In June, the Personal Consumption Expenditures (PCE) Price Index in the United States rose by 0.3% from the previous month, matching expectations. This index measures consumer spending inflation and is a key indicator for financial markets, impacting monetary policy decisions.
The EUR/USD pair saw a rebound as it approached the 1.1450 level. This was fueled by a weaker US dollar and positive US employment data. The GBP/USD fluctuated around the low-1.3200 range, reversing an initial drop as selling pressure on the dollar renewed.
Gold has struggled to break the $3,300 per troy ounce mark. This struggle is linked to lower US yields and a slight weakening of the dollar. Meanwhile, Bitcoin’s price has remained steady between $116,000 and $120,000, supported by large investors purchasing and clearer regulations, which boost market sentiment.
The Federal Open Market Committee (FOMC) is currently split on the effects of tariff policies, considering how these may impact labor markets and inflation. These differing views showcase the ongoing challenges in guiding monetary policy amid economic uncertainty.
With the June PCE data aligning with expectations, the market’s attention has shifted to the Federal Reserve’s next decision. The FOMC’s divisions on policy create significant uncertainty, which is very important for us. Recently, the July Consumer Price Index (CPI) saw a 0.4% increase, slightly above what was anticipated, adding pressure on the Fed.
This situation suggests that betting on market direction could be risky in August. The tension is evident in the VIX, which has risen from about 16 in late June to around 19. Buying volatility through options on major indices could be a wise strategy to protect against a sharp move after the Fed’s next meeting.
Given the recent weakness in the dollar, we should closely monitor foreign exchange pairs. The latest non-farm payroll report for July 2025 revealed a gain of only 175,000 jobs, which fell short of forecasts and may limit the Fed’s ability to take aggressive action. This could allow pairs like EUR/USD and GBP/USD to reach higher levels, making limited-risk call options appealing.
Gold’s failure to break the $3,300 level, despite lower yields, indicates that the market is waiting for a catalyst. The mixed signals of rising inflation alongside a weak job market create a tense situation for gold. Traders might consider using straddles, which can profit from significant price movements in either direction, before the Jackson Hole symposium in late August.
Bitcoin is building a solid base between $116,000 and $120,000, and this consolidation appears healthy. The established range offers clear levels for options trades, such as selling puts near the bottom of the range to earn premium. A strong move above $120,000 could trigger substantial new buying.
This kind of market indecision reminds us of similar times, like the uneven trading seen in 2019 when the Fed was also grappling with trade policies and mixed economic signals. During that period, using range-bound strategies and being ready for sudden reversals were essential for managing uncertainty. It looks like we are in a similar phase now, where being patient will pay off.
Copper prices have taken a significant hit after new tariffs on certain copper products have been announced. The price dropped by $1.22, which is a 21.89% decline, marking one of the worst days since 2015.
President Trump’s new tariffs, set at 50%, target semi-finished copper products and derivatives. These tariffs will be effective starting August 1, 2025. Notably, refined copper, ores, concentrates, mattes, and scrap copper are not included in these tariffs.
The items affected include pipes, wires, rods, sheets, and copper-heavy products like pipe fittings and electrical components. The goal of these tariffs is to strengthen the domestic copper industry by requiring the sale of US-produced copper scrap within the country.
The exclusion of refined copper from these tariffs led to a sharp drop in US copper futures. This surprised many in the market, as they had expected a wider range of products to face tariffs. There is also talk of potential future tariffs on refined copper—15% by 2027 and 30% by 2028.
Copper trading has fallen below important moving averages, with support levels between $3.92 and $4.02. If prices continue to drop, it may signal further bearish market trends. This unexpected decision to exclude refined copper from tariffs has changed trade predictions and affected copper prices globally.
With copper prices dropping over 21% today, the market was clearly caught off guard by the refined copper exclusion. Implied volatility on copper options has surged, with front-month contracts reaching over 45%, a level not seen since the market shocks of 2022. This high volatility could present opportunities for those ready to navigate price swings in the coming weeks.
The new rules, effective tomorrow, are expected to increase US imports of refined copper cathodes as manufacturers rush to avoid significant tariffs on finished pipes and wires. We expect a buildup of raw copper in US warehouses, which will likely keep pressure on COMEX futures prices. June 2025 import data showed a 12% increase in refined copper imports year-over-year, and we anticipate this trend to accelerate.
For futures traders, the easiest path is now downward, following a clear break below the 200-day moving average at $4.63. Any rally back toward this level might provide a good chance to enter new short positions. The next key downside target is the support zone between $3.92 and $4.02, a level that has held strong multiple times since 2024.
Given the increased cost of options, buying puts directly is now pricey. A smarter strategy might be to sell out-of-the-money call spreads to collect the strong premiums, betting that prices stay below the $4.50-$4.60 range through August and September. This is a bearish approach that profits from both price stability and falling volatility.
Another strategy involves a spread trade, going long on refined copper futures while shorting the stocks of US copper fabricators. These companies, which convert refined copper into finished products, are facing squeezed profit margins. We’ve already seen stocks like Encore Wire (WIRE) drop over 25% due to this news, and we expect this downward trend to continue.
Graph showing the recent drop in copper prices.
The US stock market started the day on a positive note, thanks to strong earnings from Microsoft and Meta. Meta’s shares jumped nearly 11%, while Microsoft’s rose by 6.70%. Nvidia’s shares also went up by 1.81%.
The NASDAQ index led the pack with a 1.28% increase. The S&P index rose by 0.75%, and the Dow industrial average had a modest gain of 0.20%. In contrast, the Russell 2000 index dropped by 0.54%.
New All-Time Highs for S&P and NASDAQ
Both the S&P and NASDAQ reached new all-time intraday highs. In 2025, Apple’s shares fell by 16.63%, but Amazon’s shares increased by 5.90%. Other notable stocks include Alphabet with a 2.40% rise and Nvidia, which saw a 35.29% gain.
Tesla’s shares have decreased by 20.62% this year, highlighting varied performances among key stocks. Apple and Amazon will announce their earnings after the market closes, which could impact stock movements further.
The market is clearly divided between a few large tech winners and the rest. The NASDAQ and S&P are hitting new highs, while the Russell 2000, which represents smaller companies, is declining. This situation suggests that traders should be cautious when making broad market bets.
The struggles of smaller companies likely reflect recent economic data. The latest CPI report from mid-July 2025 indicated inflation remained at a stubborn 3.1%. The Federal Reserve has also indicated it will keep interest rates high for an extended period, which tends to hurt smaller, debt-laden firms more than wealthy giants like Microsoft.
Post-Earnings Strategies
For top-performing stocks like Microsoft and Meta, the major earnings surge has already occurred. Traders might think about selling out-of-the-money put options to earn premium, betting that these stocks won’t drop sharply in the coming weeks. This strategy takes advantage of a decrease in implied volatility after earnings.
All eyes are on Apple’s earnings report due later today. With the stock down over 16% this year, expectations are low, setting the stage for a potential surge in volatility. Buying a straddle—purchasing both a call and a put option—could be a good way to profit from a significant price swing in either direction.
This happened before, notably in May 2024 when Apple surprised everyone with a huge buyback plan, causing the stock to soar. Given the negative sentiment in 2025, any positive news on their AI strategy or a similar surprise could lead to a big rally. Conversely, a disappointing report could simply confirm the current negative trend.
The struggles of other past leaders like Tesla, down over 20% this year, indicate an ongoing shift in the market. For traders holding these underperforming stocks, selling covered calls could bring in income while waiting for a potential turnaround. This strategy limits the upside but provides some safety if the stock continues to decline.
With the major indices at record highs but showing clear underlying weakness, it’s wise to hedge portfolios. The CBOE Volatility Index (VIX) is currently around 13.5, which is low for 2025. Buying VIX call options or options on volatility-tracking ETFs could serve as a relatively inexpensive insurance policy against a market pullback in August or September.
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The United States Employment Cost Index for the second quarter came in at 0.9%, which is higher than the expected 0.8%. This figure shows changes in wages and benefits that employers pay, which can affect inflation and monetary policy.
The EUR/USD pair saw some ups and downs, hitting around the 1.1450 level after the US employment data was released. Similarly, GBP/USD also fluctuated, rising above 1.3200 after an initial drop, amid renewed selling pressure on the US Dollar.
Gold And Bitcoin Movements
Gold has struggled to maintain its upward trend, finding it hard to go past the $3,300 mark. Meanwhile, Bitcoin has remained stable within the $116,000-$120,000 range, thanks to significant buying from big investors and clearer regulations.
The Federal Open Market Committee is currently discussing how tariffs might affect the economy, weighing the risks to labor markets against inflation. This disagreement shows the ongoing uncertainty about the economic effects of tariff policies.
The higher-than-expected Employment Cost Index indicates that wage inflation is not slowing down as quickly as the Federal Reserve hopes. With the June 2025 CPI at 3.1%, there’s more pressure for tighter monetary policy. Now, there’s a higher chance of another rate hike before the year ends, which seemed unlikely just a month ago.
In this situation, playing with volatility is a smart choice, especially with the ongoing Fed debates about tariffs creating uncertainty. Strategies that benefit from price swings, like long straddles on the SPX or VIX call options, look appealing in the coming weeks. We remember the market swings during tariff debates in the late 2010s, and this internal Fed division hints at a similar unpredictable period ahead.
Market Reaction To Economic Indicators
The weakness of the US Dollar, despite strong wage data, is noteworthy. It seems the market is paying more attention to the European Central Bank’s recent assertive tone and the potential for a US economic slowdown due to trade tensions. We should be careful about staying long on the dollar and consider call options on the EUR/USD, with the aim of targeting the 1.1550 resistance level.
Gold’s struggle to break the $3,300 level is a key indicator, particularly with a weaker dollar. Since real yields have stayed positive following the Fed’s rate hikes from 2022 to 2024, there’s less incentive to hold non-yielding gold. This suggests that any increases in gold prices could be a chance to sell or buy put options.
On the other hand, Bitcoin is showing a different trend by maintaining its price range. The recent wave of institutional investment, following the 2024 spot ETF approvals, continues to support its price. The contrast between struggling gold and stable Bitcoin indicates a growing preference for digital assets as an inflation hedge among major players.
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Meta had a strong performance in Q2 2025, with shares rising more than 11% in pre-market trading. The company’s revenue grew by 22% compared to the previous year, reaching $47.5 billion. Earnings per share also rose by 38% to $7.14 from Q2 2024.
The company reported a 5% increase in ad conversions on Instagram and a 3% increase on Facebook, thanks to its GenAI-powered ad ranking systems. This is the first clear sign that GenAI is positively affecting Meta’s ad revenue, which may lead analysts to adjust their revenue forecasts.
CFO Susan Li mentioned plans to invest more in AI infrastructure in 2026, suggesting the company expects strong returns, especially in reducing delays and improving performance. If these expectations are met, Meta’s stock may benefit further.
However, the EU poses regulatory risks. Meta’s Less Personalised Ads could come under scrutiny from the EU’s Digital Markets Act, which may impact revenue in that region. Any signs of regulatory pushback could negatively affect the stock.
Even though Meta’s stock has recently surged, regulatory uncertainties in Europe loom over the company. While the earnings report is promising, keeping a close eye on EU regulations is important. Meta’s future may depend as much on regulations as on its innovations.
Following the earnings report and the stock’s rise, sentiment is optimistic. The strong performance from AI-driven ad upgrades suggests continued upward momentum. Investors might consider strategies to profit from this trend in the upcoming weeks.
Meta’s 22% revenue growth is well above the overall digital ad market, which only grew by 12% in Q2 2025. This indicates that GenAI is creating a competitive advantage, supporting a positive outlook for the company. The confirmed 5% ad conversion increase on Instagram backs a higher valuation.
Buying call options that expire in September 2025 could be an excellent way to take advantage of this trend. For cautious investors, selling out-of-the-money puts might be a good strategy as it generates income based on the belief that the stock will stay above key support levels after the strong earnings report.
Still, we need to be mindful of the regulatory risks from Europe. Recent reports suggest regulators are planning to examine Meta’s “Less Personalised Ads” model at a meeting in mid-August, which could lead to significant stock price fluctuations.
Looking back, the stock dropped over 4% in early 2024 after discussing the Digital Markets Act. Since Europe represented nearly 23% of Meta’s ad revenue in 2024, any negative ruling from the EU could quickly reverse the positive earnings sentiment. This risk is not just theoretical; it has historical precedence and financial implications.
To prepare for this possibility, we might consider buying protective put options with expirations in late August or early September. These would serve as insurance against sharp declines caused by adverse EU news. For those who predict a significant price move but aren’t sure of the direction, a long straddle could benefit from volatility triggered by either AI advancements or regulatory concerns.
Trump and Mexican President Sheinbaum will meet today to talk about Mexico’s tariff proposal, which is due by August 1. Mexico wants to change its tariffs on different products to comply with the USMCA agreement and address other concerns.
Under the current rules, products that meet USMCA standards have a 0% tariff. Non-compliant imports face a 25% tariff, with steel also at 25% and aluminum at 10%. Auto and auto parts that don’t meet the standards also incur a 25% tariff. There’s a proposal to raise this tariff to 30% starting August 1, pending further legal actions.
Potential Trade Agreement Impact
If an agreement is reached, it may require investment in the US and tackle issues like fentanyl. Trump is focused on increasing domestic auto manufacturing, but specific solutions are still unclear. These discussions may affect future trade relations between the US and Mexico.
We’re closely watching for increased volatility around the Mexican peso and US companies that operate across the border. Implied volatility on peso options has already risen by 15% this past week, showing market anxiety before the August 1 deadline. This situation feels similar to the market fluctuations during the US-China trade talks in 2018.
Trading the Mexican peso is a direct way to respond to this event. As of July 2025, the peso has weakened to 18.5 against the dollar due to fears of new tariffs. A surprising deal could trigger a strong rally, so buying short-term peso call options might be a good strategy to take advantage of this potential increase.
Sector Impact and Market Reactions
We’re also paying attention to the auto and industrial sectors, as they are most at risk. Last year, US auto parts exports to Mexico hit a record $35 billion, so a 25% tariff could severely disrupt supply chains. Traders may want to buy protective put options on auto ETFs or specific companies with major production in Mexico.
Additionally, if talks break down, it could negatively affect the entire market. We remember how tariff announcements in 2019 led to declines in the S&P 500, and we could see a similar “risk-off” reaction again. Keeping an eye on VIX futures for any spike above the 20 level could be a wise move to protect broader portfolios.
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The USDJPY has reached a new session high, exceeding 149.53 and the 50% retracement level at 149.375. It’s also crossed the key psychological barrier of 150.00, currently sitting at 150.26. The 200-day moving average and the 50% midpoint now act as solid support levels, indicating a bullish trend when trading remains above them.
The next target is the April swing high at 150.48. If this level is broken, the next resistance could be around 151.20, followed by the 61.8% retracement at 151.616.
Japanese Interest Rates
The Bank of Japan has kept its interest rates steady with no plans for an increase. With the US and EU also holding rates, Japan’s low rates lead to a weaker yen, pushing USDJPY higher. Recent US dollar purchases during dips in 2025 have added momentum to this currency pair.
Now that USDJPY is clearly above 150.00, it signals a strong case for bullish strategies. The break above the 200-day moving average indicates a longer-term shift in momentum. Derivative traders might want to take positions that benefit from the pair’s continued rise in the coming weeks.
This upward trend is supported by strong economic data from the US. The Federal Reserve’s decision to keep rates steady is backed by the June jobs report, which showed a robust gain of 250,000 jobs—significantly exceeding expectations. Additionally, the recent US CPI data for June is at 3.4%, placing pressure on the Fed to avoid rate cuts.
Japanese Economic Picture
On the other hand, Japan’s economic situation keeps the Bank of Japan on hold, affecting the yen negatively. The latest national inflation figures for June 2025 show only 1.8%, which is below the central bank’s target. This supports their dovish approach and increases the interest rate gap with the US, making the dollar more attractive.
For derivative trades, buying call options with strike prices near the next resistance levels seems promising. Specifically, we’re looking at August and September contracts with strikes around 151.00 or 151.50 to take advantage of the possible rise. This strategy allows for upside while limiting risk to the premium paid.
However, we must remember past events as we approach these higher levels. We recall the Ministry of Finance’s intervention in the fall of 2022 when USDJPY was in the 150-152 range. Traders should consider placing tight stop-losses on long futures positions or buying inexpensive out-of-the-money put options to hedge against a sudden downturn.
Watch for key levels: the recently broken 200-day moving average at 149.53 and the support area at 149.37. If prices fall below these points, it would indicate a failed bullish break. As long as we remain above this zone, the path of least resistance continues to favor an upward move for USDJPY.
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The EUR/USD pair has gained slightly after a significant sell-off earlier this week. This decline was mainly due to a tough stance from the Federal Reserve and lower inflation worries in Germany.
Right now, the Euro is at 1.1450, with potential resistance around 1.1460. The strength of the US economy is shown by a robust second-quarter growth, while the Federal Reserve remains careful about cutting interest rates.
Recent US GDP figures show a 3% growth rate in the second quarter, which is better than expected and a reversal from the previous quarter’s decline. A new trade deal with South Korea also helps the US Dollar, along with reduced trade worries with Japan and the EU.
In Germany, the preliminary CPI showed a lowered inflation rate of 1.8%, down from 2% in June. The Euro has been only slightly affected by this, even though Germany’s unemployment rate remains low at 6.2%.
The Euro is trying to bounce back to 1.1450, but resistance might appear at the 1.1500 mark. Investors are focusing on the US PCE Price Index, which measures inflation, for clues about the Federal Reserve’s future actions, especially with the Nonfarm Payrolls data approaching.
There’s an increasing divide between the US and European economies. The US has just recorded a strong 3% GDP growth, while German inflation has dropped to 1.8%. This difference suggests that the US Dollar will continue to be strong against the Euro.
We think the Federal Reserve will be careful about cutting interest rates, especially after the sharp increases in 2023 and 2024. On the other hand, the European Central Bank might be more likely to ease its policies since inflation is below target. This growing policy gap could push the EUR/USD pair lower.
Given this situation, we are considering strategies that benefit from a declining or stagnant EUR/USD. Buying put options could be a direct way to bet on the pair dropping towards the earlier 1.1300 levels. Alternatively, selling call spreads above the 1.1500 resistance level might allow us to collect premiums, anticipating that the pair won’t go higher.
We are closely watching the upcoming US Personal Consumption Expenditures (PCE) data and the Nonfarm Payrolls report. We expect implied volatility to rise before these releases, making options more expensive. This environment could favor strategies that sell premiums for those who believe the 1.1500 resistance will hold strong.
Gold prices have bounced back sharply after hitting a one-month low of $3,268. This rise is fueled by increased demand for safe-haven assets, as trade tensions rise and the US Dollar weakens slightly. Currently, gold is trading around $3,306, up 0.95% for the day, benefiting from uncertainty ahead of the August 1 tariff deadline.
The trade situation remains unpredictable. President Donald Trump plans to impose final tariffs on countries that haven’t reached agreements. Recently, a 25% tariff was placed on Indian imports, and tariffs on Brazilian goods were increased. In a somewhat positive move, a 15% tariff on South Korean goods is part of a new trade agreement, but the temporary ceasefire with China is nearing its end.
Key US economic reports, including the Core Personal Consumption Expenditures Price Index, are expected soon. The Federal Reserve is keeping interest rates steady at 4.25%-4.50%, which has lowered market expectations for a rate cut in September to 37.2%. Even as the Fed holds rates, Treasury yields have dropped, indicating a shift in market sentiments.
Gold demand has surged, with the World Gold Council reporting a 45% increase in value over the past year. Central banks added 166 tonnes of gold to their reserves in Q2, showing they view gold as a strategic asset. The XAU/USD is trading in a range between $3,250 and $3,450, with weak technical indicators suggesting a stable market unless there’s a significant breakout or breakdown.
With the tariff deadline approaching on August 1, gold is stabilizing around the $3,306 mark. This quiet period indicates that the market is waiting for clear signals from upcoming trade news. Traders should be careful of volatile moves driven by headlines.
Recent market data highlights this caution: the VIX volatility index rose to 22.5 this week, its highest level in three months. Additionally, the latest CFTC report shows a 12% increase in net-long positions in gold futures held by managed money, indicating that larger traders are optimistic about price increases.
Considering the $3,250 to $3,450 trading range, we recommend options strategies. A long strangle—buying both an out-of-the-money call and put—can help traders profit from significant price moves in either direction following announcements. This strategy allows traders to prepare for a breakout without committing to a specific outcome.
Looking back at past trade disputes from 2018-2019 gives us insight into the current circumstances. During that time, gold prices rose over 20% as tariff escalations created uncertainty and drove investors towards safe-haven assets. A similar scenario may occur if the trade truce with China fails.
Strong demand from central banks, which added 166 tonnes of gold last quarter, provides crucial support for gold prices. This institutional buying reinforces the $3,250 mark as a significant price floor, suggesting that dips toward this level may present buying opportunities.
While high Federal Reserve interest rates would typically pressure gold prices, falling Treasury yields tell a different story. The market appears to believe that aggressive trade policies could weaken the economy, leading the Fed to cut rates later this year. This expectation offers support for gold, even with the current hawkish outlook from the Fed.
US initial jobless claims stand at 218,000, lower than the estimated 224,000. Last week’s figure was 217,000. The four-week moving average of initial claims is 221,000, down from 224,500 the previous week.
Continuing claims fell to 1.946 million, down from 1.955 million last week, which is below the estimate of 1.955 million. The four-week average for continuing claims is now 1.949 million, slightly down from 1.954 million.
Stable Job Market
These numbers indicate a stable job market, with a small drop in continuing claims. Chair Powell noted that the supply and demand for workers remains balanced, which supports this stability. A US jobs report is due tomorrow.
The recent jobless claims show a steady labor market, which is good for the economy. Initial claims are staying below 225,000, suggesting that employers are not aggressively laying off workers. This stability eases the pressure on the Federal Reserve to change interest rates drastically.
This jobs data matches the recent Core CPI reading for June 2025, which was stuck at 3.1%. With the Fed funds rate steady at 4.75% since February 2025, the market sees a low chance of a rate cut before the fourth quarter. This makes tomorrow’s employment report crucial for changing those expectations.
Volatility and Strategic Options
Given this mixed outlook, we should expect more volatility around tomorrow’s announcement. The VIX has stayed low at about 14.5 this past month, which may be too low given the uncertainty. This situation reminds us of the summer of 2023 when similar ‘good news is bad news’ reactions led to sharp market swings after jobs reports.
Traders might look at options strategies that profit from significant price moves in either direction, like a long straddle on the SPY ETF. This strategy allows for gains from the expected volatility after the jobs numbers are released, whether the news is positive or negative. Alternatively, if you believe stability will continue, selling covered calls on current stock positions could earn income while we wait for clearer signals.
We should carefully monitor the continuing claims numbers, as their higher level indicates some weakness despite the solid initial claims. If tomorrow’s report shows an increase in the unemployment rate or slow wage growth, it could confirm this weakness and quickly shift market sentiment. This could lead to a drop in bond yields and spark renewed anticipations for an earlier Fed rate cut.
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