Japan’s unemployment rate in June held steady at 2.5%. This number met expectations and was the same as the previous month’s rate. The job-to-applicant ratio was 1.22, which was below the expected 1.25 and down from the earlier figure of 1.24.

Impact on the Japanese Yen

This data usually has little effect on the Japanese yen. In June 2025, Japan’s labor market remained tight, with unemployment stable at a low 2.5%. While this indicates a strong economy, the report typically does not have a direct impact on the yen. Instead, we should consider what this means for the Bank of Japan’s (BoJ) next steps. The main question is if this tight labor market will lead to sustainable wage growth that the BoJ needs to change its policy. Recent data has been mixed; for instance, Tokyo’s Core CPI for July 2025 fell to 2.1%, slightly below expectations. This gives the BoJ a reason to remain cautious, likely resulting in continued yen weakness in the short term.

Interest Rate Differences and Carry Trade

The key factor for the yen remains the large interest rate gap between Japan and other major economies, especially the United States. With the U.S. Federal Reserve keeping its key interest rate above 5% in the first half of 2025, borrowing in yen to invest in dollars remains attractive. This steady jobs report doesn’t change the allure of this profitable carry trade. Looking back, we saw a similar trend in 2023 and 2024, where good domestic indicators were overlooked by a BoJ focused on ensuring inflation wasn’t temporary. Until the annual “shunto” wage negotiations result in sustained growth that keeps inflation above target, betting against the BoJ’s supportive stance has not been profitable. We expect this trend to continue for now. In the coming weeks, the mix of low volatility but underlying tension presents an opportunity. We find value in buying longer-term, inexpensive options that could profit from a sudden policy change later this year. For example, purchasing puts on the USD/JPY currency pair is a low-cost way to prepare for any unexpected hawkish signal from the BoJ. Create your live VT Markets account and start trading now.

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Gold prices have risen to about $3,306, up 0.95%, thanks to increased demand for safe investments amid new trade tensions. This comes just before the August 1 tariff deadline, with the US considering new tariffs on several countries. The US Dollar has slightly fallen from recent highs, which is helping gold prices recover. President Trump announced new tariffs: a 25% tariff on Indian imports for national security reasons and a 50% tariff on certain Brazilian goods. A deal with South Korea resulted in a lowered 15% tariff on imports in exchange for $350 billion in American investments. The US is also negotiating trade agreements with the EU and Japan, while talks continue with other nations.

Focus On Economic Data

Traders are keeping an eye on upcoming US economic data, particularly the Core Personal Consumption Expenditures Price Index, which the Fed uses as its main inflation indicator. Market participants are curious about how these numbers might affect future monetary policy, especially interest rates. Current market conditions suggest a cautious approach, with expectations for a rate cut in September significantly dropping. Gold demand grew by 3% year-on-year to 1,249 tonnes, driven by safe-haven investments. Central banks added 166 tonnes to their reserves, highlighting gold’s strategic value. Currently, gold prices are stabilizing between $3,250 and $3,450, indicating a possible continuation of this trading range. We expect gold to remain strong around $3,306 due to renewed trade worries following tariffs imposed on India and Brazil. This situation mirrors the start of the US-China trade disputes from the late 2010s, contributing to significant uncertainty. The small dip in the dollar is also supporting gold prices right now. The spotlight is now on the Federal Reserve, as the Core PCE inflation data for July 2025 came in at a slightly high 2.3%. This exceeds the Fed’s target and reduces hopes for a September interest rate cut, a shift already reflected in federal funds futures. This creates a complicated environment, as higher rates usually put downward pressure on gold prices.

Market Nervousness Rising

With increasing uncertainty, market nervousness is climbing. We can see this in the CBOE Volatility Index (VIX), which has risen to 18.5 from its lows last month. For derivative traders, it might be wise to buy options to take advantage of potential sharp price moves. A bull call spread on gold futures could allow us to benefit from a possible breakout above the $3,450 resistance level while managing our maximum risk. However, we need to be alert for any sudden easing of trade tensions or stronger-than-expected US job data. If a surprise agreement with India or Brazil occurs, gold’s safe-haven appeal might quickly diminish. In that case, having protective puts or starting bear put spreads could protect against a decline towards the $3,250 support level. The consistent purchasing by central banks, which have added another 166 tonnes to their reserves, continues to provide solid long-term support for gold prices. This ongoing demand makes us cautious about taking overly aggressive bearish positions. Over the next few weeks, we anticipate trading will likely stay volatile within the established $3,250 to $3,450 range. Create your live VT Markets account and start trading now.

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The Euro has dropped against the Swiss Franc for four days in a row, hitting its lowest point since May 5. The EUR/CHF pair is now close to 0.9280, down almost 0.60% this week, as the Franc gains strength due to demand for safe assets amid trade tensions and approaching US tariff deadlines. US President Donald Trump has postponed a tariff deadline with Mexico by 90 days, keeping current tariffs while warning of new ones for countries that don’t reach a deal by August 1. While there was a phone call about a trade deal with Mexico’s President Claudia Sheinbaum, uncertainty remains high, causing increased anxiety about trade globally. In June, Switzerland’s retail sales rose by 3.8% compared to last year, far exceeding expectations and boosting the Franc’s value. Monthly sales also increased by 1.5%, recovering from a previous decline and making the currency more appealing as a safe haven. Meanwhile, the Eurozone’s GDP grew by just 0.1% in the second quarter, showing a significant slowdown. Attention now turns to the Eurozone’s July inflation data, which will be critical in guiding the European Central Bank’s future actions, as the region faces ongoing low price pressures and sluggish growth. The Core Harmonized Index of Consumer Prices, which excludes volatile items, will help track inflation trends and impact the Euro’s potential strength. Given the Euro’s weakness against the Swiss Franc, a clear trend appears likely to continue in the weeks ahead. The EUR/CHF pair faces pressure from a solid Franc and a struggling Euro. This situation creates an opportunity for bearish strategies on this currency pair. The Franc’s attractiveness comes from global uncertainty and domestic strength. Trade worries, particularly with the US tariff deadline approaching today, August 1, enhance the Franc’s safe-haven status. Additionally, the Swiss National Bank raised its policy rate to 1.75% in June 2025, which is a stark contrast to the Eurozone’s economic outlook. In contrast, the Euro struggles with the Eurozone’s stagnant Q2 GDP growth of just 0.1%. We are now anticipating the July inflation report, where recent forecasts from Bloomberg expect core inflation to reach 1.9%, still below the European Central Bank’s target. Weak data like this will likely keep the ECB supportive of a dovish approach, limiting any potential boost for the Euro. In the coming weeks, traders should think about purchasing put options on the EUR/CHF pair. Choosing contracts that expire in late August or September 2025 would give enough time for the market to react to the Eurozone’s inflation data and any guidance from the ECB. This strategy could allow for profits from a continued decline in the pair’s value. It’s worth noting that implied volatility for EUR/CHF has increased to about 6.8%, suggesting that the market is prepared for larger price swings. This situation is reminiscent of the early 2010s when economic stress in the Eurozone led to a steady move towards the safety of the Swiss Franc. We expect a similar trend to emerge, although perhaps less severe.

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The United States has set a 39% tariff on Switzerland, leading to a drop in the value of the Swiss franc (CHF). Other recent tariff changes include a 20% rate on Taiwan and 19% on Cambodia, Thailand, Malaysia, Vietnam, and Indonesia. This tariff increase is part of a larger strategy, which recently raised Canada’s tariff from 25% to 35%. Other countries affected include Australia, New Zealand, Israel, Venezuela, and Turkey, with tariffs between 10% and 15%.

Geopolitical Tensions

These tariff changes occur amid rising geopolitical tensions and shifting trade policies. The increased tariffs are likely to affect trade balances and have already impacted currency markets, particularly the Swiss franc. Traders and market analysts are closely monitoring these developments. The Swiss franc has fallen more than 3% against the dollar in early trading, a swift decline not seen since the Swiss National Bank’s policy shift in 2015. We expect ongoing currency volatility, which could create trading opportunities for those who are ready for sudden changes. In the coming weeks, traders might consider buying options to manage this uncertainty. Put options on the USD/CHF pair could guard against further weakness of the franc, while call options might be used to bet on continued strength of the US dollar. Using options helps define risk in a situation where policy news can change asset values rapidly.

Impacts of Tariffs

These tariffs aren’t just a concern for Switzerland. The tariffs on Canada and key Asian partners will likely pressure their currencies too. We remember the risk-off sentiment during the 2018-2019 trade disputes, which generally favored the US dollar. A potential strategy could involve shorting a basket of affected currencies, including the Canadian dollar and Thai baht, against the dollar. We should also consider derivatives linked to Swiss stocks, especially in the pharmaceutical and luxury watch sectors. These industries made up nearly 60% of Swiss exports to the US in 2024 and are quite vulnerable. Purchasing put options on the Swiss Market Index (SMI) could help protect against a broader market decline. Attention now turns to the Swiss National Bank (SNB), as the market anticipates a possible emergency response to stabilize the franc. Any unexpected action or rate cut could significantly impact short-term interest rate futures. Given their history of significant interventions to weaken the franc in the early 2020s, the SNB has the power to act decisively. Create your live VT Markets account and start trading now.

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The Canadian dollar has remained steady, even with a recent rise in tariffs from the US. The exchange rate between USD and CAD has hit a 10-week high, showing that the Canadian dollar is at a 10-week low. The US has increased tariffs on Canadian goods from 25% to 35%. This new rate will take effect shortly as US Eastern time shifts to August 1.

Impact on the Canadian Economy

With the 35% tariff going live, the Canadian dollar faces continued downward pressure. This drop to a 10-week low for the CAD may just be the start of a longer trend. We expect further weakness against the U.S. dollar in the upcoming weeks. This tariff hike affects an already weak Canadian economy, where Q2 GDP growth slowed to only 0.8% annualized. In comparison, the latest U.S. non-farm payrolls reported a strong gain of 215,000 jobs, keeping the Federal Reserve on track. This widening economic gap makes holding U.S. dollars more attractive than Canadian dollars. For derivative traders, this spike in uncertainty presents a big opportunity. Implied volatility on USD/CAD one-month options has surged over 10%, a level not seen since bank troubles in spring 2024. Strategies like long straddles, which benefit from increased price movement, should be on the table.

Potential Monetary Policy Response

We anticipate that USD/CAD will aim for higher levels, possibly reaching the psychological 1.4000 mark. A similar situation occurred during the trade disputes of 2018 when escalating tariffs led to an 8% rise in just a few months. History indicates that this trend might continue. The market is now expecting a response from the Bank of Canada. Overnight index swaps show more than a 70% chance of a 25-basis-point interest rate cut by the October meeting. This expectation of easing monetary policy may limit any potential rallies in the Canadian dollar. Create your live VT Markets account and start trading now.

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The GBP/USD faced some losses during the North American session after the Federal Reserve decided to keep interest rates steady without clear guidance for September. Strong jobs data and rising inflation helped the Dollar, pushing the GBP/USD down to 1.3214, down from a high of 1.3281. In the European session, the Pound Sterling struggled around 1.3200 against the US Dollar, marking its sixth day of decline. The US Dollar Index remained strong, hovering near a two-month high of about 100.00, adding to the pressure on the GBP/USD pair.

Asian Session Performance

During the Asian session on Thursday, GBP/USD saw some buying interest, recovering slightly from the previous day’s low since mid-May. The pair traded just above the mid-1.3200s but caution is advised when considering a recovery. Meanwhile, the AUD/USD hovered around five-week lows between 0.6430 and 0.6420. The EUR/USD made a recovery, moving back to the 1.1460 level despite the Greenback reaching a two-month high. Gold faced selling pressure and struggled to stay above $3,300, while Ripple’s price retracted to $3.09 as it struggled to break through resistance. With the Federal Reserve’s unclear plans for September, the strong US Dollar is expected to be the leading theme for the coming weeks. The July jobs report added a solid 280,000 positions, and the CPI rose to 3.5%. This suggests the Fed is unlikely to change its stance, reinforcing the strength of the Dollar and making bearish positions against it risky.

Exchange Rate Strategies

For the GBP/USD, we see the most likely movement as downward, especially as it struggles near the 1.3200 mark. The Bank of England’s cautious tone from late July, along with unexpected UK retail sales figures showing a decline, points to fundamental weakness. Traders might consider buying GBP/USD put options to profit if it breaks below this key level. The decline of the Australian Dollar is clearer, especially after recent manufacturing data from China fell into contraction territory, impacting sentiment for the AUD. We expect continued weakness against the Greenback, and selling AUD/USD call options might be a smart strategy to take advantage of limited upside potential in the upcoming weeks. Interestingly, the Euro shows resilience, likely due to hawkish comments from European Central Bank officials last week. This divergence suggests the EUR may perform better than other currencies, especially the Pound. A possible strategy is to trade the EUR/GBP cross, going long on the Euro and shorting the Pound to take advantage of this specific strength. In the commodities market, Gold is struggling to hold above $3,300 due to the strong Dollar and rising real yields, which raise the opportunity cost of holding the non-yielding metal. Historically, gold prices tend to fall even amid inflation if the Dollar remains strong. This environment also dampens interest in riskier assets like Ripple, which will likely have a tough time until the Dollar’s momentum slows. Create your live VT Markets account and start trading now.

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The EUR/GBP exchange rate has increased, bouncing back from a recent seven-week low. The pair is currently around 0.8647, up about 0.35%. The Euro is finding some support despite market uncertainties, while the British Pound is under pressure. Recent data from Germany shows that the Consumer Price Index (CPI) rose by 0.3% in July. The Harmonized Index of Consumer Prices (HICP) increased by 0.4% month-on-month, but the annual rate dropped to 1.8%, which is below the European Central Bank’s (ECB) target of 2%.

Eurozone Labor Market Resilience

The unemployment rate in the Eurozone has fallen to 6.2%, slightly better than expected, indicating some strength in the labor market. There are growing expectations that the Bank of England (BoE) may cut interest rates at its next meeting due to signs of economic weakness. UK GDP figures show consecutive monthly declines, raising worries about a potential recession. Labor market data reveal decreasing payroll numbers and rising unemployment, suggesting the central bank may need to change its interest rates. The Bank of England aims to keep prices stable by adjusting interest rates. In extreme cases, it might use Quantitative Easing or Quantitative Tightening to adapt to different economic situations. These measures affect the value of the Pound Sterling. The EUR/GBP rate is climbing from its lows to around 0.8647, largely due to differing economic outlooks. The main driver of this trend is the increasing belief that the Bank of England will cut interest rates soon, contrasting with the European Central Bank’s more stable economic situation.

Historical Comparisons And Current Trends

The British Pound faces significant pressure because of clear signals of economic weakness. Recent data from the Office for National Statistics revealed a 0.2% GDP contraction for the second quarter of 2025. Additionally, the UK unemployment rate rose to 4.5% in July. All eyes are on the Bank of England’s meeting scheduled for August 7th, where interest rate futures currently reflect an 85% chance of a rate cut. Looking back to the period after the 2016 Brexit vote, we see a historical analogy. During that time, uncertainty about the UK economy led the BoE to adopt a much looser policy compared to the ECB. Consequently, the EUR/GBP pair gradually increased from the mid-0.70s to above 0.90 over the following months. Meanwhile, the Euro has remained stable despite German inflation easing to 1.8%. Support comes from a strong labor market, with a record low unemployment rate of 6.2% in the Eurozone. Additionally, the latest Eurostat data shows core inflation in the region is sticking at 2.7%, giving the ECB little reason to consider cutting rates. For derivative traders, this policy divergence offers a clear path for upcoming weeks. We favor long positions in EUR/GBP, and purchasing call options with a September expiry seems like a smart strategy. This allows us to benefit from a potential upward move if the BoE follows through with the expected rate cut. However, it is crucial to be aware of the risks involved. Any unexpectedly hawkish comments from the Bank of England could lead to a sharp reversal in the Pound. To mitigate this risk, we might think about buying some out-of-the-money put options as a safeguard against any unexpected downturn. Create your live VT Markets account and start trading now.

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Trump has signed an order that raises the tariff rate on goods from Canada to 35%, up from 25%. This change will take effect on August 1. According to the White House, items that qualify under the United States-Mexico-Canada Agreement (USMCA) will not be affected by these tariffs. This decision comes after Trump expressed disagreement with Canada’s stance on recognizing Palestinian statehood. The administration has promised to use all available measures to protect national security. Countries listed in Annex I of the executive order will face the 35% tariffs, while those not listed will be subject to a 10% tariff. Additionally, goods sent through other countries to avoid the 35% tariff will incur a 40% transshipment tariff.

Currency Market Impacts

With these tariffs starting tomorrow, August 1, we can expect immediate and notable changes in the market. The most immediate impact will be on the currency market, particularly the U.S. dollar compared to the Canadian dollar. We expect the Canadian dollar, which ended today at about 1.38 CAD per USD, to weaken significantly. This presents a chance for traders to take long positions on the USD/CAD pair using futures or options. Canadian stocks will likely see a sharp decline when the markets open. Traders might consider buying put options on broad Canadian ETFs, like the iShares MSCI Canada ETF (EWC), to profit from an expected downturn. This situation mirrors what happened during the 2018 steel and aluminum tariff conflict, where Canadian stocks fell sharply right after tariffs were announced. Due to the sudden nature of the executive order, implied volatility on Canadian assets will likely rise. Buying volatility could be a smart strategy, such as using straddles on the most affected Canadian companies or currency futures. This approach would benefit from significant price movements, regardless of the direction, which is particularly useful in today’s uncertain political environment.

Tariff-Impacted Goods

It’s important to identify which goods are not protected by the USMCA, as these will be hit hardest by the 35% tariff. Key items include softwood lumber and specific agricultural products. A recent report from Statistics Canada for Q2 2025 showed that non-USMCA protected goods made up over $15 billion in exports to the United States, highlighting a vulnerable part of the trade relationship. Lastly, we must consider the impact on U.S. companies. Businesses that depend on non-USMCA imports from Canada will face higher costs, which could hurt their future earnings and stock prices. On the other hand, U.S. producers competing with these Canadian imports may benefit from the situation. Create your live VT Markets account and start trading now.

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The United States recently held a 4-week bill auction, resulting in a yield of 4.29%, up from the previous 4.245%. This shift indicates changes in the financial markets. In currency trading, the EUR/USD pair is nearing the 1.1450 mark, recovering from earlier drops. The GBP/USD pair has also climbed over the 1.3200 level after facing some ups and downs.

Gold Struggles to Maintain Value

Gold is struggling to stay above $3,300 per troy ounce due to falling US yields and a weaker US Dollar. Bitcoin is trading between $116,000 and $120,000, with increased interest from large investors. A new partnership between JPMorgan and Coinbase aims to link users’ bank accounts with crypto wallets. The Federal Open Market Committee (FOMC) is still considering the risks of tariffs and their effects on jobs and inflation.

Best Brokers for Trading EUR/USD

An article lists recommended brokers for trading EUR/USD in 2025, highlighting those with competitive features. A detailed review helps traders understand each broker’s pros and cons, making it easier to choose wisely. The slight increase in the 4-week bill yield to 4.29% indicates that the market is acknowledging some short-term uncertainty, even as the dollar decreases in value. This situation is reminiscent of early 2024, when rate expectations were very volatile. With the FOMC uncertain about tariffs, we suggest traders proceed carefully with long-dated interest rate futures and consider short-term options to prepare for sudden policy changes. The US Dollar is weakening, with EUR/USD testing the 1.1450 resistance level and GBP/USD rising above 1.3200. The Dollar Index (DXY) has dropped nearly 3% since May 2025 and is currently around 99.50. This trend makes call options on EUR/USD with strike prices above 1.1500 appealing for the upcoming weeks, especially after a surprising rise in consumer confidence in the Eurozone in the latest Q2 2025 report. Gold’s struggle to break above $3,300 per ounce is concerning, especially since a weaker dollar usually supports it. Data from major gold ETFs, like GLD, reported over $500 million in net outflows in July 2025, indicating that institutional investors are taking profits. This trend suggests a potential significant price movement, leading traders to consider straddle strategies on gold futures to benefit from an increase in volatility, regardless of the direction. Bitcoin’s trading range of $116,000-$120,000 indicates large investors are accumulating positions. Recent data shows that Bitcoin reserves on exchanges have fallen to a three-year low, reflecting a strong holding sentiment. The partnership between JPMorgan and Coinbase adds credibility to Bitcoin, making long-term call options appealing for capitalizing on possible price increases. The Federal Reserve’s ongoing debate about the impact of tariffs is causing notable uncertainty in the market. This is evident in the VIX, which has risen from a low of 14 in June 2025 to around 19 now. In this environment, selling expensive, short-term put options on major indices could be a good income strategy for those who believe the Fed will take action to avoid a severe downturn. Create your live VT Markets account and start trading now.

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US President Donald Trump announced he will discuss a trade deal with Mexican President Claudia Sheinbaum, aiming to finalize it within 90 days. During this period, Mexico will continue to face tariffs: a 25% tariff on fentanyl and cars, and a 50% tariff on steel, aluminum, and copper. The USD/MXN exchange rate showed a slight recovery, trading at 18.82, which is a 0.3% decrease for the day. This change followed the announcement of the trade talks.

Understanding Tariffs

Tariffs are fees placed on imported goods to support local industries. They are different from taxes as they are collected at ports of entry. People debate their effectiveness; some think they protect local businesses, while others worry about their potential negative effects on the economy. Trump intends to use these tariffs to strengthen the US economy, especially focusing on imports from Mexico, China, and Canada, which made up 42% of US imports in 2024. In that year, Mexico was the top exporter with $466.6 billion. He wants to use money from tariffs to lower personal income taxes. Given the 90-day negotiation period, the recent drop in the USD/MXN to 18.82 seems like a short-term change rather than a lasting trend. The next few weeks may be marked by uncertainty, leading to significant fluctuations in the peso. This situation is reminiscent of the USMCA renegotiations in 2018 when the peso saw swings of over 10% based solely on political comments.

Impact on Markets and Strategies

This uncertainty suggests that capitalizing on long volatility strategies might be profitable. We see high implied volatility in options for the iShares MSCI Mexico ETF (EWW) and the USD/MXN currency pair. After the VIMEX, Mexico’s volatility index, spiked over 30% following the June 2024 election results, we expect volatility to remain high and sensitive to news from the talks. The specific risk of a 25% tariff on cars makes the auto industry particularly vulnerable. We are considering buying protective puts for companies heavily reliant on Mexican manufacturing. In 2024, Mexico exported over $130 billion in vehicles and parts to the U.S., so any disruption would quickly affect earnings and stock prices for companies on both sides of the border. In addition, the proposed 50% tariff on metals presents a clear opportunity for a pair trade strategy. We expect this to negatively impact Mexican steel producers like Ternium while benefiting U.S. firms. In 2024, Mexico was among the top five steel suppliers to the U.S., making this tariff a serious threat to their market position. Beyond these specific industries, the risk of the talks falling apart could affect overall market sentiment. We recall how the market declined during the 2018-2019 trade disputes, which had a negative impact on the S&P 500. Therefore, holding some out-of-the-money puts on major indices like the SPX could provide a smart hedge as the 90-day deadline draws near. Create your live VT Markets account and start trading now.

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