The ISM Manufacturing PMI dropped to 48.0 in July, down from June’s 49.0. This signals a slowdown in the US manufacturing sector and is below the expected 49.5.
The Employment Index fell to 43.5 from 45.0, highlighting challenges in hiring within the sector. The Prices Paid Index decreased to 64.8 from 69.7, while the New Orders Index had a slight increase to 47.1 from 46.4.
As a result, the US Dollar is under pressure, trading at around 98.80. This shift comes amid new data releases and speculation about a potential interest rate cut by the Federal Reserve in September.
Gross Domestic Product (GDP) measures how the economy grows over time and affects currency values. A rising GDP usually strengthens the national currency and can lead to higher interest rates. However, this may lower gold prices by raising opportunity costs.
This information is for your reference only and should be verified before making any investment decisions. All investments pose risks, including the possibility of loss.
The US manufacturing sector faced challenges in July 2025, indicating a slowdown. The ISM PMI of 48.0 shows contraction and missed analysts’ expectations. This suggests the economic weakness seen in the second quarter may continue into the third.
The Employment Index’s drop to 43.5 raises concerns for the job market. Recent government data revealed that Non-Farm Payrolls for July added only 155,000 jobs, which is below the anticipated 185,000. A cooling labor market could affect consumer spending in the coming months.
This trend of weaker data provides the Federal Reserve with more reasons to consider decreasing interest rates. Market expectations now reflect over a 70% chance of a rate cut during the September 2025 meeting. The drop in the Prices Paid Index to 64.8 suggests that inflationary pressures could be easing.
For derivative traders, this reinforces a bearish outlook on the US Dollar. The Dollar Index has revisited recent lows around 98.80, with further declines likely if rate cut expectations strengthen. We might consider buying put options on US Dollar ETFs to prepare for a possible downturn in August and September.
A weaker dollar and lower interest rates generally favor gold. Historically, when the Fed eases, as seen in 2019, gold tends to perform well because the opportunity cost of holding it decreases. Therefore, buying call options on gold ETFs may be a smart move to protect against dollar weakness.
The outlook for the broader stock market is uncertain, creating opportunities for volatility trades. While weak economic data could hurt corporate profits, hopes for a Fed rate cut provide some support. This tug-of-war could result in sharp market shifts, making long straddles or strangles on an index like the S&P 500 an appealing strategy amid this uncertainty.
The major US stock indices ended the week with losses. The NASDAQ and Russell indices each dropped more than 2%. Several key factors contributed to this decline: the start of new tariffs on August 1, disappointing jobs data from revisions, the positioning of US nuclear submarines amidst geopolitical tensions, and the firing of the BLS chief over allegations of data manipulation.
Here are the specific declines:
– The Dow industrial average fell by 542.40 points, or 1.23%, to 43,588.58.
– The S&P index dropped 101.38 points, or 1.60%, to 6,238.01.
– The NASDAQ index decreased by 472.32 points, or 2.24%, ending at 20,650.13.
– The Russell 2000 fell 44.86 points, or 2.03%, to 2,166.78.
For the week, the Dow dropped 2.92%, the S&P fell by 2.36%, and the NASDAQ decreased by 2.17%.
Companies That Performed Well
Despite the overall market decline, some companies managed to do well. Corning saw a 12.10% rise after posting strong earnings, and Meta and Microsoft gained by 5.21% and 2.05%, respectively. Next week, earnings reports are due from several major companies, including Berkshire Hathaway, Pfizer, and Disney, which could affect market trends.
Given the new tariffs and the weak jobs report, now may be a good time to think about protective puts on key indices like the SPX and QQQ for the coming weeks. The August jobs report showed a net loss of 50,000 jobs after revisions, a stark contrast to an expected gain of 180,000. This marks the first negative print since 2023 and could signal further market declines as recession fears grow.
Increased geopolitical tensions, particularly concerning the movement of nuclear submarines, are adding to market worries. The VIX, a gauge of market fear, surged over 25% this week to close above 22, a level we haven’t seen consistently since early 2024 during regional banking stress. Traders might consider VIX call options or volatility-linked ETFs to protect against or profit from potential future market turbulence.
Opportunities In The Defense Sector
This environment is creating opportunities in the defense sector. Companies like Northrop Grumman are already performing well. The iShares U.S. Aerospace & Defense ETF (ITA) has outperformed the S&P 500 by over 8% year-to-date in 2025, and ongoing global tensions could boost that trend. Using call options in this sector might provide upside exposure even if the broader market declines.
Despite the sell-off, certain areas like AI and semiconductors are showing impressive strength, with companies like Meta and Super Micro continuing to rise due to robust earnings. This divergence indicates that selling cash-secured puts on reliable tech firms could be a smart strategy, allowing traders to earn premiums during times of elevated fear while potentially acquiring strong assets at lowered prices if the market dips further.
With major companies such as Disney, Eli Lilly, and AMD set to report earnings next week, implied volatility is sharply increasing. For instance, implied volatility for Disney’s options suggests a potential price swing of 8% after its announcement, which is significantly higher than its quarterly average. This makes options strategies like straddles or strangles appealing for traders who anticipate significant price movement, even if they aren’t sure about the direction.
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Cryptocurrencies, especially Bitcoin, have changed how people invest and are now being included in retirement plans. The idea of adding digital currencies to an Individual Retirement Account (IRA) in the USA raises interesting questions. IRAs are designed to help people save for retirement with tax advantages. They come in different types, like Traditional and Roth IRAs, which usually hold traditional assets such as stocks and bonds. However, the popularity of cryptocurrencies has sparked interest in incorporating them into these accounts.
Since 2014, the IRS has treated cryptocurrencies as taxable “property,” like stocks or real estate. This classification has made it possible to create self-directed Crypto IRAs, allowing people to hold and trade cryptocurrencies. Services from platforms like BitcoinIRA, iTrustCapital, and Fidelity Digital Assets offer these types of IRAs. They provide both Traditional and Roth Crypto IRAs, following IRS rules about contribution limits and penalties for early withdrawals.
Including cryptocurrencies in retirement accounts can offer growth potential, tax benefits, and diversification. Although often volatile, Bitcoin has historically done better than traditional investments over long periods. Tax benefits arise within IRAs, where capital gains are either delayed or exempt. Additionally, cryptocurrencies tend to have a low correlation with traditional markets, enhancing diversification.
However, the volatility of cryptocurrencies carries risks. Bitcoin has experienced sharp drops, which can endanger retirement plans that rely too heavily on it. Crypto IRAs may be more expensive than Traditional IRAs, due to various fees. The evolving legal status of cryptocurrencies also adds uncertainty. Experts recommend that cryptocurrencies should only make up a small part of a retirement portfolio, especially for younger investors who have long-term aspirations.
More and more people are looking at including Bitcoin in their retirement accounts because of its tax advantages and potential for growth. While appealing, cryptocurrencies come with speculative risks. A balanced strategy within a diversified portfolio, aligned with investment timelines, is wise. Even with the allure of Crypto IRAs, traditional systems, like Social Security, still serve as the backbone of American retirement saving.
The growing trend of including Bitcoin in retirement accounts indicates steady demand that can help stabilize prices. A report from Morningstar in July 2025 noted that crypto investments in self-directed IRAs increased by 15% in the second quarter of 2025. This steady buying pressure offers a good environment for traders with a cautiously optimistic outlook.
This solid demand also contributes to ongoing volatility, which brings clear opportunities for trading. The T3i BitVol Index, which measures the 30-day expected volatility of Bitcoin, was around 65% in late July 2025, higher than the lows seen in late 2024. Such conditions make strategies like selling cash-secured puts or setting up volatility-harvesting positions attractive in the upcoming weeks.
Despite this potential, caution is essential due to the unpredictable legal situation. We are witnessing renewed discussions in Washington about possible SEC guidelines for digital asset custodians within retirement accounts. This uncertainty suggests that keeping some long-dated options as a safeguard against sudden regulatory changes could be wise.
Reflecting on the steep declines of 2022, we recognize that overexposure remains a serious risk even in a climate of positive long-term trends. Therefore, we believe that using defined-risk strategies, like credit and debit spreads, will be crucial in the upcoming weeks. These strategies will allow us to benefit from price changes while carefully managing our maximum potential loss.
The ISM Manufacturing Prices Paid index in the United States was 64.8 for July, which is lower than the expected 70. This number indicates changes in manufacturing prices and factors affecting pricing in the industry.
In the currency markets, EUR/USD has risen above 1.1550 due to weaker US employment and manufacturing data. At the same time, GBP/USD has regained strength, trading above 1.3250, also influenced by the same reports that hinted at a weaker dollar.
Gold Reaches New Highs
Gold hit a weekly high of about $3,350, benefiting from falling US Treasury bond yields. This movement reflects changing expectations about the Federal Reserve’s future rate decisions, prompted by disappointing job numbers.
In the cryptocurrency space, Bitcoin and other coins are facing difficulties after a strong July. Bitcoin dropped below $115,000 as traders looked for support levels amid rising market liquidations and price changes.
With recent signs of a slowing US economy, we think the outlook for many assets has shifted. The ISM data showed a decline in prices paid by manufacturers to 64.8, combined with weaker employment numbers, implying that the Federal Reserve’s recent rate hikes are starting to have an impact. We may need to prepare for a period of ongoing US dollar weakness.
For currency markets, we expect further growth in EUR/USD and GBP/USD. Traders might consider buying call options on the Euro, aiming for a move towards 1.1700 in the upcoming weeks. Historically, the dollar’s rapid decline in late 2023 illustrates how quickly market sentiment can change once there’s a belief that the Fed has stopped hiking rates.
Bullish Outlook For Gold
The outlook for gold is very positive. It has broken through key resistance to reach $3,350, primarily driven by declining Treasury yields. We anticipate this trend will continue. We should look to add to long gold futures positions, as markets are beginning to price in a good chance of a rate cut before the end of 2025.
In contrast, the cryptocurrency market now needs a more cautious approach. Bitcoin’s inability to maintain $115,000 indicates significant profit-taking after the July rally, which was mainly fueled by speculation regarding new institutional products. The high liquidation volume, over $400 million in just 48 hours, suggests we should wait for a solid support base to form before starting new long trades.
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In July, the University of Michigan reported that one-year consumer inflation expectations in the U.S. climbed to 4.5%, up from 4.4%. This indicates how consumers feel about inflation over the next year.
The EUR/USD currency pair saw a boost, trading above 1.1550, following weak U.S. employment data and the ISM Manufacturing PMI. Likewise, GBP/USD turned positive, rising above 1.3250 after disappointing Nonfarm Payrolls and Manufacturing data in the U.S.
Gold prices have reached new weekly highs around $3,350, supported by falling U.S. Treasury bond yields. This change reflects adjustments in what the market expects from the Federal Reserve’s interest rate policies.
In the cryptocurrency market, Bitcoin declined to below $115,000 after a bullish trend in July. It may find support at $112,000 amid rising liquidations, highlighting ongoing volatility.
The eurozone economy has shown resilience this summer, bolstered by a U.S.-EU agreement and spending plans in Germany. However, there’s still a possibility of a final interest rate cut from the European Central Bank as wage indicators weaken.
With rising consumer inflation expectations in July 2025 and weak data on employment and manufacturing, we see a clear trend. The Federal Reserve may have less ability to raise interest rates aggressively. The latest Consumer Price Index (CPI) report for July confirmed this, showing core inflation at 3.1%, below the 3.3% forecast, indicating the Fed’s earlier tightening measures are taking effect.
This situation is unfavorable for the U.S. dollar, as we’ve noticed in the rallies of EUR/USD and GBP/USD. We believe the dollar’s weakness has room to grow in the coming weeks. Therefore, we are considering buying call options on EUR/USD with strike prices above 1.1600 to capture potential gains while managing risk.
However, the eurozone’s strength could be limited by its central bank. ECB President Lagarde mentioned on July 28, 2025, that the “disinflationary process is ongoing,” which keeps a potential rate cut in play for autumn. This difference in policies leads us to be optimistic about the euro against the dollar while being cautious about a substantial rally, prompting us to hedge our positions.
The drop in U.S. Treasury yields has made gold appealing, driving it towards $3,350. This situation resembles the 2020 environment when falling real yields pushed gold to record highs. We should consider long positions in gold futures or options on gold-related ETFs to take advantage of this upward momentum.
In the crypto market, Bitcoin’s drop below $115,000 after a strong July indicates that leverage is being cleansed. Data from Glassnode on July 30, 2025, revealed a rise in open interest for Bitcoin put options with strike prices near $110,000, as traders prepare for more volatility. We should explore using option straddles, which profit from significant price movements in either direction, to navigate this uncertainty.
Economic Indicators for July.
In July, the US ISM Manufacturing PMI was at 48, lower than the expected 49.5. This suggests the manufacturing sector is contracting.
The EUR/USD jumped above 1.1550 after weak US employment and PMI numbers. Poor job data and a weaker dollar allowed the GBP/USD to rise above 1.3250.
Gold reached a new weekly high of about $3,350 due to a drop in US Treasury bond yields. This change hints that the Federal Reserve may rethink its rate outlook after disappointing Nonfarm Payrolls data.
In the cryptocurrency market, July was bullish, with Bitcoin (BTC) and some altcoins hitting all-time highs. However, Bitcoin declined below $115,000, with bears aiming for a support level at $112,000.
The euro area shows some economic strength, helped by EU-US agreements and increased spending in Germany. While there are risks of further cuts, those may come later this year or early in 2026.
Given the contraction in US manufacturing and soft job data, further weakness in the US dollar seems likely. Initial jobless claims for the week ending July 26, 2025, were 245,000, slightly above expectations, reinforcing this outlook. In the coming weeks, we should explore strategies that benefit from a declining dollar, like buying call options on the EUR/USD and GBP/USD.
The euro’s strength is backed by solid fundamentals in the euro area. Germany’s IFO Business Climate index for July exceeded expectations, coming in at 91.5. This resilience supports the EUR/USD’s climb above 1.1550, so we should be cautious about betting against the euro soon.
The drop in US Treasury bond yields is currently driving the markets, with the 10-year yield falling below 3.4% for the first time in over a year. This reaction to the disappointing Nonfarm Payrolls report suggests that the market is now pricing out future Federal Reserve rate hikes in 2025. We can look to interest rate futures to position for a more dovish Fed stance through the end of the year.
Gold’s rise to $3,350 is a direct result of these lower real yields, which make the non-yielding metal more appealing. With persistent inflation, the environment is favorable for precious metals. We recommend holding long positions in gold futures (GC) or buying call spreads on gold ETFs.
We’ve seen this scenario before, such as during the policy shift in late 2018 when weak economic data halted Fed tightening. Today’s market actions reflect that period, rewarding those who prepared for a less aggressive central bank. History indicates that this trend of dollar weakness and rising safe-haven assets might last for several months.
In cryptocurrency, Bitcoin’s drop below $115,000 shows that even major assets can be affected by changing market sentiment. Open interest in Bitcoin put options with an $110,000 strike price rose by over 30% this past week, signaling that traders are hedging against further declines. Although the long-term outlook remains positive, we should use derivatives to safeguard our crypto portfolios against short-term bearish pressure.
The Michigan Consumer Expectations Index in the United States dropped from 58.6 to 57.7 in July. This small decrease shows that people are feeling a bit less confident about the economy’s future.
These indices help us understand how consumers feel, which can affect economic activity. The data indicates changing views on economic stability and future financial situations.
Potential Strategies
With the Michigan Consumer Expectations Index falling in July, we are beginning to see signs of consumer fatigue. This points to the need for strategies that benefit from possible weaknesses in consumer-focused industries. Although the change is minor, it suggests that economic momentum may be slowing.
This may signal a good time to look at protective put options on consumer discretionary ETFs, such as the XLY. This sector is very sensitive to changes in consumer sentiment and spending. A continued drop in confidence could hit companies in retail, travel, and luxury goods the hardest.
This sentiment data is important to consider, especially since the June 2025 retail sales report showed a surprising 0.3% decline. Additionally, the projected number for July’s Non-Farm Payrolls report has been revised down to 160,000, indicating a cooling labor market. Together, these data points suggest that the economy is slowing down.
Market Implications
Given these factors, we are keeping an eye on the CBOE Volatility Index (VIX), which has been hovering around a low of 14. Buying a small number of VIX call options could be a cost-effective way to protect against a sudden market drop. If consumer challenges lead to broader sell-offs in stocks, we expect volatility to spike.
Looking back at a similar time in 2022, decreasing consumer sentiment was a reliable early warning for that year’s stock market downturn. Back then, the Federal Reserve was aggressively raising rates while the economy was slowing. We need to think about whether we are seeing a similar situation now, as the Fed has kept rates steady for several months.
This puts the Federal Reserve in a tricky position since core inflation has remained stubbornly above 3%. Any new signs of economic weakness could lead them to adopt a more cautious approach later this year. We will pay close attention to comments from Fed officials for any changes in their stance.
In the meantime, many investors may look for safer options. We could consider call options in traditionally defensive sectors like utilities (XLU) and consumer staples (XLP). These areas usually perform better during times of economic uncertainty when consumers prioritize essential needs.
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The Michigan Consumer Sentiment Index for July in the United States was lower than expected, coming in at 61.7 instead of the predicted 62. This index indicates how confident consumers feel and can influence economic activity and forecasts.
The EUR/USD currency pair rose above 1.1550 due to weak US job data, showing increased momentum. Similarly, GBP/USD climbed above 1.3250 after a six-day losing streak caused by disappointing US employment figures.
Gold Prices Surge
Gold prices jumped to around $3,350 at the end of the week, mainly because US Treasury bond yields fell sharply. This shift occurred as the market adjusted its expectations regarding the Federal Reserve’s interest rate policies after disappointing Nonfarm Payroll data.
In the cryptocurrency market, Bitcoin dropped below $115,000, with sellers aiming for support at $112,000 due to rising liquidations. Overall, the euro area is showing strength thanks to recent EU-US agreements and increased spending in Germany, although there could be risks later this year.
Given the recent weak US economic data, we should pay close attention to the decline of the US dollar. The Nonfarm Payrolls for July 2025 were disappointing at just 95,000, compared to the expected 180,000, which reflects lower consumer sentiment. As a result, the market now sees less than a 15% chance of a Federal Reserve rate hike in September, a sharp drop from over 70% just a week ago.
Currency and Investment Strategies
This situation signals a good opportunity to favor currencies against the dollar, particularly the Euro and British Pound. The EUR/USD pair is gaining momentum above 1.1550, and we expect this trend to continue as the European Central Bank appears more assertive than the Fed. Consider buying call options on EUR/USD or GBP/USD to benefit from this trend, which comes with defined risk.
Gold’s rise to $3,350 is part of a flight to safety, strongly driven by a drop in US 10-year Treasury yields to under 3.5%. This movement is not just about a weak dollar; it points to concerns over a potential economic slowdown. We should look to increase our long positions through gold futures contracts or buy call options on gold ETFs to protect against instability.
On the other hand, the risk-off sentiment is hurting speculative assets like Bitcoin, which has fallen below $115,000. More than $300 million in leveraged long positions were liquidated in the past 48 hours, adding to the downward pressure. We can take advantage of this by purchasing put options on Bitcoin, targeting support levels at $112,000 or lower.
This market environment reminds us of late 2023, when early signs of a pause in Fed tightening led to significant rallies in bonds and gold. Back then, anticipating policy changes was essential, and the current weak labor and sentiment data suggest we may be at a similar turning point. In the coming weeks, our strategies should account for a longer period of US dollar weakness and ongoing market volatility.
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In June, construction spending in the United States fell by 0.4%, which was below expectations of no change at 0%. This decline gives us a glimpse into the construction sector’s health and its impact on the overall economy.
The EUR/USD currency pair rose above 1.1550, following disappointing US non-farm payroll data that weakened the US Dollar. Similarly, the GBP/USD pair recovered, climbing above 1.3250 due to the weaker USD after the job figures were released.
Gold prices increased, exceeding $3,350, as US Treasury bond yields decreased. This change reflects market expectations regarding future decisions by the Federal Reserve after the poor employment report.
Cryptocurrencies are currently facing downward trends, unlike the positive performance seen in July. Bitcoin is nearing the $112,000 support level. In contrast, the euro area’s economy is surprisingly stable, benefiting from recent EU-US agreements, even with concerns over wage growth.
Recent data indicates a slowing US economy, likely influencing market trends. The drop in construction spending in June 2025, along with poor job figures, suggests that the Federal Reserve may need to adopt a less strict monetary policy. We can recall the Fed’s quick policy shift in late 2018 when economic indicators started to weaken.
Given this environment, we have a bearish outlook on the US dollar. Therefore, we are exploring strategies that could benefit from rising EUR/USD and GBP/USD values. The US inflation figures from July 2025 show a small drop to 2.8%, reducing pressure on the Fed to support the dollar. We believe the EUR/USD could potentially reach the 1.1600 level in the upcoming weeks.
We see gold as a key safe-haven asset in this situation, especially with falling US Treasury yields. The yield on 10-year notes recently dipped below 3.5%, which has historically suggested a bullish outlook for gold since it makes bonds less appealing. Buying call options on gold seems like a smart way to protect against further economic weakness in the US.
On the other hand, we are becoming cautious about cryptocurrencies as Bitcoin approaches the $112,000 support level, acting more like a risky asset. Last week saw over $500 million withdrawn from digital asset funds, marking the largest weekly outflow since the second quarter of 2025. This indicates that institutional investors are pulling back for the time being.
The euro area’s relatively stable economy adds another consideration to our strategy, making long positions in the euro more appealing. Germany’s latest Ifo Business Climate index for July 2025 unexpectedly grew, revealing a fundamental strength that differs from the outlook in the US. This supports holding positions that favor the euro over the dollar.
The United States’ 5-year consumer inflation expectation for July stood at 3.4%, which is lower than the forecast of 3.6%. This information is part of a broader market analysis for general awareness.
In the foreign exchange market, the EUR/USD pair climbed above 1.1550 due to weak US employment and manufacturing data. The GBP/USD pair also traded positively, staying above 1.3250 after bouncing back from six straight days of losses tied to disappointing US job numbers.
Gold prices reached new weekly highs near $3,350 after US Treasury bond yields declined. The market is reevaluating the Federal Reserve’s interest rate outlook in light of the weak nonfarm payroll data.
In the world of cryptocurrency, Bitcoin dipped below $115,000 amid rising liquidation pressures, even after a strong July. Investors are closely watching the $112,000 support level as the market faces bearish challenges.
The Eurozone is holding strong this summer, thanks to the EU-US deal and increased spending in Germany. While there are still some risks, a potential final interest rate cut could take place later this year or early in 2026, depending on wage trends.
Given the weak US jobs report and lower-than-expected inflation, we think the Federal Reserve will avoid raising interest rates further. The latest nonfarm payroll figures for July 2025 showed only 95,000 jobs added, well below the expected 180,000. Because of this, we are looking into derivative strategies that could benefit from a pause or future rate cut.
As a result, we favor taking long positions on foreign currencies against the US dollar. We see value in buying call options on the EUR/USD and GBP/USD pairs to take advantage of their upward trend. This is similar to the dollar weakness we saw in mid-2023 when the Dollar Index (DXY) dropped significantly over several months due to similar economic indicators.
The Eurozone’s strength, highlighted by its latest Composite PMI reading of 52.8, stands in contrast to the US PMI, which recently fell into contraction at 49.5. This economic disparity supports our positive outlook on the Euro. Therefore, we should consider strategies that favor European assets over US ones.
We also expect gold’s surge to continue as US Treasury yields decline, with the 10-year yield dropping below 3.0% for the first time since early 2024. This decrease makes holding gold, a non-yielding asset, more appealing. Buying call options on gold futures or gold-backed ETFs seems like a smart move to gain exposure to this trend.
However, the cryptocurrency market is showing signs of weakness that we cannot overlook. With Bitcoin falling below the critical $115,000 mark, we should think about buying put options to hedge our portfolios or speculate on a decline to the $112,000 support level. Recent on-chain data revealing a spike in crypto exchange inflows indicates that some investors may be getting ready to sell, adding to the bearish momentum.
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