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Collins emphasized the importance of understanding how uncertainty affects the economy and investments.
Understanding how uncertainty impacts the economy is crucial, particularly in areas with long-term investments. Policymakers are encouraged to include uncertainty in their assessments of financial stability and to consider it with a comprehensive data approach.
Sometimes, uncertainty can speed up certain economic activities. When analyzing data, we should proceed with caution and humility, as significant revisions can occur during economic shifts. The July jobs report raised worries, leading to a more careful approach in setting prices.
Analysts suggest USD/JPY may consolidate between 147.00 and 148.20, with declines unlikely below 145.80.
USD/JPY is expected to stay within the range of 147.00 to 148.20. Recently, there hasn’t been much upward movement in prices, causing this stable phase.
In the short term, the US Dollar may drop further, but it’s unlikely to go below 145.80. If it rises above 149.00, it would signal the end of the downward trend.
Two days ago, the Dollar fell to 146.60 but then bounced back. However, this bounce didn’t show much strength. We expect the market to stay stable for the next few weeks, keeping USD/JPY within this range.
It’s important to be cautious due to the risks in the market. Trading decisions should be made after thorough research, considering the possibility of losses in foreign exchange trading.
We anticipate that the USD/JPY pair will remain within the range of 147.00 and 148.20 in the upcoming weeks. The latest US CPI data from last week showed core inflation steady at 3.1%, which lowers chances of any immediate changes in Federal Reserve policy. This economic stability supports the current phase of consolidation for the currency pair.
This calm suggests that traders might find it beneficial to sell options during this period of low volatility. We are looking into selling out-of-the-money strangles, with strike prices around 145.50 and 149.50. This strategy aims to earn premium as long as the pair stays within this wider range.
The support level at 145.80 looks strong, backed by a significant interest rate advantage for the US Dollar. The drop to 146.60 on August 4th was quickly reversed, indicating limited demand for a stronger Yen without a clear policy change from the Bank of Japan. We see this level as solid short-term support.
A rise above 149.00 would be a key indicator, as this level is seen as a psychological barrier leading to the critical 150.00 mark. We remember the Japanese Ministry of Finance’s past interventions to strengthen the Yen when the Dollar became too strong, which makes us cautious about lasting moves above 149.00.
Additionally, the US non-farm payroll report from August 1st met expectations of 195,000 jobs added, confirming views of a stable economy. This gives us little reason to expect a major breakout soon. Therefore, derivative traders might look for strategies that benefit from time decay within this established range.
Traders should be careful and set alerts for important levels. A clear daily close above 148.20 could hint at a test of the upper breakout point, while a drop below 147.00 might lead to retesting recent lows. Keeping an eye on comments from both central banks will be essential for any signs that this calm period is ending.
Canadian Dollar improves slightly after testing low at 1.38 due to weaker USD
The Canadian Dollar is slowly rising after bouncing back from below 1.38. It’s closing in on the fair value estimate of 1.3650, though it is still seen as somewhat overvalued.
Spot rates are stabilizing, while the USD is experiencing a bearish reversal. Currently, USD/CAD is testing support at 1.3763, which represents 38.2% of the recent USD increase from late July.
If USD continues to drop, it may fall into the upper 1.36s or the low 1.37s, with resistance at 1.3800/10. Canada has reaffirmed its commitment to the USMCA, which allows many exports to remain tariff-free.
Later today, Canada will release Composite and Services PMI data at 9:30 ET. This information could further influence currency movements soon.
Given the current situation, we might want to prepare for stronger Canadian Dollar performance in the upcoming weeks. One strategy is to sell USD/CAD call options with strike prices above the 1.3810 resistance. This approach allows us to take advantage of the expected range or possible downward movement, as we believe the pair will likely stay within this limit for now.
The newly released Canadian Services PMI for July was unexpectedly strong at 52.1, beating the anticipated 51.5. This indicates that Canada’s economy is holding up well, giving the Bank of Canada more reason to keep its current policies. This positive signal supports the idea that the currency pair may test lower levels.
Canada’s strength contrasts with softer trends in the United States. Last week’s Non-Farm Payrolls report showed a slowdown in job creation. The interest rate futures market is now betting on a higher chance of a Federal Reserve rate cut before the end of 2025, a sentiment not yet seen with the Bank of Canada. This growing difference in policies is a key factor affecting the USD/CAD exchange rate.
The loonie is also getting support from stable commodity prices, which are vital for the Canadian economy. WTI crude oil has remained strong above $85 per barrel through early August, giving the currency a solid base. As long as energy prices don’t experience a sharp decline, this should prevent any significant rise in the USD/CAD pair.
The current market environment is similar to what we saw in late 2023. Back then, expectations of a dovish shift from the Federal Reserve led to widespread weakness of the US dollar. At that time, USD/CAD dropped from over 1.38 to below 1.33 in just two months. We might be witnessing the start of a similar trend as the pair approaches its estimated fair value in the mid-1.36s.
NASDAQ rises above key moving averages, signaling a bullish market trend today
The NASDAQ index is currently performing well, leading major US stock indices with a gain of 1.06%. It is up by 224 points, trading at 21,140.07.
On Friday, the index dropped sharply, falling below its 200-hour moving average for the first time since April 24. This decline also pushed the price below the 38.2% retracement level, reaching 20,650.10, from the rally that started on June 23 and peaked on July 31.
Market Opens Higher
Today, the market opened higher. It has risen above the 100-hour moving average of 21,020.24 and the 50-hour moving average of 21,043.28. Staying above these levels indicates a positive outlook. When the 200-hour moving average is breached, it signals bearish trends. The support level is found at the 38.2% retracement level of 20,650.10. The 100-hour and 50-hour moving averages give us support and resistance levels at 21,020.24 and 21,043.28, respectively. In other news, the US Treasury plans to auction $42 billion in 10-year notes, yielding a high of 4.255%. Meanwhile, European indices finished higher, with Spain’s Ibex leading the way. Given the NASDAQ’s current strength, we see a clear short-term bullish signal for the upcoming weeks. The index has recovered its 50-hour and 100-hour moving averages following a brief dip last week. This suggests that the upward trend that started in late June is still strong.Opportunities for Traders
For traders in derivatives, now is a good time to consider call options on the NASDAQ 100 (NDX) or related ETFs. The 100-hour moving average, at around 21,020, is a key level to monitor. As long as the index stays above this mark, a bullish outlook remains, making it a sensible area for placing stops on long positions. This optimism is backed by solid fundamentals. The latest Consumer Price Index (CPI) report for July 2025 showed inflation cooling to 2.9%, which exceeded expectations. This reduction in price pressure provides the Federal Reserve more flexibility, which typically benefits growth-oriented tech stocks. Additionally, the job market showed strength with 215,000 non-farm payrolls added in July 2025. However, there are risks to consider. Geopolitical tensions are rising, with discussions about a potential 15-20% tariff on all EU goods and instability in the Middle East. These issues could dampen market sentiment and lead to a move towards safer assets, so we need to keep a close eye on them. The high yield from the recent 10-year Treasury note auction, at 4.255%, may also act against the market. Attractive yields on secure government debt can draw investment away from stocks, particularly in the high-valuation tech sector. The CBOE Volatility Index (VIX) is still low at about 14, but it has increased from summer lows, indicating some traders are seeking protection against a possible downturn. Given these mixed signals, a cautious strategy could involve combining long call positions with less expensive, out-of-the-money put options as a hedge. If the NASDAQ cannot maintain its position above the moving averages, especially the 21,020 level, that would indicate the recent strength is weakening. It would then be wise to reduce bullish positions and prepare for a possible move back to the 20,650 support level. Create your live VT Markets account and start trading now.The New Zealand Dollar could rise against the US Dollar, ranging between 0.5860 and 0.5960.
The New Zealand Dollar (NZD) may rise slightly against the US Dollar (USD), but it’s unlikely to go above 0.5930. Over the long term, the NZD is expected to stay within a range of 0.5860 to 0.5960.
Recent trading shows the NZD fluctuating between 0.5884 and 0.5922. There is a small upward trend. Resistance is expected at 0.5945, with support levels at 0.5895 and 0.5880.
Neutral Outlook for NZD
Previous negative assessments of the NZD have shifted to neutral due to a slowdown in downward momentum. We expect the NZD to continue trading between 0.5860 and 0.5960. This information contains forward-looking statements that carry risks and uncertainties. It’s important to conduct thorough research before making any decisions about these markets and instruments. This content should not be seen as a recommendation for buying or selling assets or as investment advice. Given that the New Zealand dollar is expected to remain within a specific range, strategies that benefit from low volatility are advisable. This suggests setting up trades that profit if the NZD/USD pair stays between about 0.5860 and 0.5960. For example, selling options volatility through strategies like an iron condor could be a solid approach in the coming weeks. This neutral outlook is supported by recent actions from the central bank. The Reserve Bank of New Zealand kept its official cash rate unchanged in July 2025, noting that they want to see inflation lower from the recent Q2 2025 Consumer Price Index (CPI) reading of 3.5%. This absence of a strong directional push from the RBNZ suggests the currency will stay stable for now.Central Bank Influence on Currency Trends
On the other side, the US Federal Reserve has also indicated a pause in rate increases earlier this year. The interest rate difference between the two countries has stabilized, reducing a key driver of currency movements. This balance makes a big breakout in either direction less likely in the near term. Reflecting back from August 2025, we’ve seen similar range-bound trading for the NZD/USD throughout much of 2024. During that period, conflicting global growth signals and central bank uncertainty kept the pair stuck in a narrow range. This historical trend indicates that the current situation is not unusual and could continue. A specific factor limiting the Kiwi’s strength is the commodity market. The latest Global Dairy Trade auction on August 5, 2025, revealed a slight 0.5% drop in whole milk powder prices. Since dairy is a major export for New Zealand, this decline reinforces resistance around the 0.5960 mark, hindering the NZD’s momentum for a longer rally. Therefore, we see an opportunity to take advantage of time decay, or theta, since the currency pair is expected to move sideways. We suggest focusing on short-dated options that expire within the next two to four weeks to maximize this effect. The defined-risk nature of these strategies is wise, especially as previous downward momentum has only recently slowed. Create your live VT Markets account and start trading now.Markets evaluate interest rates and economic growth, leading to a decline in the US Dollar against major currencies.
The US Dollar (USD) is experiencing mixed to lower trading against major currencies, continuing the decline seen last Friday. The New Zealand Dollar has shown strength after a slight increase in the unemployment rate, while the Chinese Yuan has dipped slightly due to a disappointing rate from the People’s Bank of China.
Stock markets are holding steady, even as the US threatens higher tariffs on India for its oil purchases from Russia. Crude oil prices are rising amid potential US actions to restrict Russian oil supply. Recent US economic data indicate a ‘stagflationary’ environment, with both manufacturing and services struggling, and job growth shrinking in these sectors.
US Dollar Sentiment
Current sentiment for the USD is weak, with the DXY index close to recent highs. Short-term charts show that the important support level at 98.55 is under pressure. The US Treasury will conduct a 10-year sale after a lackluster three-year auction. While Federal Reserve speakers are set to speak later today, there are no major US data reports expected. Signs of stagflation complicate trading decisions. For instance, data from July 2025 shows inflation at 3.8%, while job growth slowed to only 80,000, indicating stagnant activity and ongoing price pressures. This economic climate suggests we should be ready for unstable market conditions. The current economic environment is putting stress on the US Dollar, with the DXY index around 98.70. We see the 98.55 support level as crucial; breaking below could indicate a more significant decline for the dollar. Looking back at the rate hikes in 2022-2023, the dollar weakened when growth fears overpowered inflation concerns, a trend we might be seeing again.Federal Reserve Dilemma
The Federal Reserve is facing a tough challenge, trying to fight inflation while also supporting a weakening economy. This uncertainty is increasing market volatility, with the VIX index rising from 15 to over 22. Traders should consider buying options to guard against sudden moves, as implied volatility is expected to stay high. With the dollar’s weakness, there are opportunities in other currencies such as the New Zealand Dollar, which is performing relatively well. Selling USD/NZD call options or buying the pair could be a smart strategy. On the other hand, the weakness of the Chinese Yuan suggests caution, making pairs like the AUD/CNH less appealing for now. Crude oil is a key focus, with WTI prices nearing $95 per barrel due to ongoing supply worries. Possible new US sanctions on Russian oil exports are supporting prices. We believe buying call options on oil futures or energy stocks can be a way to participate in potential upside while managing risk. Create your live VT Markets account and start trading now.A $42 billion auction of 10-year notes yields 4.255%, showing weak demand and low bidding efficiency
The U.S. Treasury recently auctioned $42 billion in 10-year notes, with a high yield of 4.255%. The bid-to-cover ratio was 2.35, down from the six-month average of 2.58. Domestic buyers, acting as direct bidders, made up 19.61% of the total, higher than the six-month average of 16.4%.
International buyers, also known as indirect bidders, represented 64.23% of the auction, lower than their six-month average of 72.3%. Dealers were left with 16.16%, significantly more than the average of 11.2%. Overall, the auction received a “D” grade.
Low International Interest
This auction showed low international interest, indicated by a drop in demand from indirect bidders. Domestic interest seemed stronger, likely due to stablecoin demand. The Treasury auction on August 6th serves as a warning. The high yield of 4.255% combined with weak demand suggests that the market is struggling to take on government debt. We can expect interest rates to rise in the upcoming weeks. This situation is not isolated. Last week’s July 2025 CPI report showed core inflation stubbornly at 3.8%. The Federal Reserve is unlikely to ease its policies with inflation so high above their target, reinforcing the need for rising yields across the board.Bearish Bond Positions
Given this, we should consider bearish positions on bonds. We could sell 10-year Treasury note futures (/ZN) or buy put options on bond ETFs like TLT. These strategies would benefit if bond prices drop as yields climb. Higher rates are generally bad for stocks, which we are already observing. The S&P 500 has fallen 3% from its July highs, and the VIX is now above 17, indicating increased fear. We might want to buy puts on major indices to hedge or bet directly on further declines. This market environment resembles late 2023, when the 10-year yield approached 5%, causing turmoil in the stock market. At that time, the market had to adapt to consistently high rates. It seems we are facing a similar challenge now. The issue also boils down to supply and demand. Weak foreign buying means others must fill the gap. Additionally, the Treasury plans to issue another $120 billion in debt by the end of the month. This ongoing increase in supply is likely to keep pressure on borrowing costs. Create your live VT Markets account and start trading now.Swiss president leaves Washington without a tariff agreement, affecting trade competitiveness with the U.S.
The Swiss president is leaving Washington without a tariff deal. Currently, the United States has imposed a 39% tariff on Swiss goods due to a trade deficit of $40 billion, which the U.S. considers too high.
Impact on Swiss Exports
These tariffs significantly affect Swiss exports. Sectors like watches, chocolate, machinery, and some non-pharmaceutical goods will face higher costs when entering the U.S. market. This situation is likely to make Swiss products less competitive and disrupt trade between the two countries. Without a tariff agreement, major Swiss exporters feel immediate pressure. Companies such as Swatch Group and Richemont, which depend on the U.S. for much of their watch sales, may see their stock prices drop in the coming weeks. Traders might consider buying put options on these companies to profit from this potential decline. Last year, the Americas market contributed significantly to luxury goods sales, with some reports indicating that it accounted for over 20% of Richemont’s revenue. The new 39% tariff on non-pharmaceutical goods represents a hefty cost that could hurt profit margins and reduce demand. This situation might make short positions on these export-heavy stocks a sensible choice. The uncertainty also affects the entire Swiss Market Index (SMI). We might see the SMI drop as investors rethink Switzerland’s economic outlook following this diplomatic failure. This could lead to a weakening of the Swiss Franc against the U.S. dollar.Trade Deficit and Economic Impact
In 2024, the U.S. goods trade deficit with Switzerland exceeded $42 billion, primarily in pharmaceuticals but also concerning goods like watches and machinery. A significant decline in these exports could negatively affect Switzerland’s trade balance and pressure the Franc downward. Although the Franc is usually seen as a safe haven, a direct economic hit could weaken it from its current levels. We can also expect increased market volatility, creating chances for options traders. A similar trend occurred during the U.S.-China trade disputes in the late 2010s, where tariff uncertainties caused significant price fluctuations for months. Traders might look at buying straddles or strangles on the SMI to navigate this anticipated volatility without taking a specific stance. Create your live VT Markets account and start trading now.In July, India’s M3 money supply rose to 9.6%, up from 9.5% earlier.
In July 2021, India’s M3 money supply rose to 9.6%, up from 9.5%. This change indicates a shift in the country’s financial situation.
The EUR/USD was around 1.1640, while the GBP/USD moved up towards 1.3350. These changes were driven by a weakening US Dollar and market expectations about the Bank of England’s policies.
Gold prices dropped below $3,360 per troy ounce, moving back from a recent increase. This dip occurred in a risk-on market environment, shifting focus to upcoming announcements from the Federal Reserve.
Bitcoin was holding steady near $114,000, with interest from institutions like Japan’s SBI Holdings filing for ETFs. Ethereum remained above $3,600 as spot ETFs saw investments of $73 million just the day before.
Economists anticipate a slowdown in US economic growth, despite ongoing trade volatility. The attention is on changing trade policies that significantly affect the economy.
Back in mid-2021, India’s M3 money supply was growing at 9.6%. Now, the Reserve Bank of India reports a growth rate of 7.2% as of July 2025, indicating a tighter monetary environment. Traders might consider call options on USD/INR, anticipating a possible depreciation of the Rupee in the weeks ahead.
The currency landscape looks different today compared to four years ago when EUR/USD was around 1.1640. Currently, it’s about 1.0750, influenced by a strong U.S. non-farm payrolls report adding 280,000 jobs last week. There’s an opportunity to sell near-term EUR/USD futures contracts to take advantage of this dollar strength.
Similarly, GBP/USD has decreased from its 1.3350 level in 2021 and is now at 1.2280. With the Bank of England recently pausing rate hikes, buying put options on the Pound might be a wise strategy to protect against further weakness against the dollar.
We remember gold’s drop in 2021 as markets anticipated Federal Reserve actions. Today, gold is trading firmly at $2,450 per troy ounce, driven by ongoing global inflation. The latest U.S. CPI data shows inflation remains high at 3.8%, making buying call options on gold futures a smart move.
Bitcoin’s price peak near $114,000 in 2021 seems far away now, as it currently trades around $95,000 amidst challenges from recent SEC commentary on staking services. However, institutional interest remains, with digital asset products reporting $150 million in net inflows last week, according to CoinShares.
For Ethereum, which was above $3,600 back then, it’s now trading near $7,800. With the recent dip, traders might consider selling cash-secured puts with a strike price of around $7,500. This lets them collect premiums while waiting for a clear entry point if the market dips further.
The economic slowdown in the U.S. we discussed back in 2021 has largely happened. Recent government data showed that the second-quarter GDP for 2025 grew at a slow 0.8% annually. As a response, derivative traders should consider options on the CBOE Volatility Index (VIX), as buying VIX call options can provide a hedge against potential market turbulence.
Pound Sterling fluctuates near 1.3300 against the US Dollar during the European trading session as investors await the Fed Kugler replacement and the Bank of England’s decision.
The Pound Sterling is around 1.3300 as investors wait for news on changes to Federal Reserve (Fed) leadership and the Bank of England’s (BoE) monetary policy. The BoE is likely to cut interest rates by 25 basis points to 4%. In the US, President Trump has narrowed down his choices for the next Fed Chair to four candidates.
Right now, the Pound is trading closely with the US Dollar, as everyone waits for an announcement about Fed Governor Adriana Kugler’s replacement. The US Dollar index stands at about 98.80 as traders stay attentive to the upcoming decision.
President Trump has ruled out Treasury Secretary Scott Bessent for the Fed Chair position, leaving Kevin Hassett and others in the running. The BoE will announce its decisions soon, with expectations of an interest rate cut led by BoE Governor Andrew Bailey.
In the UK, inflation is rising due to higher energy and food prices, alongside growing consumer inflation expectations. Job data shows a slowdown in labor demand as employer contributions to social security rise.
In the US, the Fed is expected to lower rates due to a decrease in hiring. The unemployment rate has climbed after disappointing job data. Concerns about tariffs have come up again, especially regarding semiconductors, chips, and pharmaceuticals.
With the Pound Sterling trading near 1.3300, we expect increased volatility ahead. Important announcements from both the Bank of England and the US Federal Reserve are on the way. The one-month implied volatility on Sterling options is nearing 11.5%, a level we haven’t seen since the political uncertainty in late 2024.
The anticipated BoE rate cut to 4% directly addresses a weakening UK economy. July data showed UK headline inflation stubbornly high at 5.2%, while job vacancies fell for the fourth month in a row. This mix of high inflation and slowing growth puts the Pound in a challenging position.
Across the Atlantic, the US Dollar faces challenges as the Federal Reserve also hints at a rate cut. The latest Non-Farm Payrolls report was disappointing, adding only 95,000 jobs instead of the expected 180,000, pushing the unemployment rate to 4.3%. This economic weakness and uncertainty about Fed leadership are weighing on the Dollar.
With the BoE decision looming, we are considering buying put options on Sterling. This allows us to prepare for a potential decline in the currency while controlling our maximum risk. These trades are focused on the next 30 to 45 days to capitalize on expected market moves.
Ultimately, we are watching to see which central bank acts more decisively to support its slowing economy. The market will react first to the BoE’s decision, providing a clear short-term trading signal. We’ll also pay close attention to new tariff announcements from the US, as they could quickly change the market’s focus.
