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GBP/USD rises above mid-1.3200s during European trading as USD weakens
Pound Sterling is falling close to 1.3200 against the US Dollar during the European trading session on Thursday. This is the sixth day in a row of losses, driven by the US Dollar Index, which reached a two-month high of about 100.00 on Wednesday.
However, the GBP/USD pair is gaining some ground in the Asian session on Thursday. It has partially recovered from the low of the previous day and is trading just above the mid-1.3200s. Still, caution is necessary regarding its chances for a significant recovery.
Japan seeks a 15% tariff rate on US chips to match the EU’s rate
Japan is looking to set a 15% tariff on American chips, matching the rate used by the European Union. Akazawa, Japan’s trade negotiator, is confident that Japan can secure this tariff rate for the potential duties that the US plans to impose on chips.
This proposed 15% tariff on US chips adds uncertainty to the semiconductor industry. It would directly impact the profits of American chip exports to Japan, a crucial market. According to the Semiconductor Industry Association, exports to Japan made up nearly $12 billion in Q2 2025, which highlights the financial risk involved in this situation.
Trade And Market Strategies
We advise traders to prepare for more fluctuations in major US tech stocks such as NVIDIA, Intel, and AMD in the coming weeks. A good strategy might involve using options to benefit from the price changes as news from the negotiations develops. Looking back at the tariff announcements from 2018, we saw the Philadelphia Semiconductor Index (SOX) experience significant daily swings, which might happen again now. Given that a 15% tariff is likely, buying protective put options on tech-heavy indexes like the Nasdaq 100 or on specific chipmakers can help guard against negative developments. If the US considers a higher rate than 15% or if negotiations falter, it could lead to a sell-off. This cautious approach seems wise until there is an official agreement. In Japan, this tariff news may put pressure on companies that import and depend on high-performance American chips, particularly in the automotive and gaming sectors. For instance, Toyota’s earnings call in May 2025 pointed out its increasing reliance on US chips for autonomous driving technology. This tariff could boost domestic chip makers like Renesas Electronics, making them more competitive.Currency Market Implications
The currency market, especially the USD/JPY exchange rate, will also be crucial to monitor. Higher import costs for Japan’s manufacturing sector could weaken the yen further. The yen has already dropped below 150 per dollar this month, and the confirmation of this new tariff could push it down even more. Create your live VT Markets account and start trading now.USDJPY rises above April’s high, aiming for 151.198 to 151.33 while maintaining bullish control
The USDJPY has reached an intraday high of 150.79, breaking the previous swing high of 150.48 from April 3. This shows a strong upward trend. The next target zone is between 151.198 and 151.33, followed by a key level at 151.616, which is the 61.8% retracement of the 2025 decline.
Earlier, the pair moved above the 200-day moving average at 149.53 and the 50% midpoint of the 2025 trading range at 149.375. These levels are now important support zones, with prices comfortably above them. This indicates strong upward momentum, with buyers firmly in control.
Divergence In Central Bank Policy
The recent surge in USDJPY above 150.50 is largely due to differing central bank policies. The US Federal Reserve’s recent statements indicate a hawkish approach, while the Bank of Japan has confirmed its commitment to accommodative policies just two weeks ago. This difference suggests that the path ahead for the USDJPY is likely to continue upward. For derivatives traders, buying call options is a direct way to take advantage of this bullish movement. There has been a noticeable rise in open interest for call options set for August and September, particularly at strike prices of 151.50 and 152.00. This strategy allows traders to profit from a price increase while limiting their maximum risk. However, we should keep in mind the sharp reversals from late 2022, when the Japanese Ministry of Finance intervened to support the yen near the 151.90 level. As we near the target zone between 151.20 and 151.60, the likelihood of either verbal or direct intervention rises significantly. Traders should brace for increased volatility and sudden price pullbacks.Reinforced Bullish View
Recent data supports our bullish outlook. The US Non-Farm Payrolls report from early July 2025 showed an impressive addition of 250,000 jobs. In contrast, Japan’s recent Q2 GDP figures indicated a slight contraction, giving the authorities little reason to shift away from their weak yen strategy. Implied volatility in the options market has already increased by 15% this month, making strategies like bull call spreads wise for managing rising option premiums. Our positive outlook persists as long as the price stays above the support zone between 149.37 and 149.53. A drop below this area, which includes the 200-day moving average, would signal that the strong upward trend is weakening. For now, these levels provide a solid base for the current rally. Create your live VT Markets account and start trading now.Canada’s GDP decreased by 0.1% in May, as expected.
Canada’s Gross Domestic Product (GDP) for May met expectations with a slight 0.1% decrease from the previous month. This shows that market predictions for the Canadian economy are stable.
In other market news, the EUR/USD is gaining traction and nearing the 1.1450 level. The GBP/USD has seen some ups and downs but has settled back above 1.3200 after dropping to around 1.3180.
Gold Market Performance
Gold is experiencing a selling trend and has had a hard time breaking past the $3,300 mark per troy ounce. The performance of gold reflects lower US yields and only slight declines in the US Dollar. Bitcoin’s price has remained between $116,000 and $120,000 for sixteen days as big investors continue to buy. Over-the-counter balances have fallen to record lows due to a new agreement between JPMorgan and Coinbase that connects banking with crypto wallets. The Federal Open Market Committee (FOMC) is still unsure how tariff risks will affect job markets versus inflation. This ongoing discussion continues to influence US monetary policy decisions.Monetary Policy Analysis
With Canada’s GDP decreasing in May, we expect low volatility in the Canadian dollar. The 0.1% decline was anticipated and contrasts with the modest 0.2% average monthly growth we saw in the last half of 2024. As a strategy, selling options to earn premiums on currency pairs like USD/CAD might be wise in the coming weeks. We are closely monitoring the EUR/USD as it tests the 1.1450 level. The Euro’s strength appears tied to the hawkish stance of the European Central Bank from their July 10th, 2025 meeting, indicating a tougher approach to inflation compared to the Fed. Traders may want to consider buying call options in case of a breakout above this key resistance level. The British pound’s recent movements above 1.3200 suggest continued price fluctuations. Unexpectedly high UK inflation data for June 2025, at 3.5%, is causing uncertainty about what the Bank of England will do next. This market environment is suitable for volatility strategies, like buying a straddle to profit from significant price swings in either direction. Gold’s struggle to rise above $3,300 indicates that the metal may be losing momentum after a strong start earlier this year. With the 10-year US Treasury yield stable around 3.8%, the appeal of non-yielding gold is fading. We see this as a chance to sell out-of-the-money call options at the $3,300 strike price, betting it will act as a ceiling. Bitcoin’s price range between $116,000 and $120,000 hints that a major price change is on the horizon. This calm period follows a big surge after the 2024 halving, and derivative data shows implied volatility at a six-month low. A long strangle strategy, which involves buying both a call and a put option, could take advantage of the breakout when it happens. The Federal Reserve’s uncertainty creates a tense market environment, making each new piece of information crucial. We will keep an eye on the US jobs report for July, set to be released on August 8th, 2025, as a key event. Traders should consider taking protective measures, like purchasing VIX call options, to prepare for any sudden market drops. Create your live VT Markets account and start trading now.In June, the United States Core Personal Consumption Expenditures Price Index met expectations at 0.3%
The Core Personal Consumption Expenditures (PCE) Price Index in the United States went up by 0.3% in June, which was what experts expected. This index is important for understanding inflation and its effects on monetary policy.
EUR/USD gained strength and moved close to 1.1450 after briefly dropping to about 1.1400. This shift came in response to the Federal Reserve’s actions and strong job data from the U.S.
The British Pound Movement
The GBP/USD fluctuated, dipping to 1.3180 before rising above 1.3200. This change was linked to selling pressure on the U.S. Dollar due to new economic data. Gold faced selling pressure as it struggled to stay above the $3,300 mark per troy ounce. These trends are connected to falling U.S. yields and slight losses for the dollar. Bitcoin has been stuck in a narrow range between $116,000 and $120,000 for over two weeks. Activity in large wallets and a record low in over-the-counter balance indicate ongoing market developments. The Federal Open Market Committee (FOMC) is debating the economic risks posed by tariffs. There’s disagreement about whether tariffs hurt labor markets or increase inflation.Implications of Core PCE Data
Today’s date is 2025-07-31T18:16:22.876Z. With the Core PCE data meeting expectations, it appears that the Federal Reserve is unlikely to make sudden changes to its policy. This hints at a period of steady, though elevated, interest rates. Hence, strategies like selling short-dated options for premium collection could be worth considering. The recent University of Michigan Consumer Sentiment survey for July 2025 showed a slight dip, further suggesting that the Fed may choose to remain stable for now. The Euro is showing strong momentum, nearing 1.1450 against the dollar. This is likely due to expectations that the European Central Bank will respond to ongoing inflation, which was over 4% in Germany and France last quarter. In the upcoming weeks, buying EUR/USD call options or taking a long position in Euro futures could be advantageous. The British Pound is also showing strength, rising above 1.3200. With UK inflation for June 2025 at a high 3.8%, markets are expecting another rate hike from the Bank of England at their next meeting. This ongoing support for the pound makes positions benefiting from GBP strength against the dollar seem justifiable. The selling pressure on Gold around $3,300 seems more like profit-taking than a trend reversal. Since World Gold Council reports from Q2 2025 indicate that central banks are still big buyers, we see dips as potential buying opportunities. Employing bull call spreads might let us capture upside while managing risk if U.S. yields start to increase again. Bitcoin’s narrow trading range between $116,000 and $120,000 looks poised for a breakout. The increase in open interest for September 2025 call options, especially at the $130,000 strike price, suggests that savvy investors are preparing for an upward move. We should be alert for a significant shift once this range is broken. The disagreements within the FOMC over tariffs are creating uncertainty in the market. This situation reminds us of the volatility from 2018-2019 when trade policies forced the Fed to change its approach. It may be wise to consider hedges for our portfolios, such as VIX derivatives, as this internal conflict could lead to unpredictable market conditions. Create your live VT Markets account and start trading now.The 30-year mortgage rate in the US falls to 6.72%, offering slight relief for buyers
The US 30-year mortgage rate has dropped to 6.72%. This offers a slight relief amid high home prices and borrowing costs. Last week, the rate was 6.74%, and it peaked at 7.04% earlier this year. The lowest point this year was 6.62%. Even with this decrease, the market is still struggling with falling sales.
Treasury Yield and Economic Implications
The current 30-year mortgage rate of 6.72% is linked to the 10-year Treasury yield, which is around 4.35%. This small drop suggests that bond markets are worried about future economic growth. For traders, interest rate futures are becoming increasingly important, as even minor adjustments in economic data could lead to bigger price changes. This dip in borrowing costs has sparked discussions about what the Federal Reserve might do next, and we expect this will be a key topic for the rest of the summer. Looking back at late 2023, traders began betting on rate cuts before the Fed signaled anything. Currently, fed funds futures indicate a 45% chance of a rate cut by the December 2025 meeting, up from just 30% last month. With the ongoing struggle between persistent inflation and a slowing economy, we may see increased volatility in the bond market. The MOVE Index, which measures Treasury market volatility, has been rising from earlier lows this year, reminiscent of the ups and downs seen in 2024. This situation hints that strategies aimed at profiting from larger interest rate movements could become more appealing.Impact on Housing Market
This slight rate drop won’t immediately solve the housing market issues, as high home prices remain a significant obstacle. Data from the National Association of Realtors for June 2025 shows that existing home sales are still down 4% compared to a year ago. Traders in derivatives should pay close attention to homebuilder ETFs like XHB, as their stock prices are very responsive to changes in interest rate expectations. Create your live VT Markets account and start trading now.Continuing jobless claims in the United States reach 1.946 million, falling short of projections
In July, US continuing jobless claims reached 1.946 million, just below the expected 1.96 million. This number gives insight into the job market and can impact market trends.
The EUR/USD currency pair moved towards 1.1450 as the US dollar lost some of its strength. Positive job data from the US played a role in this shift.
GBP/USD Gains and Losses
The GBP/USD pair has been experiencing ups and downs, recently climbing back above 1.3200 after a short drop. This back-and-forth movement was driven by recent US economic data that affected the US dollar’s value. Gold prices faced some selling pressure while trying to rise above $3,300 per troy ounce. Falling US yields and slight losses in the dollar influenced gold’s performance. Bitcoin has been hovering between $116,000 and $120,000 for over two weeks. Increased buying from major investors and clearer regulations are affecting its current market sentiment. US continuing jobless claims are just under the 2 million mark, slightly higher than the 1.7 to 1.8 million range that was common in 2024. This ongoing rise suggests a slowing job market, which may affect the Federal Reserve’s future decisions. We should keep an eye on Fed Funds futures for signs of traders expecting a rate pause in September.EUR/USD Market Movement
The EUR/USD is heading towards 1.1450, a notable increase from the 1.08 level seen last year. This rise shows weakness in the dollar, particularly as recent data reveals that Eurozone core inflation remains steady at 3.5%. This situation keeps the European Central Bank on a more aggressive monetary policy path. It may be wise to buy call options on the EUR/USD, aiming for a rise above the 1.1500 resistance level. Similarly, the GBP/USD is trading above 1.3200, benefiting from the dollar’s decline. Reports from the Bank of England indicate that UK inflation remains persistent, making interest rate cuts unlikely before 2026. This difference in policy from the US supports strategies like bull call spreads for potential gains. Gold is facing sellers near the $3,300 level, a significant increase from the $2,350 range of mid-2024. Its strength is linked to US 10-year Treasury yields, which have recently fallen below 3.8%. This makes non-yielding assets like gold more attractive. We see an opportunity to sell out-of-the-money put options on gold, collecting premium while betting prices will stay supported above $3,250. Bitcoin’s tight range between $116,000 and $120,000 has led to low volatility. On-chain data shows that wallets holding over 100 BTC have been steadily increasing since the “SEC Digital Asset Framework” was introduced earlier this year. This calm accumulation phase often leads to a significant price movement, making a long straddle an interesting strategy for profiting from an upcoming breakout in either direction. Create your live VT Markets account and start trading now.Initial jobless claims in the United States reach 218K, missing predictions
In the United States, initial jobless claims for the week of July 25 dropped to 218,000, lower than the expected 224,000. This figure gives us a glimpse into the current employment situation in the country.
EUR/USD has gained strength again, nearing the 1.1450 level. This shift follows decisions made by the Federal Reserve and positive US employment data.
Currency Market Changes
The GBP/USD pair has shown some ups and downs, staying just above 1.3200. This instability comes as the US Dollar faces pressure from recent American data. Gold prices are struggling to rise over $3,300 per troy ounce, facing downward pressure from falling US yields and some weakness in the Dollar. Bitcoin has stayed stable, trading between $116,000 and $120,000 for the last 16 days. Increased buying activity from large investors and a low balance in over-the-counter markets have supported this steady performance. The Federal Open Market Committee (FOMC) is divided on how to respond to tariff risks. The discussion focuses on potential effects on the job market and inflation.Currency Trading Opportunities
The US labor market is strong, as shown by the drop in initial jobless claims to 218,000. However, the FOMC’s differing opinions on tariff risks create uncertainty. This clash between solid data and policy doubts suggests we should brace for market fluctuations. For currency traders, the dollar’s weakness opens up opportunities, especially in pairs like EUR/USD, currently testing the 1.1450 resistance level. Considering the instability in GBP/USD above 1.3200, using options to bet on price swings, known as a straddle, may be a better strategy than choosing one direction. This kind of volatility around Fed policy reminds us of significant currency swings from 2022 and 2023. Gold’s struggle to break through $3,300, despite lower US yields, is a warning sign. This indicates the recent rally might be losing steam. Traders with long positions should think about taking profits or hedging with put options. Historically, when speculative long positions in gold reach high levels, a price correction often follows. Bitcoin’s steady trading between $116,000 and $120,000 is promising, indicating strong accumulation by big investors. With low implied volatility during this 16-day stretch, buying call options could be a smart move for potential upside breakouts. This pattern resembles what we observed in late 2020 before a significant price surge, with the effects of the upcoming 2024 halving still offering support. In the end, the market is looking for a clear signal from the Federal Open Market Committee. Until we receive more consistent guidance on how they will handle inflation and trade risks, it’s wise to adopt strategies that limit potential losses. We should keep an eye on future speeches from Fed officials for hints about their next steps. Create your live VT Markets account and start trading now.European indices show mixed results: France and Italy decline while Spain records a slight gain; US stocks are up.
European indices had mixed performances. The CAC in France and the FTSE MIB in Italy both fell over 1.1%. However, Spain’s Ibex saw a slight increase of 0.11%.
The closing numbers for major indices were as follows: German DAX down 0.73%, France’s CAC down 1.14%, the UK’s FTSE 100 down 0.05%, and Italy’s FTSE MIB down 1.56%.
European Debt Market
In the European debt market, yields mostly decreased, but Italy’s rates stayed the same. Spain’s 10-year yield was 3.271%, Germany’s was 2.693%, France’s was 3.347%, and the UK’s was 4.572%. In the US, the stock market showed overall gains. The Dow slightly dipped by 0.01%, while the S&P increased by 0.47%, NASDAQ rose by 0.87%, and the Russell 2000 dropped by 0.30%. Microsoft shares rose 4.4%, and Meta shares surged 11.85%. Apple and Amazon were set to report after the market closed, with Apple slightly down and Amazon up by 1.74%. US interest rates declined for various durations, with the 10-year yield at 4.340%. Commodities showed mixed results: copper fell, crude oil decreased, and gold went up by 0.60%. Bitcoin also increased, trading at $118,298. Initial job claims remained low, and Core PCE slightly exceeded expectations at 2.8%.European Markets Weakness
European markets, especially in France and Italy, are showing notable weakness. This presents an opportunity to hedge against further declines. The drop in the CAC and FTSE MIB, both over 1%, suggests traders might want to buy put options on European index ETFs in the coming weeks. Concerns about the French budget deficit and Italian political instability are affecting investor sentiment, making this strategy a way to protect portfolios. In the US, the tech-heavy NASDAQ is rising while the Russell 2000 small-caps are falling, pointing to a possible pairs trading strategy. We should consider buying call options on the NASDAQ 100 and put options on the Russell 2000. This divergence is similar to the pattern observed in late 2023 and early 2024, where major tech stocks outperformed the overall market during economic uncertainty. Tonight’s earnings from Apple and Amazon are expected to create significant volatility, especially following major movements from Microsoft and Meta. Given this uncertainty, we could use straddles or strangles on these stocks to benefit from large price swings in either direction. Historically, stocks like these have seen average post-earnings moves over 5%, making the cost of options a worthwhile investment. The significant drop in copper due to tariff news suggests a risk-averse sentiment in global industrials and materials. This echoes the trade war period of 2018-2019, which pressured cyclical sectors. We should think about buying puts on mining and industrial ETFs to protect against potential trade disputes. Despite the slightly higher-than-expected inflation with Core PCE at 2.8%, US bond yields are falling, indicating that the market is more concerned about a slowdown in growth than the Fed. This uncertainty opens up opportunities to trade options on Treasury bond ETFs like the TLT, betting on continued rate volatility. The last Federal Reserve meeting reflected a divided committee on future rates, supporting potential swings in the bond market. Gold is rising while oil is falling, suggesting a move towards safety and away from growth-dependent assets. With the VIX, a measure of market fear, still low at around 14, buying VIX call options seems like an inexpensive way to protect against market shocks. This approach would guard against various risks we see across different markets. Create your live VT Markets account and start trading now.Atlanta Fed estimates 2.3% growth for Q3, down from 3.0% in Q2
The Atlanta Fed has announced its first growth estimate for the third-quarter GDP at 2.3%. This comes after the second-quarter GDP was reported at 3.0%, which was slightly higher than the Atlanta Fed’s earlier estimate of 2.9%.
Their model, which is known for its accuracy, initially predicted that market economists would forecast a growth of 2.4%. Early estimates can vary quite a bit, but these fluctuations should decrease as more data becomes available.
