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US goods trade balance shows a larger deficit of $85.9 billion than expected.
In June, the United States reported a goods trade balance of $-85.9 billion. This was better than the expected $-98.4 billion.
The trade balance shows how much the U.S. imports versus exports. Keeping accurate records and predictions is essential for understanding the economy’s health.
Scotiabank reports that the JPY remains stable near its multi-month low against the USD.
The Japanese Yen is holding steady against the US Dollar, staying near the lower end of its recent range. Short-term spreads are stable, while long-term spreads are getting closer together, offering some support for the Yen.
The upcoming Bank of Japan meeting is in the spotlight, with many expecting a possible shift toward tighter policies. This anticipation comes after a decrease in bond market disruptions, the end of political events, and trade talks with the US.
Japan Economic Indicators
Before the central bank’s decision, Japan will announce retail sales and industrial production figures. These reports could give us a clearer view of the economy and guide future fiscal policies. It’s important to note that forward-looking statements involve risks and uncertainties. Financial information is for informational purposes only and should not be seen as investment advice. Conduct thorough research before making any trades, as there are risks involved. Currently, the Japanese Yen is trading around the 162.50 mark against the US Dollar, a historically low level. While short-term spreads are holding steady, the narrowing long-term spreads offer some foundational support against large declines. This could lead to a crucial moment ahead.Expectations for the Bank of Japan Meeting
Attention is now on the Bank of Japan’s meeting scheduled for early next month. Most market players expect a hawkish shift, indicating a potential move toward tightening policies. This has gained traction due to reduced bond market fluctuations and the conclusion of major political events in Japan. This possible policy change reminds some of the currency interventions seen in 2024 when the Yen fell below 160. Before the central bank’s decision, we will closely monitor this week’s industrial production and retail sales releases. Forecasts suggest retail sales may have risen by about 2.1% year-on-year. A stronger-than-expected result could reinforce the case for a rate increase. Considering this outlook, derivative traders should think about positions that capitalize on a strengthening Yen. Buying put options on the USD/JPY pair is a direct way to benefit from a potential drop in the exchange rate post-announcement. Implied volatility is rising ahead of the meeting, so timing entry to these positions will be crucial. Create your live VT Markets account and start trading now.Case-Shiller home prices fell by 0.3%, showing regional differences in annual changes
The Case Shiller home price index for 20 major cities fell by 0.3% in May, a bit more than the expected 0.2% drop. Over the past year, prices increased by 2.8%, which is less than last month’s increase of 3.4%.
New York saw the highest annual gain at 7.4%, followed by Chicago at 6.1% and Detroit at 4.9%. Tampa, however, dropped by 2.4%, marking its seventh straight annual decline. The 10-City Composite had a 3.4% annual increase, down from 4.1%.
Regional Performance Dynamics
In detail, the Western markets remained weak, with San Francisco experiencing a 0.6% drop. Los Angeles, San Diego, and Phoenix had only minor gains. Monthly price growth flattened out, with overall indices rising 0.4% before seasonal adjustments, but falling 0.3% after seasonal adjustments. Only four cities, including Cleveland and Tampa, saw month-over-month improvements. The slowdown in home prices is due to tight financial conditions, low transaction volumes, and local market factors—not just high mortgage rates. Affordability issues and limited inventory are keeping home prices across the nation nearly flat. Individual city performance showed mixed results for month-over-month and year-over-year data. New York and Chicago were among the top gainers, while San Francisco faced a downturn. The May Case-Shiller data shows that the housing market is losing momentum, with prices decreasing for the third month in a row on a seasonally adjusted basis. This slowdown, driven by more than just high rates, suggests that cooling will likely continue into late summer. This scenario could provide opportunities for traders targeting lower prices and increased volatility.Market Strategy Insights
Reports from late July 2025 indicate that 30-year mortgage rates remain stubbornly around 7%, making it harder for potential buyers to afford homes. This is reflected in the latest National Association of Home Builders sentiment index, which is a pessimistic 45, well below the neutral mark of 50. With low builder confidence and high borrowing costs, a rebound in transaction volumes seems unlikely in the near future. A key signal is the growing divide between regional markets, reminiscent of the early phase of the 2006 downturn. We are considering pairs trades, looking to go long on resilient markets like New York and Chicago while shorting weaker areas such as Tampa and San Francisco. This divergence indicates that a broad, one-size-fits-all approach to the housing market is becoming ineffective. Given the uncertainty, we find value in purchasing volatility through housing-related ETFs like the iShares U.S. Home Construction ETF (ITB). We anticipate rising demand for downside protection, making put options on major homebuilders like D.R. Horton (DHI) and Lennar (LEN) appealing. The goal is not to predict a crash but to position for a market that appears to be fracturing and losing strength. As we look ahead to the August and September data releases, we will closely monitor transaction volumes. Historically, a sharp decline in sales often precedes further price drops. A weakening labor market would speed up this trend, so we will keep a close eye on weekly jobless claims as a crucial indicator. Create your live VT Markets account and start trading now.The healthcare sector declines as technology, led by Nvidia, remains resilient amid volatility
Today, the stock market is showing a unique trend. Technology stocks are climbing, mainly due to strong performance in the semiconductor sector. However, the healthcare sector is struggling.
Eli Lilly shares dropped by 4.39%, which significantly hurt healthcare stocks. UnitedHealth Group also fell by 4.19%, raising concerns about health services. On the other hand, the semiconductor sector is doing well, with Broadcom up by 1.67% and Nvidia rising by 0.87%.
Automobile Industry Trends
In the automobile sector, Tesla shares fell by 1.89%, hinting at possible market hesitance or supply chain challenges. Meanwhile, AT&T stocks increased by 0.42%, showing steady confidence in telecommunications. The market’s signals are mixed. While technology advancements help some sectors, the decline in healthcare raises alarms. This shows a division in the market, with technology showing growth potential and healthcare facing caution. Investors may shift towards promising technology sectors to prepare for possible economic slowdowns. They could focus on companies like Nvidia and watch for legislative changes affecting healthcare pricing. The stability seen in telecom with AT&T suggests a chance for reliable returns amid market fluctuations.Healthcare Sector Insights
We believe the decline in the healthcare sector opens up opportunities for bearish positions in the upcoming weeks. Recent government talks about drug pricing reform, which could hurt profits, are driving this downturn. As a result, we are looking into buying put options on the XLV healthcare ETF to take advantage of potential further drops. Conversely, semiconductors remain strong, especially with Nvidia’s expected earnings mid-August. Recent industry data showed a 5% month-over-month rise in global chip sales for June 2025, confirming this positive trend. Bullish strategies, like selling put spreads on the SOXX semiconductor ETF, seem wise to earn from this upward momentum. Tesla’s stock drop appears related to broader consumer concerns, backed by recent data showing a decline in European EV registrations for the second quarter. This marks the first quarterly decline in five years, indicating increasing competition. Given its volatility, we might consider a defined-risk strategy like a bear call spread on TSLA to benefit if the price stays below recent highs. Telecommunications stocks like AT&T seem to offer a safe refuge from broader market volatility. Historically, these stocks perform well during uncertain times. We are considering selling iron condors on telecom stocks to earn premium, as they likely stay within a predictable range. Overall, the market indicates a clear shift away from defensive sectors like healthcare and towards growth areas like technology. The Volatility Index (VIX) has risen to 18, up from a low of 14 earlier this month, showing increased trader anxiety. A pairs trade—going long on tech futures while shorting a healthcare-heavy index—could effectively exploit this divergence. Create your live VT Markets account and start trading now.Scotiabank strategists say the Pound is steady and trying to stabilize against the US Dollar.
The Pound Sterling is steady against the US Dollar, even though it has faced some recent declines. Market predictions for Bank of England rate cuts have eased. A 25 basis point cut is expected by August 7, with a smaller reduction by the end of the year now down by 5 basis points.
Recent data from the CFTC indicates a change in sentiment towards the GBP. Traders have shifted from a net long position of $2.4 billion to a neutral stance. This makes the GBP seem vulnerable since it has recently fallen below key support levels from mid-July. If it can move up to 1.34, that would stabilize its outlook, while new lows around 1.33 would suggest a bearish trend.
In other markets, EUR/USD is below 1.1550, recovering after dropping to 1.1500 due to US data. GBP/USD is testing the 1.3300 support as strong demand for USD continues in anticipation of the FOMC and NFP events. Gold is struggling for gains, hovering around $3,330 per ounce, as caution prevails before the Fed’s rate decision. Meanwhile, Ethereum has reached a year-to-date high near $4,000, fueled by strong institutional interest with ETFs gaining 1.6 million ETH recently.
The Federal Reserve is facing criticism for delaying rate cuts amidst uncertainties about tariffs and the economy’s strength. However, this delay could reveal weaknesses in the job market.
The British Pound’s apparent stability may be deceiving, and it seems increasingly vulnerable ahead of the Bank of England’s meeting on August 7. With the market pricing in a 25-basis-point cut, the outlook for the currency appears to be downward. The latest Commitment of Traders report highlights this shift, showing non-commercial positions falling by over 30,000 contracts, marking this as the largest weekly decline of the year.
Given this situation, traders should consider any rallies towards the 1.3400 level as chances to take bearish positions. A clear break below the 1.3300 support level, which has been tested several times this month, would likely lead to more selling. Using put options that expire in late August could be a smart way to prepare for a potential drop while managing risk.
The main story remains the strength of the US Dollar, driven by expectations for this week’s Federal Open Market Committee meeting and Non-Farm Payrolls data. Currently, Fed funds futures show less than a 10% chance of a rate cut before November, reflecting the economic strength noted by policymakers. Historically, the dollar index has increased by an average of 1.2% in the two weeks leading up to meetings perceived as hawkish.
This creates a significant challenge for gold, which is struggling with resistance at $3,330 per ounce. The main pressure comes from rising U.S. 10-year real yields, which have climbed above 2.0% this week, increasing the cost of holding non-yielding assets like gold. We recommend avoiding large positions in gold until the central bank provides clearer direction.
In contrast, Ethereum continues to show impressive strength, reaching new year-to-date highs. The 1.6 million ETH accumulated by spot ETFs in recent weeks equates to over $6 billion in net inflows, confirming that institutional capital is driving this rally. The options market indicates this optimism, with a persistent bias towards call options over puts, as shown by the 25-delta risk reversal skew.
The Euro is stabilizing in the mid to upper 1.15 range against the Dollar after a decline.
The Euro is trying to find stability in the mid to upper 1.15 range after falling 1.3% against the US Dollar. Higher interest rates, especially the Germany-US 2Y spread, are helping support the Euro. However, a drop in risk reversals shows there is a growing need for protection against a rise in the Euro’s value.
Bullish positions have made the Euro vulnerable. The latest CFTC report shows a long position of $18.4 billion. We are keeping an eye on the upcoming July preliminary CPI report and the ECB’s inflation forecasts, which expect 2.6% for the next year and 2.4% for the next three years. These will be important indicators.
The Euro/USD is close to its 50-day moving average of 1.1570 and has maintained a bullish trend since February. The RSI is below 50, indicating bearish signs, but it is still near neutral. We expect the Euro to stay within a range of 1.1520 support and 1.1680 resistance.
While we watch the Euro stabilize in the mid-upper 1.15 range, the latest German ZEW Economic Sentiment survey shows improved investor confidence at 51.3, the highest since early 2024. This suggests some underlying faith in the economy despite the currency’s recent drop.
Given the expected range of 1.1520 support and 1.1680 resistance, selling options premium looks appealing for the coming weeks. An iron condor strategy, selling the 1.1700 call spread and the 1.1500 put spread set to expire in August, could take advantage of this consolidation. This strategy will profit if the EUR/USD stays within these strike prices before expiration.
As we await the preliminary July CPI figures, we expect increased volatility. The European Central Bank’s inflation forecasts are already above their 2% target. Any unexpected CPI data could lead to a strong market reaction. Traders might consider buying a short-dated straddle to profit from significant price movement in either direction.
We must also be cautious about the extensive bullish positions. Recent CFTC data indicates a net long of $18.4 billion. In the past, crowded trades like this can quickly unwind, as demonstrated by the Euro’s sharp drop in the third quarter of 2023. Therefore, buying out-of-the-money puts with a strike around 1.1450 could act as a cost-effective hedge or a bet on a potential long squeeze.
On the other hand, the recent decline in risk reversals shows an increasing demand for call options compared to puts. This means that despite the crowded trades, some traders are hedging against a strong upward move. We might reflect this sentiment by implementing a bull call spread, buying the 1.1600 call and selling the 1.1750 call to capture potential gains while managing our risk.
Atlanta Fed raises Q2 GDP growth forecast from 2.4% to 2.9%
The Atlanta Fed has raised its GDP growth estimate for the second quarter from 2.4% to 2.9% as of July 25. This is the final estimate for Q2, with the US GDP numbers set to be released at 8:30 AM ET the next day.
On July 29, the GDPNow model indicated a real GDP growth rate of 2.9% for Q2. Although gross private domestic investment growth fell from -11.7% to -12.7%, an increase in the net exports’ contribution to GDP growth rose from 3.31 percentage points to 4.04 percentage points.
Third Quarter Estimate
The next GDPNow update on July 31 will give the first estimate for the third quarter. A Reuters survey with 83 participants estimates the advanced GDP median at 2.4%, with predictions ranging from 0.8% to 4.5%. We observe a difference between the Atlanta Fed’s final GDPNow estimate of 2.9% and the market consensus of 2.4%. This gap creates an opportunity for volatility around tomorrow’s 8:30 AM ET data release. The wide range of 0.8% to 4.5% in the Reuters survey shows uncertainty in the market that we can take advantage of. If the official number is closer to 2.9%, it indicates a stronger economy, which could raise inflation concerns. Given that the core PCE inflation figures for June 2025 are at 3.1%, a strong GDP report may lead to higher Treasury yields. We expect the 10-year Treasury yield, currently at 4.15%, to test recent highs around 4.30%. To prepare for this, we plan to buy short-term VIX call options set to expire in August, since a sharp market reaction could see the VIX rise from its current low of 14. We are also looking at straddles on the SPDR S&P 500 ETF (SPY) to benefit from a significant price move, no matter which direction it takes. The market tends to react sharply to unexpected economic signals.Federal Reserve Rate Implications
Looking ahead, a strong GDP figure would challenge the market’s expectations of a Federal Reserve rate cut in September. Current Fed funds futures show a 65% chance of a 25-basis-point cut; this could drop below 40% quickly if the GDP number is strong. This offers a chance to prepare for a more aggressive Fed in the coming weeks. We saw a similar trend in late 2023 when strong economic data pushed back expectations for rate cuts, causing volatility in both equity and bond markets. Therefore, we are considering buying longer-term put options on interest-rate-sensitive investments, like the iShares 20+ Year Treasury Bond ETF (TLT). This could help us hedge or speculate on a “higher-for-longer” rate outlook. If the GDP figure falls at or below the 2.4% consensus, we expect a relief rally as rate-cut expectations strengthen. In that scenario, we should quickly close our short-term volatility positions to capture the initial movement. The main risk is if the GDP number matches the consensus too closely, which could result in a muted market reaction and a decline in the value of our options. Create your live VT Markets account and start trading now.JOLTS reports show June job openings at 7.437 million, falling short of estimates, with declines in various sectors
In June, there were 7.437 million job openings, just below the expected 7.500 million. This is the lowest level since April 2025. The previous month’s job openings were revised down from 7.769 million to 7.712 million, and the vacancy rate decreased from 4.6% to 4.4%.
In terms of hires, there were 5.2 million, with a rate of 3.3%, which showed little change from May. However, the arts, entertainment, and recreation sector lost 42,000 jobs.
Total Separations
Total separations were 5.1 million, with a rate of 3.2%, similar to last month. State and local government education saw a drop of 39,000 jobs, and the federal government cut 20,000 positions. Voluntary quits were 3.1 million, at a rate of 2.0%, slightly down from May’s 2.1%. There was a loss of 114,000 jobs in professional and business services, while state and local government education and the federal government decreased by 20,000 and 5,000, respectively. Layoffs and discharges remained steady at 1.6 million, with a rate of 1.0%, unchanged from May. There were 35,000 fewer jobs in arts, entertainment, and recreation, along with a decrease of 19,000 in state and local government education. Other separations stayed at 314,000, stable from May. This report indicates that the labor market is losing some momentum. Job openings fell below estimates and reached their lowest level since April. The quits rate, which reflects worker confidence, also decreased slightly. While this is not a crisis, it shows a controlled cooling that we expected.Federal Reserve and Market Response
This softening trend is what the Federal Reserve aims to see. The recent June Consumer Price Index report shows inflation cooling to an annual rate of 2.8%, and this weak job data gives the Fed a reason to ease policy. We believe this makes a case for a rate cut at the September meeting more likely. As a response, we are considering derivatives that benefit from falling interest rates. We plan to invest in Secured Overnight Financing Rate (SOFR) futures for the fourth quarter, and we expect options on long-duration bond ETFs to perform well, especially by positioning for higher prices. For the equity markets, this strengthens the idea that “bad news is good news” for now. As long as the data suggests a soft landing instead of a severe recession, we expect less market anxiety. We plan to sell volatility by writing out-of-the-money call options on the VIX. This situation is similar to late 2023 when weaker labor data was seen positively as a sign of potential Fed easing. The current report shows that the ratio of job openings to unemployed persons has fallen to 1.4, which is much healthier than the 2.0 level during the peak inflation years. As a result, fed funds futures now indicate over a 75% chance of a quarter-point rate cut by the end of September. Create your live VT Markets account and start trading now.The US dollar is expected to keep rising against the Chinese yuan, with resistance at 7.1910.
The US Dollar is expected to rise against the Chinese Yuan, but it may not reach the resistance level at 7.1910 right away. Recently, the USD hit a high of 7.1830 and closed at 7.1815, with support levels at 7.1750 and 7.1700.
In the short term, traders initially anticipated a range between 7.1530 and 7.1730, but the USD exceeded this range. Current overbought conditions suggest that breaking through the key resistance may be difficult for now.
USD Upward Momentum
Over the next one to three weeks, the USD shows signs of slowing downward momentum, allowing for possible upward movement. A significant milestone for further gains is closing above 7.1910. Staying above 7.1660 will increase chances of reaching this target. It’s crucial to do your own research before making financial decisions, as the information shared comes with risks. This article doesn’t offer personalized investment advice and highlights the risks of market investments. Given the US Dollar’s strength against the Chinese Yuan, there are opportunities for derivative traders in the upcoming weeks. The currency pair has moved beyond its expected range, suggesting ongoing momentum that may continue. We believe buying call options set to expire in late August or September is a straightforward strategy for potential gains. This positive outlook is backed by recent economic data showing a split between the two economies. The latest US non-farm payroll report from early July 2025 exceeded expectations, adding 215,000 jobs. This supports the Federal Reserve’s steady interest rate policy. In contrast, China’s Caixin Manufacturing PMI for June fell to 50.2, signaling a fragile recovery.Market Conditions and Strategic Considerations
However, the current overbought market suggests a minor pullback could happen before another upward move. The daily Relative Strength Index (RSI) is around 74, which often indicates a consolidation or slight dip. As a result, traders might look into bull call spreads to minimize initial costs and manage risk if the dollar stalls before hitting the key resistance. The critical level to monitor is 7.1910. A strong close above this level would signal the next upward move. If this happens, traders should consider adding to bullish positions, aiming for the 7.2500 level, which was last seen in late 2023. This key threshold should be closely watched by anyone looking for confirmation before increasing their investments. On the other hand, if the dollar fails to stay above the 7.1660 support level, the bullish outlook weakens. A drop below this level might push the dollar back toward 7.1500, similar to the brief decline seen in May 2025. In this situation, using protective put options can help safeguard existing long positions. The ongoing policy difference between the two central banks remains a fundamental driver. Recent comments from Federal Reserve officials indicate no imminent rate cuts, which continues to support the dollar. In contrast, the People’s Bank of China has maintained a supportive approach to strengthen its economy, putting gentle pressure on its currency. Create your live VT Markets account and start trading now.The EUR/USD pair shows weakness but has slightly recovered from one-month lows in morning trading.
The Euro has fallen for five days straight because of an unfavorable trade deal between the US and the EU. This has hurt the economy in the Eurozone. Currently, the EUR/USD pair is under pressure but has slightly recovered from its recent lows.
During the European session, the Euro continued its decline but managed a small rebound after hitting new multi-week lows. Nevertheless, selling pressure pushed the pair back down, with increasing criticism from European countries about the trade agreement adding to the strain.
