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India’s foreign exchange reserves fall to $688.87 billion from $698.19 billion
India’s foreign exchange reserves have fallen to $688.87 billion as of July 28, down from $698.19 billion. This indicates a decline in the country’s reserves during this time.
EUR/USD is hovering around 1.1650, with the US Dollar gaining strength ahead of expected inflation data. Statements from Federal Reserve officials and trade updates are influencing the movement of this currency pair.
This week, USD/JPY consolidated at 147.84, with analysts awaiting upcoming US CPI data.
The USD/JPY exchange rate has been steady this week, with little change as traders wait for the upcoming US Consumer Price Index (CPI) data. Currently, the USD/JPY is around 147.84. The US has agreed to change tariff stacking and reduce auto tariffs after recent trade talks.
The technical analysis shows that bearish trends are limited, with the Relative Strength Index (RSI) decline calming down. Key support levels are at 147.10 and 145.80/146, while resistance is at 147.90 and 149.40/50. Interest in trading may lessen due to weaker US data and potential interest rate changes from the Federal Reserve (Fed) and Bank of Japan (BoJ).
Political Uncertainty and Market Implications
Political instability, such as Prime Minister Ishiba’s leadership issues and concerns about the country’s credit rating related to fiscal health, could support the USD/JPY pair. However, the ongoing ‘sell USD’ sentiment and the narrowing yield gap between US Treasuries and Japanese Government Bonds may influence it negatively. The USD/JPY continues to hover around 147.84 as traders anticipate the US CPI data. This report, set to be released on August 13, is expected to reveal a 0.3% month-over-month increase in core inflation. This data is crucial as it will significantly impact the Fed’s interest rate decisions in September. Given the uncertainty surrounding the CPI report, we suggest considering options trading to take advantage of potential volatility. A significant market move, either upward or downward, could benefit traders with both call and put options. We observed similar volatility spikes during previous key inflation reports in late 2023 and 2024 when the market was sensitive to changes in Fed policies. If inflation comes in lower than expected, we might see a stronger trend in ‘sell USD’ activity, pushing the exchange rate toward the 147.10 support level. The yield difference between US 10-year Treasuries, currently about 4.10%, and Japanese Government Bonds at 0.95% has been closing this year. A weaker CPI report would likely strengthen this trend, making the yen a more appealing option.Possible Market Reactions to Inflation Data
Conversely, if inflation turns out to be higher than anticipated, it could challenge the possibility of Fed rate cuts and push the exchange rate toward the 147.90 resistance point. Domestic issues, like PM Ishiba’s declining cabinet approval ratings around fiscal reforms, might also impact the yen negatively. This mix of factors could lead the exchange rate to aim for the upper resistance zone at 149.40. The initial excitement from recent trade negotiations, which amended auto tariffs, appears to be fading. The weaker US economic data from last month, including slightly disappointing retail sales numbers, has shifted focus back to monetary policy. For us, this means the key factor affecting USD/JPY in the upcoming weeks will be the anticipated decisions of the Fed compared to the Bank of Japan, rather than trade developments. Create your live VT Markets account and start trading now.Musalem shared a balanced view, noting stable economic activity and cautious company strategies in response to tariffs.
Economic activity is steady, neither rising nor falling. Bank funding pressures are easing, and credit quality remains strong.
A lack of skilled workers continues, making companies wary of spending on new projects and hiring. To cope with tariffs, businesses are cutting costs and negotiating with suppliers, avoiding layoffs for now.
Business Strategies And Consumer Impact
Businesses that rely on imports are passing costs to customers, while companies closer to consumers have kept prices stable for now. The Fed is meeting its employment goals but falling short on inflation, with the job market close to full employment. There is a risk that the Fed might miss its targets for both inflation and employment, which could lead to job losses. Although tariff impacts on inflation might decrease, inflation could still remain persistent. While the job market is currently balanced, weaker economic activity could threaten jobs. The Fed is effectively managing risks related to both of its goals. Economic activity seems to be stable, indicating a period of lower volatility in the upcoming weeks. The VIX, which measures expected volatility, is trading around 14, a historically low level that shows this stability. In this environment, strategies that profit from sideways market movement—like selling out-of-the-money option strangles on major indices—may be favorable.Federal Reserve And Market Expectations
The Federal Reserve has indicated that interest rates will likely remain steady for now. With the latest core PCE inflation data from July at 1.7%, traders should consider options that will benefit if expectations for a rate cut decrease. This suggests looking at interest rate futures that reflect current rates staying the same through the end of the year, as the market currently sees only a 20% chance of a cut by November. However, there is a clear risk to jobs if the economy slows further. The July jobs report showed an unemployment rate of 3.8%, but hiring momentum is slowing compared to early 2025. Therefore, purchasing some inexpensive, longer-dated put options on stock indices could be a wise way to protect against a sudden downturn in the labor market. Create your live VT Markets account and start trading now.Tech sectors thrive as communication services and electronics show strong gains, boosting investor confidence and strategies
Market Mood and Strategies
The mood in the market is carefully optimistic. Growth in communication services and consumer electronics is sparking discussions about future technology developments. Financial stocks hint at a shift towards safer assets that can provide steady returns during ongoing economic changes. To take advantage of these trends, experts recommend investing more in tech stocks such as Google and Apple while keeping portfolios balanced with stable financial stocks like JP Morgan and Visa. It’s important to stay updated on tech innovations and financial developments to handle possible volatility and regulatory changes effectively. Today’s insights suggest using real-time data to make better investment decisions, focusing on the resilience of tech and smart financial strategies to shape future markets. With strong momentum in tech stocks, traders should consider bullish strategies as of August 8, 2025. The rise of companies like GOOG and TSLA indicates a willingness to take risks, which we can benefit from. This isn’t just a short-term event; it’s part of a solidifying trend. This confidence appears to be supported by recent economic data. The Consumer Price Index report for July 2025 showed a 2.8% increase, easing fears of further Fed tightening that affected the market in 2024. With stable interest rates now anticipated, growth sectors like technology are drawing significant investment.Volatility Insights for Traders
This week, the VIX index has dropped below 15 for the first time since the brief market turmoil in spring 2025. Lower volatility means cheaper options, creating a good entry point for directional bets. This is a major change from the high volatility we faced late last year. For specific trades, we recommend near-the-money call options on GOOG and META, set for September 2025 expirations. These companies are seeing a rebound in advertising spending, which grew by 8% year-over-year in the second quarter of 2025. Current trends suggest this positive momentum will continue into the next earnings cycle. Similarly, interest in AAPL and TSLA is worth noting. With Apple’s iPhone 17 launch event happening next month, buying calls now allows us to benefit from pre-announcement excitement. TSLA’s recent gains, following European approval of its latest autonomous driving software, suggest more upward potential that options can exploit. On the financial side, the stability in JPM and V provides a chance for premium collection. We see potential in selling cash-secured puts or creating bullish credit spreads. This approach aligns with the belief that, while these stocks may not climb as rapidly as tech stocks, they are unlikely to drop in the current market. However, keep in mind that implied volatility is low across the board. While this makes buying options appealing, it also means that long volatility positions are inexpensive. Consider using debit spreads to manage risk, as a sudden market shock could erase gains from naked long calls. Create your live VT Markets account and start trading now.Buyers and sellers compete in USDCHF, causing price fluctuations that reflect key technical levels.
The USDCHF currency pair saw ups and downs this week. It dropped at first but found some buyers close to the 200-hour moving average. Later, the price went up in response to tariffs set by the Trump administration on Switzerland.
The price has been unpredictable, hitting a low around 0.80405 and finding support at the 50% retracement level from the July 23 low to the August 1 high. On the other hand, sellers have created resistance around 0.80893 since Wednesday.
Technical Analysis and Market Directions
Technical analysis shows that these price levels are key for understanding market movements right now. The fluctuations reflect reactions to ongoing geopolitical events. Currently, the USDCHF is struggling to find a clear direction. The price is stuck between strong support at 0.8040 and solid resistance at 0.8089. This narrow range indicates that traders are uncertain after the recent tariff news. The dollar is supported by strong economic data, which explains why traders are buying when the price dips. For example, last week’s Non-Farm Payrolls report for July 2025 showed that 215,000 jobs were added, meeting expectations. Additionally, the Consumer Price Index (CPI) came in slightly higher at 3.4%, giving the Federal Reserve little reason to adjust its policies. On the Swiss side, the Swiss National Bank (SNB) is reluctant to let the franc gain too much strength, particularly with rising trade tensions. Inflation in Switzerland remains low at just 1.2% year-over-year, as reported in the latest data. This historical reluctance by the SNB to allow the franc to strengthen creates a safety net for the USDCHF pair.Trading Opportunities and Risks
For derivative traders, this clear price range presents opportunities to capitalize on volatility. Strategies like an iron condor, with short strikes placed outside the 0.8040 to 0.8090 range, might be beneficial for those looking to profit from this price stability. This strategy takes advantage of time decay while waiting for the next market move. However, the tariff situation poses a significant risk that could disrupt this calm. We saw in 2018-2019 how quickly tariff announcements could create unexpected market shifts. This uncertainty is reflected in the increase of implied volatility on one-month USDCHF options, which has risen to 7.5%, up from an average of 6.8% in July 2025. Consequently, while selling options can be enticing, any position should have clearly defined risk limits to guard against sudden market shifts. The current pricing suggests more volatility is expected than what we’re experiencing now, indicating that this period of stability may not last. Traders should keep a close eye on potential risks, as any political news could greatly impact the technical situation. Create your live VT Markets account and start trading now.EUR/USD pair pulls back from recent highs due to increasing US dollar strength following Fed news.
The EUR/USD currency pair dropped to 1.1640 after reaching a week-long high above 1.1700. This decline was driven by a rebound in the US Dollar. Additionally, the potential selection of Christopher Waller as the Federal Reserve Chairman is affecting market sentiments.
Christopher Waller is a Federal Reserve Governor who was appointed by Donald Trump. He is a strong contender to take over from Jerome Powell. Meanwhile, Stephen Miran is a favorite for a board position, which could impact future monetary policy choices.
US Economic Data
Recent US economic figures showed that Jobless Claims rose to 226,000, exceeding expectations. Nonfarm Productivity increased by 2.4%, and Unit Labour Costs also dipped slightly over what was expected, suggesting caution is needed for monetary policy changes. Technical analysis indicates that the EUR/USD pair faced resistance at 1.1700, causing it to lose some gains while still aiming for a 0.5% increase this week. Bulls face challenges in the 1.1700-1.1710 range, while we expect support around 1.1595-1.1610. The Euro is the official currency for 19 countries in the Eurozone and plays a significant role in global trade. Its value changes based on many factors, including ECB interest rates, inflation data, and other economic indicators. Now, the EUR/USD has retreated to about 1.1640, largely due to the stronger US Dollar. This shift follows the latest US Consumer Price Index (CPI) data from July 2025, which showed an inflation rate of 3.4%. This serves as a reminder that inflation remains a major concern for the Fed. The pair’s struggle to maintain gains above 1.1700 suggests strong resistance is forming.Potential Impact of US Monetary Policy
The discussion about Christopher Waller potentially leading the Federal Reserve is creating a cautious outlook for US monetary policy. His previous statements indicate he prefers stricter inflation control, which typically supports a stronger dollar. The market remembers the volatility during the 2018 leadership change, meaning this uncertainty might lead to hedging against euro strength. On the other hand, the European Central Bank seems more reluctant to tighten its policies. Recent German ZEW economic sentiment data from July 2025 showed a decline, indicating ongoing worries about industrial output in the Eurozone. This divergence in policy is a key reason we foresee further pressure on the EUR/USD exchange rate. For derivative traders, this suggests preparing for a possible decrease in the EUR/USD. Buying put options below the 1.1600 support level could be a strategy to benefit from a downward trend in the upcoming weeks. These options provide defined risk in case the pair unexpectedly rallies. We witnessed a similar pattern in 2022 when aggressive Fed tightening drove the EUR/USD below parity for a moment. While the recent rise in Jobless Claims to 226,000 raises some caution, the main narrative continues to emphasize Fed hawkishness. Thus, we should be ready for the dollar to maintain its upward momentum against the euro until the end of the month. Create your live VT Markets account and start trading now.Francesco Pesole from ING suggests that the krona could exceed the krone as risks decrease.
Scandinavian currencies could do well if geopolitical risks lessen. Sweden’s krona may perform better than Norway’s krone, mainly due to the different impacts of energy prices on the two countries. Recently, the NOK/SEK exchange rate dropped, likely linked to this difference. In July, Sweden’s CPIF inflation was expected to rise to 3.0%, but core inflation fell more quickly than anticipated to 3.1%.
The Riksbank is not likely to cut rates further, even after the recent EU-US trade deal. The market has already considered this, which supports a positive outlook for the Swedish krona in the medium term. The EUR/USD is stable around 1.1650 due to tariff worries and the release of US inflation data. The GBP/USD trades cautiously near 1.3450 as traders aim to lock in profits with a recovering US dollar.
Gold is struggling to stay above $3,400 because of a small uptick in the US dollar. Canada’s unemployment rate could change with the upcoming Labour Force Survey report. The Bank of England lowered its rates by 25 basis points to 4% and hinted that rate cuts may end soon due to inflation worries.
We believe the Swedish krona is a better investment than the Norwegian krone in the coming weeks. Geopolitical risks have eased a bit, leading Brent crude oil prices to drop from over $95 last month to around $88. This decline hurts Norway’s oil-based economy. Historically, when energy prices have dropped like this in the late 2010s, the krona has typically performed better, and we expect this trend to continue.
We think the Riksbank will pause interest rate cuts for now, even with the recent EU-US trade agreement. Sweden’s July inflation report showed CPIF at 3.0%, and a solid manufacturing PMI of 52.4 suggests the economy doesn’t need more stimulus. This supports our view that the krona has a stable foundation for the upcoming quarter.
Traders should be cautious when trading the euro against the dollar, as it struggles to stay above 1.1600. This week, July’s US inflation data came in higher than expected at 3.4%, boosting the dollar. With ongoing concerns about potential US tariffs on European auto exports, traders might consider options strategies that would profit if EUR/USD drops to around 1.1500.
For the British pound, this is a good time to take profits on long positions against the US dollar. After the Bank of England cut its rate to 4.0% earlier this month, recent data showed that UK wage growth remains stubbornly high at 5.5%. This reality likely caps the pound’s recent rise near the 1.3450 level.
Gold is unlikely to break the $3,400 per ounce barrier soon. The stronger US dollar and rising US 10-year Treasury yields, now at 4.35%, make holding gold less appealing. We recommend avoiding new long positions until this resistance is clearly surpassed.
Traders should pay close attention to the Canadian dollar today as the July Labour Force Survey is set to be released. The market expects the unemployment rate to rise slightly to 6.3% from 6.2%. Any result below this forecast could lead to a significant rally for the Canadian currency.
Weak Canadian jobs report causes modest rise in USDCAD with resistance ahead
The Canadian jobs report showed a loss of 40,800 jobs in July, much worse than the expected gain of 13,500. This follows the previous gain of 83,100 jobs, highlighting a significant downturn when gains were expected.
The unemployment rate remained steady at 6.9%, which is slightly better than the forecasted 7.0%. However, this stability occurs in a generally weak job market.
Full-Time Employment Drop
Full-time jobs dropped by 51,000, compared to an increase of 13,500 before. Part-time jobs increased by 10,300, but this was not enough to offset the full-time losses. The participation rate fell to 65.2% from 65.4%, indicating fewer people are engaging in the labor market. This situation casts a shadow on Canada’s job landscape despite the unchanged unemployment rate. The USDCAD exchange rate moved slightly higher and is now hitting a resistance level. Traders consider key support and resistance levels to guide market trends and strategies. Today is August 8, 2025. The sudden loss of 40,800 jobs in Canada is a major warning sign for the market. This significant drop contrasts sharply with the expected gain of 13,500, suggesting the Canadian economy is slowing down more quickly than anticipated.Bank of Canada Under Pressure
This job decline, particularly the loss of 51,000 full-time positions, puts pressure on the Bank of Canada. We believe this report greatly reduces the chances of further interest rate hikes this year. Now, all eyes are on the possibility of a rate cut before the year ends. Canada’s latest inflation report for July 2025 still shows CPI at 2.8%, above the central bank’s goal. However, this disappointing jobs report is likely to overshadow inflation concerns for policymakers. The declining participation rate further reveals an underlying weakness that must be addressed. This stands in stark contrast to the United States, where recent non-farm payrolls show ongoing job growth and stable wages. The fundamental difference supports a stronger US dollar compared to the Canadian dollar. Additionally, WTI crude oil prices have struggled to stay above $75 a barrel, adding more pressure on the loonie. Back in late 2023, the Bank of Canada responded to similar labor market issues by adopting a cautious stance, leading to rate cuts in 2024. This suggests the central bank will take this report very seriously, making the upcoming policy meeting in September crucial. For derivative traders, this outlook favors strategies that profit from a rising USDCAD. Buying call options on USDCAD can allow speculation on further increases while managing risk. The rising uncertainty may lead to increased implied volatility, making options pricing more fluid. The currency pair is currently testing a resistance level, so a sudden breakout is not guaranteed. Traders might look into bull call spreads to lower their entry costs, targeting the 1.3900 level reached earlier this year. It’s important to closely monitor upcoming retail sales and inflation data for confirmation of this economic slowdown. Create your live VT Markets account and start trading now.Brent closes nearly 0.7% lower as expectations grow for a possible Trump-Putin meeting soon
ICE Brent dropped almost 0.7% as talk of a possible meeting between Presidents Trump and Putin surfaced. It’s unclear if Ukrainian President Volodyr Zelenskyy will be involved, especially since today is the deadline for the Russia-Ukraine peace deal, which might prompt the US to tighten sanctions on Moscow.
Indian state refiners are hesitant to buy Russian crude oil due to tariff uncertainties. They are looking for government guidance and worry about how secondary tariffs could affect India. As a result, India may turn to other sources for crude oil, particularly from the Middle East, due to the gap between US exports and savings from Russian crude.
China’s crude oil imports in July averaged 11.2 million barrels a day, an 11.5% increase from last year, but more than 8% lower than the previous month. The strong imports in June were linked to independent refiners restocking. For the first seven months of the year, the average is 11.3 million barrels a day, a 3.2% year-on-year increase.
Given the current situation, we expect increased volatility for ICE Brent. The possible Trump-Putin meeting could lead to less tension, which might lower prices. Meanwhile, the peace deal deadline and potential new sanctions pose significant risks for price increases. The CBOE Crude Oil Volatility Index (OVX) has already risen to 38, signaling market stress, so we should be ready for sharp price changes.
The risk of stronger US sanctions on Moscow is important, especially if today’s peace deal deadline passes without an agreement. Looking back at 2022, sanctions on Russia caused Brent crude prices to exceed $120 a barrel. This history suggests that buying some out-of-the-money call options could be a smart way to hedge against a sudden price jump if talks do not succeed.
We are keeping a close watch on India’s refiners, as their next move could significantly impact the physical market. As the third-largest oil importer, if India decides to shift away from purchasing over 1.5 million barrels per day of Russian crude, this could drive up demand for Middle Eastern oil. Such a shift would strengthen the Brent benchmark, making long positions in Brent futures appealing for the coming months.
The data from China paints a more cautious outlook for crude demand. While year-on-year import numbers are strong, the month-on-month decline lines up with the official manufacturing PMI from China’s National Bureau of Statistics, which has remained just above the 50-point mark, indicating only slight expansion. This suggests that while Chinese demand supports prices, it may not be robust enough to spark a major rally.
Considering these mixed geopolitical and demand signals, we think a neutral options strategy, like a long straddle, is the best approach for the upcoming weeks. This allows us to benefit from significant price movements in either direction, whether from a diplomatic breakthrough or increased sanctions. It positions us to profit from uncertainty, rather than speculating on one specific outcome.
USD/JPY rises above 147.50 as favorable reports boost US dollar strength
The US Dollar is bouncing back after some recent losses, thanks to reports that Fed Governor Waller might replace Chair Powell. Appointed by Trump, Waller is viewed positively because of his dovish approach and support for the central bank’s credibility.
US jobless claims have risen to 226,000, higher than the expected 221,000, compared to the previous 218,000. In the meantime, the St. Louis Fed President warned about how tariffs could affect inflation, suggesting that only one rate cut may happen this year, even though the market expects two cuts.
In Japan, the Bank of Japan’s meeting summary expressed concerns about how US tariffs could impact the Japanese economy, possibly affecting future rate decisions. The BoJ has maintained a very loose monetary policy since 2013 to boost growth, which included Quantitative and Qualitative Easing (QQE) and setting negative interest rates. This approach has contributed to the Yen’s decline while other central banks have raised rates.
As a result, the Yen has weakened, worsened by rising global energy prices, leading to higher inflation in Japan that exceeds the BoJ’s 2% target. Rising salaries in Japan are also contributing to this inflation, partly due to the BoJ’s earlier policies.
Currently, the US Dollar is gaining strength because the market is now expecting fewer rate cuts from the Federal Reserve this year. Although weekly jobless claims have increased to 226,000, the key July 2025 inflation data came in a bit hotter at 3.4%. This supports the idea that the Fed will be careful, which helps the dollar for now.
While the rise in jobless claims hints at some weakness in the labor market, it’s important to look at the overall situation. Last Friday’s major Non-Farm Payrolls report showed that the US economy added a solid 195,000 jobs. This indicates a cooling labor market rather than a collapse, giving the Fed less of a reason to rush into rate cuts.
In Japan, we are closely watching for a major policy shift from the Bank of Japan, which has been showing more concern about the weak Yen and the effects of tariffs. Japan’s core inflation has remained above the BoJ’s 2% target for over a year, recently reaching 2.5%. This follows their historic decision in March 2024 to end the era of negative interest rates.
For derivative traders, this creates a tense situation for the USD/JPY pair, which is currently trading around 162. The long-established strategy of buying dollar calls against the yen is becoming riskier as the reasons for policy divergence are shrinking. We believe options strategies that predict a cap on the upside or a gradual decline are becoming increasingly appealing.
With mixed economic signals, we should expect more currency volatility in the coming weeks. Traders might consider buying straddles or strangles on major pairs like USD/JPY to profit from significant moves, regardless of direction. This allows them to take a position on rising uncertainty rather than betting on one specific outcome.
