The upcoming week will focus on the European Central Bank’s (ECB) monetary policy announcement and U.S. inflation data. **Monday:** No major economic events. **Tuesday:** Australia will release consumer sentiment and business confidence surveys, and SNB Chairman Schlegel will speak at a summit in Basel. **Wednesday:** The attention shifts to the U.S. with the Producer Price Index (PPI) release. **Thursday:** The ECB will announce its policy and the U.S. will report inflation data along with unemployment claims. **Friday:** The UK will release GDP figures, while U.S. markets will observe consumer sentiment and inflation expectations.

Australia’s Economic Outlook

Last month, Australia’s consumer sentiment index increased by 5.7% to 98.5, likely due to the Reserve Bank of Australia’s (RBA) rate cut. The ECB is expected to maintain rates at 2.00% since eurozone growth is low and GDP expansion is minimal. Markets will closely watch for future policy indications and projections, with expectations of a possible rate cut in December. In the United States, the core Consumer Price Index (CPI) is projected to be at 0.3% month-over-month, in line with previous results. While tariffs may pressure goods prices, service costs seem stable. The upcoming CPI report will be critical, as it is the last major data release before the Federal Reserve’s meeting, with many anticipating a rate cut due to a slowdown in economic activity. The UK is expected to show stagnating GDP, with mixed consumption and services leading growth. A weak GDP report is unlikely to change the Bank of England’s anticipated rate cut in November. The University of Michigan’s consumer sentiment survey will be important, as low confidence continues amid tariff pressures and a strained U.S. fiscal backdrop.

2019 Market Context

Reflecting on market trends from around 2019, we recall a time when central banks started lowering rates due to slowing global growth. Then, the focus was on how much the U.S. Federal Reserve and the European Central Bank would cut rates amidst moderate inflation and trade issues. This historical context is helpful as we consider the economic landscape in late 2025. One key takeaway from 2019 was the Fed’s willingness to cut rates even when core inflation was near 3%. Looking at recent data from August 2025, core PCE inflation is holding steady at 3.2%, while U.S. jobless claims have risen for the third month in a row, reaching 235,000 last week. Traders should be cautious about assuming that the Fed will hold rates, as history indicates a weakening labor market can prompt a policy change even if inflation is not at target. Similarly, back in 2019, the ECB faced weak growth, with Q2 GDP growing only 0.1%. Today, the Eurozone’s Q2 2025 GDP is also slow, at just 0.2%, hindered by weaknesses in manufacturing. With inflation in the Eurozone cooling to 2.5% in August 2025, options markets may be underestimating the likelihood of an ECB rate cut before the Fed acts, creating opportunities for divergence trades. In the UK, the familiar challenge of sluggish growth and persistent services inflation continues. Services inflation was 5% in 2019, while recent data from August 2025 shows it at 4.6%. This complicates the Bank of England’s efforts. As such, we might see continued volatility in short-sterling interest rate futures as weak growth data conflicts with the central bank’s goal of controlling ongoing price pressures. Previously, analysis showed that consumer sentiment was negatively affected by tariffs and job insecurity. Today, the University of Michigan survey for August 2025 shows low sentiment, with high borrowing costs and global supply chain uncertainties as the main causes. This ongoing consumer weakness suggests that traders might want to hedge against risks in retail and housing-related stocks, as household sectors continue to be vulnerable in the economy. Create your live VT Markets account and start trading now.

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Gold prices reached an all-time high after a weaker Non-Farm Payroll (NFP) report, which increased the dovish sentiment towards the Federal Reserve. Most anticipate three rate cuts by the year’s end, with an 8% chance for a 50 basis point cut in September, depending on upcoming CPI data. In recent months, dovish talks, especially from Fed Chairman Powell during the Jackson Hole Symposium, have helped boost prices. The market is waiting for US CPI data and the FOMC meeting next week, with expectations that gold will continue to rise as real yields decline from expected Fed easing.

Technical Analysis on Gold

On the technical side, gold reached a new high but paused around the $3,600 level. Buyers may see good risk-to-reward opportunities near the previous high of $3,500, while sellers might look to push below that to target $3,245. Daily and hourly charts show strong bullish momentum with upward trend lines. A pullback to these trend lines could offer buying chances, while sellers could jump in if prices break lower for potential corrections. Key US economic reports to watch this week include PPI, CPI data, Jobless Claims, and Consumer Sentiment figures. Given the elevated price of gold, the impact of last week’s weak NFP report is significant. The report revealed that the US economy added only 145,000 jobs in August 2025, falling short of expectations and fueling speculation about imminent Federal Reserve rate cuts. This weakness has driven gold to touch $3,600. The market seems to believe rate cuts are likely, with a strong probability of at least three by the end of 2025. The CME FedWatch Tool indicates over a 70% chance of a 25 basis point cut during the upcoming FOMC meeting, following Fed Chair Powell’s dovish comments at the Jackson Hole symposium in late August 2025 that launched this rally.

All Eyes on Upcoming CPI Data

Attention is now on the US CPI inflation data set for this Thursday. The last Core PCE inflation figure for July 2025 dropped to 2.7%. Another low inflation report could solidify expectations for a rate cut, potentially pushing gold prices even higher. However, a surprisingly high inflation report could challenge this view and lead to a sharp pullback. For derivative traders, this points towards buying call options on dips to the previous high of $3,500. This level should serve as strong support and provide a favorable entry for bullish positions. Using call spreads may lower trading costs, especially with rising volatility. On the flip side, a significant break and hold below $3,500 would signal bearish trends. Traders might respond by buying put options or setting up put spreads with goals toward the $3,245 support zone, depending on any hawkish surprises from CPI data or the Fed meeting next week. It’s important to be aware of rising implied volatility before these key economic events. The upcoming CPI report and FOMC meeting are expected to increase options prices. This scenario tends to favor strategies like vertical spreads, which can help manage costs while allowing for directional trades. This situation echoes the market shift seen in late 2023. Back then, expectations of Fed rate cuts also prompted a substantial rally in gold. Markets that priced in easing aggressively were rewarded as weaker data continued to surface. We may be observing a similar trend now in the autumn of 2025. Create your live VT Markets account and start trading now.

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The NY Fed’s consumer inflation expectations and the French confidence vote are important events today. The European session is quiet, which may lead to a pause in the markets as they prepare for the upcoming US CPI report or continue last week’s trends.

US Inflation Expectations

In the US session, attention will be on the NY Fed’s consumer inflation expectations data. This data is part of three major surveys, which also include the University of Michigan and the Conference Board. Although this survey might not drastically affect the markets, it provides valuable insights into inflation expectations. It’s considered trustworthy due to its large participant base and steady methodology, even though it comes out later than the others. Meanwhile, the French confidence vote may lead to Prime Minister Bayrou losing his position, which could prompt President Macron to choose a new Prime Minister. Any market reactions to this news are expected to be minor, likely resulting in only short-lived fluctuations.

Market Trends and Expectations

With the market in a wait-and-see mode, we might experience consolidation ahead of the crucial US CPI report later this week. Last week’s slight risk-off sentiment may continue, as traders prepare for this significant data point. This calm beginning to the week is a good time for positioning rather than reacting to fresh information. The spotlight is still on US inflation and its implications for the Federal Reserve’s policy. The last core CPI reading in August 2025 was a stubborn 3.1%, leading the market to assign a 65% chance of another rate hold at the next meeting. Traders are buying options on the S&P 500, anticipating a big price movement once the new inflation number is released. Today’s NY Fed inflation expectations survey will provide a small indication, but it’s unlikely to be a major driver of change. The previous report showed one-year expectations dipping to 2.9%, marking the first time this number fell below 3% since early 2024. We’ll be watching to see if this downward trend continues. A surprising increase in this figure could lead to a quick sell-off in short-term bond futures. Over in France, the confidence vote is mainly background noise that’s already priced into the assets. The spread between French and German 10-year bonds has remained steady at around 65 basis points for weeks, suggesting the market has adjusted to the political uncertainty that started with the 2024 snap elections. Any unexpected developments could cause temporary volatility in the euro, but it shouldn’t change the larger picture for derivative traders. Create your live VT Markets account and start trading now.

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Eurostoxx futures rose by 0.3% during early trading in Europe. This increase comes as markets stabilize after the volatility caused by the US jobs report released on Friday. In Europe, German DAX futures rose by 0.4%, and UK FTSE futures climbed by 0.3%. Meanwhile, S&P 500 futures in the US went up by 0.1% after some last-minute buying followed a dip last week.

Market Participants Remain Cautious

As the new week begins, market participants are cautious. They are paying close attention to the US inflation data due this Thursday, even though it’s during the FOMC blackout period. We’re seeing a slightly positive start to the week, with European and US futures gaining ground after some buying late on Friday helped Wall Street avoid a worse finish. This suggests a cautious atmosphere as we process the impact of the latest US jobs report. The market is clearly alert as the new trading week begins. The US jobs report on September 5th showed a strong addition of 210,000 jobs, beating expectations. Wage growth remained steady at 4.2% year-over-year. Initially, this economic strength pleased investors, but it later raised concerns that the Federal Reserve might keep its policy tight. The bond market reacted, with the 10-year Treasury yield hitting 4.35% briefly before returning to lower levels. Now, all eyes are on the US inflation data set for this Thursday. This is the last important report before the FOMC meeting’s blackout period ends. Analysts expect the headline CPI to rise to 3.4%, slightly up from last month’s 3.3%. If the number exceeds expectations, we could see significant market volatility.

Attention Shifts to US Inflation Data

This data is vital because fed funds futures currently indicate about a 45% chance of another rate hike at the FOMC meeting on September 17th. A higher inflation number could push those odds over 50%, leading to a major reassessment of risk assets. We anticipate increased volatility around this report. Given this upcoming risk, we expect the VIX index, which closed last week near 14, to rise in the coming days. Derivative traders might want to consider strategies that benefit from this potential increase in implied volatility, such as buying straddles on major indices. These strategies can profit from a large price move in either direction following the inflation report. In Europe, the gains in Eurostoxx are also supported by the European Central Bank’s decision last week to keep rates steady. However, with service sector inflation still high across the continent, any signs of ongoing US inflation could dampen sentiment here as well. We’re closely watching currency derivatives, as unexpected hawkish moves from the Fed could strengthen the dollar and impact European exporters. Create your live VT Markets account and start trading now.

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Germany’s trade balance for July was €14.7 billion, lower than the expected €15.3 billion, according to Destatis. In June, the balance was slightly better at €14.9 billion. Exports from Germany dropped by 0.6% compared to the previous month, which had seen a rise of 0.8%. Imports also dipped a little by 0.1%, down from a 4.2% increase the month before. The decrease in exports greatly affected trade with the United States, Germany’s main trading partner. Exports to the US fell by 7.9% from June, totaling €11.1 billion and reaching the lowest level since December 2021. This shortfall in trade is a strong indicator of a slowing German economy. The 7.9% decline in exports to the US is particularly concerning, suggesting that recent trade tensions are having an impact. We shouldn’t view this as an isolated incident, but rather as a potential beginning of a downward trend. This information lines up with other recent weak economic indicators. The latest S&P Global/HCOB manufacturing PMI for Germany in August 2025 was 48.5, marking the second month of contraction. This signals that the weakness is widespread across the industrial sector, not only limited to trade. In the currency market, this news puts pressure on the EUR/USD pair. It may be wise to consider buying euro put options that expire in October and November, anticipating a potential drop towards the 1.0500 level. The market may now expect a softer approach from the European Central Bank. The German DAX index, which includes many large exporters, looks especially weak. Companies like Volkswagen and Siemens will feel the effects of declining foreign demand and ongoing tariff negotiations between Washington and Brussels. We suggest buying DAX puts, similar to a pattern we observed in 2018 when US tariff threats led to a significant drop in German stocks. The key issue continues to be the tariff discussions, which have been a consistent challenge all summer. Reports from late August 2025 mentioned that talks stalled over standards for the automotive and chemical industries, directly affecting Germany’s vital export sectors. This political uncertainty is unlikely to resolve quickly, supporting a bearish outlook for the upcoming weeks. On the flip side, this economic weakness may be good news for German government debt. A slowing economy reduces the likelihood of the ECB adopting a tough policy stance, a sentiment echoed by President Lagarde’s cautious comments last month. We see a chance to invest in German Bund futures, betting that yields will fall as fears of a slowdown increase.

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Germany’s industrial production rose by 1.3% in July, better than the expected 1.0% increase. In June, production had fallen by 1.9%. When we exclude the unstable sectors of energy and construction, industrial output increased by 2.2% in July. Specifically, capital goods production grew by 3.0%, consumer goods increased by 2.1%, and intermediate goods went up by 0.8%.

Revitalization Of German Industry

The higher-than-expected industrial numbers for July indicate that Germany’s economy may be recovering from a period of weakness. This positive data, following a disappointing June, suggests we might need to reassess our negative views on German investments. It seems we could be nearing the end of the industrial recession that has affected market sentiment. This news is particularly promising as it matches the positive results from the late-August ZEW Economic Sentiment survey, which hit its highest level in over a year. Given these trends, buying call options on the DAX index could be wise since major manufacturing and automotive companies are likely to benefit. The broad recovery, highlighted by the 3.0% rise in capital goods, shows that businesses are starting to invest again. This shift is a significant change from the industrial challenges seen in 2023 and 2024, marked by high energy costs and weak global demand. Surprisingly, the German economy has managed these challenges better than expected. We are now witnessing signs of stronger domestic and European demand.

Impact On European Monetary Policy

However, this growth makes things trickier for the European Central Bank (ECB), especially after August’s Eurozone inflation came in unexpectedly high at 2.5%. This development lowers the chances of interest rate cuts before the year’s end. Therefore, it may be wise to consider short positions in German Bund futures, as bond yields are likely to rise because of this news. A growing German economy combined with a cautious ECB supports the Euro. The EUR/USD exchange rate, which has been stable, may experience a significant increase. We suggest looking into long positions on EUR/USD futures contracts to take advantage of this changing economic environment. Create your live VT Markets account and start trading now.

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There are two important FX option expiries to note. Both involve EUR/USD at 1.1700 and 1.1750, with the current price sitting between these levels. The daily chart shows resistance around 1.1730-40, which held back the pair’s upward movement after the US jobs report. These expiries might have a strong influence unless the dollar weakens significantly.

Start of the Week Caution

Last week’s indecision on Wall Street leads to a cautious start this week. US stocks initially reacted positively to softer labor market data but ended lower, with some late support helping the situation a bit. For more insights, check investingLive resources. In the past, large option expiries, like those at the 1.1700 level, often contain price movement. We see a similar situation now, with high open interest in EUR/USD at 1.0900 and the key level of 1.1000 for this week’s expiry. The current price is just above 1.0950, caught between these two strong points. This uncertainty follows last Friday’s August 2025 US jobs report, which showed a weak job growth headline but surprisingly high wage growth. This mixed data has left the Federal Reserve’s next steps uncertain, resulting in limited movement in the US dollar. The market seems to be trading within a narrow range for now. Next week, all eyes are on the US Consumer Price Index (CPI) report for August. This release will be vital for a market still cautious about inflation. The latest July 2025 data revealed core inflation remaining at a stubborn 3.1% year-over-year, putting pressure on the Fed to keep its strict policies. Meanwhile, the ECB is adopting a more dovish tone as Eurozone manufacturing PMIs for August recently hit a two-year low of 45.2.

Anticipating the CPI Report

In the coming days, the options market’s influence suggests that selling volatility could be a smart move. Traders may explore short-dated iron condors or strangles focused around the 1.0950 level to take advantage of the expected limited movement leading up to the CPI data. This strategy seeks to profit from the decline in option values over time. Looking ahead, the CPI release could shake up the current calm. An unexpectedly high inflation figure could lead to a sharp drop in EUR/USD, potentially breaking below the 1.0900 support level. To prepare, traders might consider buying longer-dated puts or setting up bearish put spreads to capitalize on a possible downward move. Create your live VT Markets account and start trading now.

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The S&P 500 E-mini Futures are currently in a key trading range. Prices are bullish above 6,507 and bearish below 6,490.5. Right now, the market price is about 6,497, which is close to today’s Volume Weighted Average Price (VWAP). On Friday, the market had mixed results. The S&P posted slight gains, while the Dow fell. European markets also ended the day lower. Economic conditions are changing, with possible interest rate cuts due to slowing growth and inflation from tariffs.

Key Trading Strategy

Traders should keep an eye on important levels for trading opportunities. If prices rise above 6,507, there may be a chance for gradual upward movement. Conversely, a drop below 6,490.5 could indicate a deeper decline. It’s wise to consider partial-profit strategies with clear targets for both buying and selling positions. VWAP bands are crucial indicators of market behavior. Prices near these bands can lead to either range-bound trends or continued movements in the same direction. For today’s trading, it’s recommended to adjust stop-loss strategies because of the narrow trading range. Move the stop to breakeven after hitting the first profit target. This analysis aims to support decision-making and is not meant to provide specific investment advice.

Rate Cuts vs Recession Fears

The market is in a tight range, showing a struggle between two main ideas. Optimism for cuts in Federal Reserve rates is being balanced by growing recession fears. This uncertainty suggests that traders should be ready for a sharp move once a clear direction is established. Last Friday’s jobs report from September 5, 2025, revealed that the economy added 155,000 jobs, which was below expectations and caused the unemployment rate to slightly rise to 4.2%. Initially, this report created a rally as it increased the likelihood of a Fed rate cut. However, hope diminished as worries grew that this weak data signaled a more significant economic slowdown. Inflation remains a concern due to the newly announced tariffs. The latest Core CPI showed inflation at 3.1%, which is significantly above the Fed’s target of 2%. This high inflation limits the Fed’s ability to cut rates heavily, creating a delicate situation where good news can quickly turn bad. Given this uncertainty, we expect volatility to increase in the weeks ahead. The VIX, which is currently around 19, reflects this tension and could rise as we near important economic data releases. Trading strategies like straddles or strangles could be effective for those who anticipate a breakout from the current range. Watch these key levels: 6,507 on the upside and 6,490.5 on the downside for the S&P 500 E-mini futures. If the market consistently stays above 6,507, it may signal more focus on rate cuts, making call options or long futures more appealing. On the other hand, a drop below 6,490.5 would suggest recession worries are taking over, making put options or short futures positions more favorable. All attention is now on the upcoming Federal Reserve meeting on September 17, 2025. Current market expectations, as shown in the CME FedWatch Tool, indicate a 65% chance of a quarter-point rate cut. We believe the market will remain indecisive until we receive clearer information from the Fed’s decisions and comments. Create your live VT Markets account and start trading now.

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The chairman of the Swiss National Bank (SNB), Martin Schlegel, highlighted that the bank is aware of the negative impacts of negative interest rates. In his interview with Migros-Magazin, he stressed that there needs to be a strong reason before such a policy is put in place. He also mentioned that uncertainty over US tariffs is hurting the economy. Even though discussions continue, markets seem to have adjusted, and no further interest rate cuts are anticipated for the remainder of the year.

Switzerland’s Monetary Policy Stability

Chairman Schlegel’s comments indicate that the SNB plans to keep its current stance. The latest data from August 2025 show Swiss inflation steady at 1.6%, which means there is no pressure to lower interest rates further. This signals that the current policy is likely to remain unchanged for the foreseeable future. Historically, the SNB was aggressive in cutting rates, starting in March 2024 and lowering them to 1.00% as recently as February 2025. That period of rate cuts is now over. This stability makes the Swiss franc less attractive for cheap funding in currency trades against higher-yielding currencies. For those trading derivatives, this suggests that the implied volatility in Swiss franc pairs will be lower. With the central bank hinting at stability, the chances of sudden policy changes in the near future are slim. This setting favors strategies that thrive in stable markets, such as selling strangles on EUR/CHF.

Concerns Over US Tariff Uncertainty

US tariff uncertainty presents a major external risk, especially after reports surfaced last week about potential new tariffs on European industrial products. This issue is likely to prevent significant appreciation of the franc, suggesting the currency will remain within a predictable range. As a result, traders should be cautious about purchasing far out-of-the-money call options on the franc. This perspective is already reflected in the interest rate futures market, where current prices show that traders believe there is less than a 10% chance of another SNB rate cut by the end of 2025. The market has absorbed the SNB’s message, so traders should prepare for continued stability through the autumn. Create your live VT Markets account and start trading now.

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Barclays predicts the Federal Reserve will implement three rate cuts by the end of the year, with decreases of 25 basis points expected in September, October, and December. This forecast comes after a disappointing jobs report. Some analysts have suggested a more significant 50 basis points cut for September, but this idea seems unlikely due to cautious sentiments among some members of the FOMC.

The Market’s Reaction

The market is slowly adjusting to the idea of multiple rate cuts by the end of the year. Barclays had originally anticipated only rate cuts in September and December, but their latest forecast matches the current market view more closely. Traders now expect about 68 basis points of rate cuts before the year ends. Given the anticipated series of cuts, the response to last Friday’s weak jobs report is significant. The economy added just 95,000 jobs in August, raising the unemployment rate to 4.2% and increasing speculation that the Federal Reserve will need to act soon. This has led to expectations of three rate cuts by year’s end. For traders focusing on interest rates, this forecast indicates a strategy of preparing for lower rates. The CME FedWatch Tool now indicates a 92% chance of a 25-basis-point cut at the meeting on September 17th. Traders can consider derivatives like SOFR (Secured Overnight Financing Rate) futures, which will gain value if rates drop as expected.

Implications for Equity Markets

In the equity markets, things are more complicated because the expected rate cuts are due to a slowing economy. The S&P 500 initially fell after the disappointing jobs report but then rallied on the possibility of cheaper money. It is currently around the 5,400 mark. Traders can use options to set up bullish call spreads aimed at benefiting from a potential “bad news is good news” rally, while also managing their risks in case economic worries dominate. Uncertainty is on the rise, as indicated by the VIX, which measures market fear, climbing to over 19 last week. This is the highest level since concerns related to the banking sector in spring. Traders might consider buying VIX call options to protect their portfolios or to speculate on increased volatility as we approach the next FOMC meetings. Looking back, we can see similarities to the Fed’s rate cuts that began in late 2007. While those initial cuts gave a temporary boost to the markets, they ultimately responded to an economy in decline, which pulled stocks lower. This historical context suggests that while we can take advantage of short-term rallies, we should stay cautious about the overall health of the economy. Create your live VT Markets account and start trading now.

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