rates. When inflation is high, interest rates usually increase, making the Dollar stronger. However, if inflation is low or if unemployment is high, the Fed may lower rates, which can weaken the Dollar. In times of financial crisis, the Fed uses quantitative easing (QE) to improve credit flow by buying government bonds, which can lead to a weaker Dollar. On the other hand, quantitative tightening (QT) involves stopping these purchases and generally strengthens the currency. Economic changes linked to key companies can also affect the markets and currencies, so any major announcements are watched closely. Right now, the US Dollar is the most important currency to pay attention to, as it is closely linked to the Fed’s actions. The latest inflation report from July 2025 showed that inflation rose to 3.8%, putting pressure on the Fed to respond. This ongoing inflation is significantly above the 2% target and affects market feelings. Based on this information, we think the Fed will adopt a strong stance to improve price stability. Current market predictions, as indicated by the CME FedWatch Tool, show a 70% chance of another interest rate hike at the September meeting. This possibility is causing the Dollar to strengthen against currencies like the Euro and the Yen. This situation closely resembles what we saw in 2022-2023, when aggressive rate increases led to a surge in the US Dollar Index (DXY). The DXY has now surpassed 107 for the first time this year, suggesting it may rise further based on historical trends. We are preparing for a stronger Dollar based on these patterns. For traders using derivatives, this means buying call options on the US Dollar or on ETFs that track the Dollar. This strategy allows one to benefit from a rising Dollar while managing and limiting risks. With market volatility, indicated by the VIX index near 18, options trading can help navigate expected price fluctuations. It’s also important to note that the Fed is continuing its quantitative tightening (QT) program and steadily lowering its balance sheet. This process reduces liquidity in the financial system, which usually supports a stronger Dollar. An announcement about slowing QT would be significant, but we do not expect that to happen soon. In the coming weeks, we will closely watch key employment reports and retail sales data. Strong economic results would likely lead to another rate hike and support the Dollar’s growth. Thus, traders should be ready for increased volatility around these data releases.

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Wix.com reported quarterly earnings of $2.28 per share, beating expectations of $1.75. Last year, earnings were $1.67 per share. This quarter’s earnings exceed expectations by 30.29%, though last quarter’s surprise was a negative 6.63%. Over the past four quarters, Wix.com has exceeded consensus EPS estimates three times. For the quarter ending June 2025, Wix.com earned $489.93 million in revenue, which is higher than the projected $487.54 million. Revenue last year was $435.75 million. The company has also exceeded revenue estimates three times in the last four quarters. Since early 2023, Wix.com shares have fallen by 40.3%, while the S&P 500 has increased by 7.1%. The future movement of Wix.com’s stock may depend on management comments during earnings calls. Currently, the company’s shares hold a Zacks Rank of #3 (Hold), which means they likely follow market trends. The forecast for the next quarter’s EPS is $1.83, with revenue expected to be $502.1 million. For the current fiscal year, the projected EPS is $7.13, with total revenue of $1.98 billion. In the same field, Realbotix Corp. expects to report no change in its quarterly loss and forecasts $0.8 million in revenue, which would be a 158.1% increase from last year. As of August 6th, 2025, Wix.com has released a strong earnings report, exceeding expectations for both profit and revenue. This shows solid operational performance over the past year. However, we should be cautious because the stock has struggled significantly since early 2023. The stock’s drop of over 40%, while the S&P 500 has risen, is mainly due to market fears about new AI-native competitors that gained traction in 2024. We’ve also seen signs of slowing premium subscriber growth in the competitive North American market. These factors make traders hesitant to expect a strong and sustained rally based on this good news. As a result, there is high implied volatility in the options market for Wix. Before this announcement, implied volatility was around 55%, indicating that the market expected a big move but was unsure about the direction. This makes buying options risky and expensive at this time. For those who think this positive report could push the stock upward, we should explore strategies that limit our costs. A bull call spread, where we buy a call with a September expiration and sell a higher-strike call against it, could help us capture potential gains while controlling risk. This strategy is wiser than simply buying a long call, given the stock’s history of declining after good news. Alternatively, we might see this as a chance to profit from the high volatility, betting that the stock won’t crash but also won’t rise significantly. Selling a slightly out-of-the-money put option for the coming weeks could be a smart move. This allows us to collect a good premium, based on the belief that post-earnings movement will be sideways or mildly positive. We also need to consider the company’s guidance, which predicts a slight dip in earnings per share for the next quarter. This, along with the neutral #3 (Hold) rating, suggests that the market may absorb this good news without a major breakout. Therefore, we should manage any positions we take carefully over the next few weeks as the initial excitement fades.

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In 1984, Ted Weschler, a financial analyst, started his investment journey by fully funding his retirement account and taking advantage of his employer’s matching contributions. By 1989, his account had grown to $70,385. He then moved his money to a Self-Directed IRA, giving him more control over his investments. With a research-based approach and resilience through market crashes, he built an impressive $264.4 million fortune over thirty-five years. Weschler achieved success by focusing on publicly available securities and enjoying an average annual return of 22% from 2000 to 2011. In 2012, he converted $131 million of his IRA into a Roth IRA, which came with a $28 million tax bill but ensured tax-free withdrawals in the future. His disciplined strategy included starting early, maximizing contributions, sticking mostly to stocks, staying calm during downturns, and prioritizing long-term growth.

Pathway to Success

Weschler’s investment skills caught Warren Buffett’s eye, leading to his hiring at Berkshire Hathaway in 2012. His journey highlights how IRAs can play a crucial role in retirement planning and teaches us about the importance of discipline and long-term investing. He shows that regular investors can significantly grow their retirement savings by following strong investment practices. Weschler’s story about growing a wealth through a retirement account teaches us a vital lesson for the derivatives market: having a solid, research-based strategy is invaluable. For traders, this means focusing on assets they know well instead of getting distracted by market noise. As of today, August 6, 2025, we face increased market uncertainty, which favors options traders. The latest inflation report for July showed core CPI stubbornly at 3.1%. With the Federal Reserve meeting set for September, the CBOE Volatility Index (VIX) has risen to 21. This signals that significant price movements may be ahead for major indices. We should take action by structuring trades to benefit from this expected volatility. This could mean buying straddles or strangles on ETFs like the SPY or QQQ before the next Fed announcement. This approach allows us to profit from substantial moves in either direction, fitting well with the current market uncertainty.

Strategic Trading Amidst Volatility

Reflecting on the rate-hike cycle of 2022 and 2023 can provide a useful framework for today’s market. During that period, traders who anticipated volatility around economic data releases did exceptionally well. We can apply this insight now by gearing up for similar sharp movements influenced by speculation on monetary policy. Our research should also zero in on sector-specific opportunities. For instance, while the overall market feels shaky, the rollout of 6G infrastructure is creating clear strength in certain telecommunications and semiconductor stocks. We can leverage derivatives to focus on these chances, perhaps by buying calls on market leaders while hedging with puts on the broader market. Ultimately, the key is maintaining discipline in our shorter timeframes. We need to clearly define our reasons for each trade, set specific profit targets and stop-losses, and act without letting emotions influence us. Sticking to these solid practices will help us consistently make the most of market movements in the upcoming weeks. Create your live VT Markets account and start trading now.

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Nvidia CEO Jensen Huang recently met with President Trump at the White House. While they haven’t shared what they discussed, it’s likely that topics like semiconductor chips, tariffs, China, and U.S. investments came up. Soon after, Apple’s Tim Cook is expected to announce an additional $100 billion investment in U.S. operations. This adds to the $500 billion Apple has already committed to increasing domestic production. While it’s unlikely that this will result in iPhone assembly in the U.S. due to costs, the investment could help with other production needs or improve existing facilities. More details will emerge from Cook’s upcoming announcement.

Impact On The Semiconductor Sector

Jensen Huang’s meeting with the president indicates we can expect news that might impact the semiconductor sector. This meeting raises questions about tariffs and incentives for domestic manufacturing, which could lead to big price changes. We should pay attention to any official statements, as they could influence the entire chip market. Because of this uncertainty, implied volatility for Nvidia (NVDA) and the VanEck Semiconductor ETF (SOXX) is likely to increase. Similar patterns occurred in 2022 and 2023 when news about the CHIPS Act led to sharp rallies and drops. In this atmosphere, it might be wise to buy options to take advantage of volatility, rather than just betting on market direction, over the next few weeks.

Apple’s Long Term Commitment

Apple’s additional $100 billion investment in the U.S. shows a strong long-term commitment. Recent data from July 2025 indicate Apple’s hardware sales are starting to level off, making new growth ideas important. This significant investment provides just that, hinting at potential new product lines or improvements in U.S. facilities. This shift is likely a positive sign for Apple’s stock (AAPL) as we head into fall. Historically, when Apple has made large domestic investment commitments, its stock has performed well after. Traders may want to consider call options expiring next quarter to take advantage of this positive sentiment. These actions point to a larger movement to secure U.S. supply chains, a trend that has gained momentum since the disruptions seen in early 2020s. We should also keep an eye on domestic suppliers for both Apple and Nvidia, as they will likely benefit from these sizable investments. Small-cap and mid-cap industrial and tech companies based in the U.S. could see substantial gains from these developments. Create your live VT Markets account and start trading now.

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Pound Sterling (GBP) is slightly rising against a weaker US Dollar (USD) but is dropping in value compared to the Euro (EUR). Recent UK data shows a steeper decline in the July Construction PMI, which fell to 44.3, the lowest in five years. A UK think tank indicates that Chancellor Reeves faces a GBP 51 billion shortfall to address in the October budget. Meanwhile, market prices show a steady trend, reflecting a bullish reversal against the USD from last Friday. The daily GBP chart suggests that the GBP could rise above the Monday high of 1.3330. Resistance is noted at 1.3365, while support levels range from 1.3265 to 1.3275. This information is for informational purposes only and shouldn’t be taken as advice to buy or sell assets. There are risks involved, and thorough research is encouraged before any investment decisions. There are no guarantees about the accuracy or timeliness of this data. Investing in open markets carries risks, including the possibility of losing the entire investment. The investor is fully responsible for any risks, losses, and costs. Currently, the Pound shows mixed results; it is gaining against a weaker US Dollar but losing against the Euro. This situation suggests that the recent move in GBP/USD is more about Dollar weakness than Sterling strength. The market seems to be adjusting to these conflicting signals. The US Dollar’s recent drop follows last week’s July 2025 jobs report, which revealed a smaller-than-expected payroll increase of just 160,000. This lowers expectations for tightening policies from the Federal Reserve, providing GBP/USD a chance to move higher soon. The pair is testing the 1.3330 level, with potential to reach 1.3365 if the Dollar continues to drop. However, we should pay attention to the troubling picture in the UK. The July Construction PMI figure of 44.3 is the worst since the economic shocks of 2020, confirming a growing slowdown. Recent data also shows that UK manufacturing output has contracted for the second quarter in a row. In light of this, one strategy is to consider short-dated call options on GBP/USD to capitalize on potential near-term increases toward 1.3365. This approach allows participation in the rally while limiting risk. It’s a tactical response to weak US data rather than a vote of confidence in the UK economy. Looking ahead to autumn, the £51 billion budget shortfall poses a significant risk for Sterling. We remember the market volatility surrounding UK fiscal announcements in late 2022. The upcoming October budget might cause similar price fluctuations as the market reacts to potential tax increases or spending cuts. Therefore, it’s wise to prepare for increased volatility in the coming weeks. Buying long-dated straddles or strangles on GBP/USD could be a smart move, as this strategy profits from large price swings in either direction, given the uncertainty surrounding the UK’s fiscal and economic future.

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