Insights 
VT 
IMF raises growth forecasts for several economies but warns of economic risks and inflation
The International Monetary Fund (IMF) has raised its global growth forecast. For 2025, the outlook is now 3.0%, up from 2.8%. The 2026 forecast has also increased to 3.1% from 3.0%. This growth is largely due to changes in tariffs rather than real economic strength.
Global inflation is expected to decrease to 4.2% in 2025 and further to 3.6% in 2026. However, there are still risks such as higher tariffs, geopolitical issues, and budget deficits.
US monthly home prices fell by 0.2% from the previous month
US home prices decreased by 0.2% in May, based on FHFA data. The prior month was revised, showing a smaller drop in new home sales from 0.4% to 0.3%.
On a yearly basis, home prices rose by 2.8%, down from 3.2% the month before. The monthly home price index slipped to 434.4 from 435.1.
Housing Market Momentum
The housing market is clearly losing momentum. The price decrease for May is significant, but the slowing annual growth rate of 2.8% is even more concerning. This indicates that high interest rates are impacting housing demand and affordability. This isn’t just a one-time report; recent data supports this trend. The June Case-Shiller home price index, released last week, showed a similar slowdown in major cities. With the latest CPI report showing core inflation at 2.5%, it strengthens the case for the Federal Reserve to shift to a more cautious approach in their next meeting. Traders should consider positions that profit from falling interest rates. December SOFR futures are appealing since the market now sees a higher chance of a rate cut by year’s end. Historically, when both housing and inflation data weaken, the central bank often makes a change. We expect a similar adjustment this time. As a result, we see continued challenges for homebuilders and related sectors. Purchasing put options on the XHB homebuilders ETF with autumn expirations could be a smart way to capitalize on this trend. The latest jobs report, showing only 5,000 new jobs in construction, backs this stance.Market Volatility and Strategy
The uncertainty about when the Fed will change policies is likely to cause more market volatility. Buying VIX call options could be a wise strategy to protect against sudden market swings in the weeks ahead. This approach allows us to benefit from the volatility as the market reacts to mixed economic signals. Looking back at 2006-2007, small monthly declines in home prices hinted at a larger downturn. While today’s situation is different, this history influences our cautious view, especially regarding consumer spending. We believe that the positive effects of housing wealth are starting to reverse. Create your live VT Markets account and start trading now.USD/CAD rises for the fourth consecutive day near 1.3755 as investors await monetary policy outcomes
The USD/CAD pair has risen to about 1.3755, marking its fourth straight day of gains. The Canadian Dollar, or Loonie, gained value because the US Dollar has strengthened after a tariff deal between the US and the EU over the weekend.
The US Dollar Index is now close to 99.00, its highest level in a month. This increase comes after the US-EU deal, which resulted in milder tariffs than expected and boosted the US Dollar.
Traders are waiting for the Federal Reserve and the Bank of Canada to announce their monetary policies on Wednesday. Both banks are expected to keep their interest rates the same.
Today’s main focus is on the US JOLTS Job Openings data for June, which is predicted to show 7.55 million job openings, down from 7.77 million in May. This information is important for understanding the job market in the US.
The Bank of Canada makes interest rate announcements up to eight times a year, which can impact foreign investment in Canada. The next announcement is set for July 30, 2025, with an expected rate of 2.75%, unchanged from before.
With the USD/CAD rate nearing 1.3755, we see continued strength in the US Dollar. This comes after a weekend agreement between the US and the EU, which prevented the most severe tariffs. The US Dollar Index has risen to around 99.00, reflecting its highest level in a month.
Both the Federal Reserve and the Bank of Canada are ready to make monetary policy announcements this Wednesday, with most expecting both to keep rates steady. However, recent data shows a difference in economic health that might favor the US Dollar. US core inflation remains above 3%, while Canada’s inflation has eased to 2.6%.
Today’s spotlight is on the US JOLTS Job Openings report. It is expected to show a slight decline in the job market, with projections of around 7.55 million openings. This still indicates a strong job market compared to before 2021. In contrast, Canada’s economy appears to be slowing, with lower growth reported for Q2.
Given this positive momentum and strong economic data, we think traders should consider betting on further gains in this currency pair. Buying August or September call options with a strike price around 1.3800 could be a smart strategy to take advantage of potential upward movement. This method allows traders to benefit from increases while capping their maximum risk.
The main risk lies in any surprises from the central banks during their meetings this week. A surprising change in tone from the Bank of Canada or an unexpected message from the Federal Reserve could quickly shift the current trend. Historically, the 1.3800-1.3850 range has been strong resistance for this pair over the last two years.
If the rate moves decisively above this historical resistance following the policy announcements, it could spark new buying activity. Such a breakout might lead the exchange rate toward the 1.3900 level in the coming weeks. We will pay close attention to the central banks’ messages for any shifts in their tone.
Commerzbank’s Thu Lan Nguyen explains how a trade dispute resolution has caused gold prices to decline.
Gold prices have fallen after a preliminary trade agreement between the European Union and the United States, easing market concerns. This decline, over $100 from last week’s high of nearly $3,440 per ounce, was further impacted by a stronger U.S. Dollar.
The U.S. reached a deal with the EU, Japan, and China to avoid worsening economic tensions. Although the U.S. started the tariff dispute, it could bear the brunt of any higher tariffs.
Concerns about failed U.S.-EU discussions are easing, but tariff-related uncertainties linger. These uncertainties might affect the U.S. economy and inflation, especially with the Federal Reserve’s upcoming decisions.
If the Federal Reserve hints at a possible rate cut during its meeting, gold prices may rise despite ongoing inflation. It’s important to note that forward-looking predictions involve risks, so thorough research is recommended before investing.
The author and source don’t take responsibility for investment decisions. Their positions in stocks or business partnerships mentioned haven’t influenced this article. The content is for informational use only and isn’t personalized investment advice.
Gold prices are retreating after a preliminary trade deal between the EU and the U.S. lowered market tensions. The drop from last week’s high close to $3,440 per ounce was worsened by a stronger U.S. Dollar. This price movement opens new opportunities for traders using derivatives.
With decreased geopolitical risks, the implied volatility of gold options has dropped, making these contracts cheaper. The CBOE Gold Volatility Index (GVZ) fell to 15.8 from 22.5 last week, indicating a calmer market. This situation is becoming more favorable for buying call options, anticipating a rebound.
A major reason for gold’s decline is the stronger dollar, with the U.S. Dollar Index (DXY) reaching 107.5, its highest level since late 2024. Traders might consider using options on currency futures to guard against further dollar strength, which often pressures commodity prices. If this trend continues, bearish strategies, like purchasing puts on the SPDR Gold Shares (GLD) ETF, may also be viable.
Attention now turns to the Federal Open Market Committee meeting on August 12, 2025. Market predictions suggest a rate cut, but the latest Consumer Price Index report showed core inflation holding at 3.1%. This divergence creates significant risk surrounding the event, making it a suitable opportunity for derivative strategies, like a long straddle, which could profit from a big price swing after the announcement.
If the central bank signals an imminent rate cut despite inflation, it could cause a sharp rally in gold. We saw a similar situation in late 2018 when a policy shift led to a multi-year increase in precious metals. For those expecting this outcome, buying long-dated call options on gold futures could offer a highly leveraged way to benefit from potential gains.
In the weeks before the Fed’s decision, we expect a period of consolidation and uncertainty. With volatility still high, selling premium through strategies like iron condors or covered calls on gold-related stocks may be an effective income-generating tactic. This strategy allows us to benefit from time decay while waiting for clearer market direction.
Lutnick says Trump skillfully negotiated the EU deal, allowing access to a large market.
The US has secured a trade agreement with the EU, committing the EU to purchase $750 million in energy at a 15% tariff. This gives the US access to the $20 trillion European market, where the EU buys $235 billion from America each year. The EU has two options: move production back to Europe to avoid tariffs or continue paying them.
Key areas of focus are the automotive and pharmaceutical industries. Companies wanting to sell in the US must manufacture there, and President Trump is set to launch a new initiative requiring pharmaceutical firms to produce domestically. The EU has agreed to a 15% tariff on select products.
Negotiation Updates
Negotiations continue on various subjects, including digital services and tariffs on steel and aluminum. Trump believes natural resources shouldn’t be taxed and wants open markets with other nations. He is reviewing existing deals to set new terms. China remains a unique challenge, with negotiations expected to conclude by Friday. Looking at today’s market, as of July 29, 2025, our views on the US-EU trade deal have shifted. The focus on aggressive tariffs is no longer at the forefront of trade issues between the US and EU. The previous emphasis on a 15% auto tariff is now in the past. Currently, we are focused on the EU’s Carbon Border Adjustment Mechanism (CBAM), which could affect US exports. In 2024, US goods exports to the EU surpassed $380 billion, highlighting the importance of our ongoing regulatory discussions.Energy Market Insights
The energy market has evolved significantly. Europe is now the leading destination for US liquified natural gas (LNG), absorbing nearly two-thirds of US exports in the first half of this year—not due to tariffs but necessity. We expect market reactions to depend more on European gas storage and winter forecasts rather than trade policy. Concerns about onshoring pharmaceutical manufacturing have shifted to supply chain resilience and domestic drug pricing laws, which now influence volatility in the healthcare sector. Our strategy is to respond to legislative news from Congress, not threats against European pharmaceutical companies. Digital services taxes, once contentious, have been largely replaced by the OECD’s global minimum tax framework. As this framework is being implemented across much of Europe, the threat of individual country tariffs has decreased. Our attention for big tech derivatives is now on how this new global tax rate affects earnings. Create your live VT Markets account and start trading now.Analysts predict further weakening of the NZD against the USD, potentially falling below 0.5940.
The New Zealand Dollar (NZD) might drop further against the US Dollar (USD), but it’s unclear if it will reach 0.5940. The weakening upward trend and slight increase in downward pressure indicate a potential move toward this level.
In the short term, the NZD fell unexpectedly to 0.5967, contrary to earlier expectations of stable trading. Although it’s currently oversold, there may be further declines. However, oversold conditions might stop it from dropping all the way to 0.5940. Resistance levels are at 0.5985 and 0.6005.
Outlook And Resistance Levels
Looking one to three weeks ahead, the earlier positive outlook for the NZD has faded. The currency failed to hold previous levels and broke through the support level at 0.5985. With ongoing downward momentum, the NZD could reach 0.5940 if it stays below the new resistance level at 0.6030. This information includes forward-looking elements and does not provide specific asset transaction recommendations. It’s wise to conduct your own research, as there are risks including potential total capital loss. The positions discussed should not be taken as financial advice. Given the weakening momentum, there is an increasing chance the New Zealand dollar will test lower levels against the US dollar in the weeks to come. External economic factors add to the downward pressure on the currency. The fundamental situation supports this technical weakness. New Zealand’s key export, dairy, has seen prices drop, with the Global Dairy Trade Price Index falling 2.1% in the auction on July 15, 2025. Meanwhile, the US economy remains strong, with recent inflation data at 3.3%, leading to expectations that the Federal Reserve will maintain a tight monetary policy for a longer period.Strategy And Positioning
The difference in policies between a stable Reserve Bank of New Zealand and an aggressive US central bank typically strengthens the USD/NZD exchange rate. The interest rate gap between the two countries drives the kiwi dollar weaker. Derivative traders may find good opportunities in this environment to position for further declines. If a drop seems likely, buying put options with a strike price near 0.5950 could be a simple strategy. This lets traders profit if the price goes below this level while keeping their maximum risk limited to the premium paid. This option aligns well with the current situation, especially after the unexpected dip to 0.5967, indicating bearish sentiment. For those looking to manage costs, a bear put spread might be useful. This involves buying a put option—perhaps at a strike price of 0.5950—and simultaneously selling another put at a lower strike, like 0.5900. This strategy reduces the upfront cost but also caps potential profits, which fits with the uncertainty about reaching the 0.5940 target. Reviewing recent history provides context. The NZD/USD pair hit similar lows back in October 2023, falling below 0.5800 before a strong recovery in the new year. This past price movement reminds us that, although the path seems downward, conditions can shift rapidly. So, it’s important to keep an eye on the strong resistance level now at 0.6030. As long as the pair stays below this level, the bearish outlook remains. A significant break above this point would suggest the downward trend has ended, requiring a reassessment of any short positions. Create your live VT Markets account and start trading now.Commerzbank’s Barbara Lambrecht suggests Qatar may stop LNG supplies to the EU, affecting US deliveries.
Qatar has issued a warning that it may stop LNG supplies to the EU, where it ranks as the third-largest supplier, providing nearly 12% of LNG imports. This warning depends on the EU dropping climate protection requirements from its Corporate Sustainability Due Diligence Directive, which must be incorporated into national laws by July 2027.
Negotiations are possible, as Qatar seeks more LNG buyers while planning to boost its annual liquefaction capacity by 65 billion cubic meters by 2030. Meanwhile, the EU aims to avoid being too reliant on a single LNG supplier, especially the US, for its energy needs.
European Energy Market Uncertainty
We are monitoring Qatar’s recent warning about potentially stopping LNG supplies. This situation brings significant uncertainty to the European energy market, likely increasing volatility in Dutch TTF natural gas futures. Traders should get ready for possible price fluctuations based on diplomatic news in the coming weeks. As of late July, EU gas storage levels are at 84% full, offering a temporary buffer against immediate supply shocks. However, losing nearly 12% of LNG imports from a key supplier would cause a significant long-term shortage. This means that while prices for short-term contracts may not rise much, contracts for the winter heating season could see higher costs. Brussels will likely be cautious about severing ties with a major supplier, especially as it becomes more dependent on American LNG. The latest figures from the Energy Information Administration show that US exports reached a record 12.1 billion cubic feet per day in the first half of this year, with over 60% going to Europe. Any disruption in the Middle East would increase the EU’s supply risks, making its energy prices more vulnerable to fluctuations in the Henry Hub and US domestic policy changes.Opportunities in Volatile Markets
We have encountered a similar situation before, as seen with the market response to Russian supply cuts in 2022, which drove TTF prices over €300/MWh. With the possibility of prolonged negotiations lasting several months, we see an opportunity in rising implied volatility. Buying long-dated call and put options or creating straddles or strangles may be a wise strategy to capitalize on significant price movements in either direction. The threat of halting supplies seems more like a negotiation tactic, especially since Qatar plans to expand its liquefaction capacity by 65 billion cubic meters by 2030 and needs buyers. This indicates a phase of increased risk from headlines rather than an immediate supply cut. Therefore, we should focus on derivatives that thrive on uncertainty, while remaining cautious about making outright directional bets until there is clearer progress in diplomacy. Create your live VT Markets account and start trading now.In June, the US goods trade deficit decreased to $85.99 billion from $98.2 billion.
The US advanced goods trade balance for June was -$85.99 billion, which is better than the -$98.2 billion forecast. This shows improvement from May’s balance of -$96.42 billion. In June, goods exports totaled $178.2 billion, a small decrease of $1.1 billion from the previous month. Meanwhile, imports reached $264.2 billion, down by $11.5 billion from May.
Every major category of goods saw a decrease, likely due to tariffs affecting imports and competitiveness. There may also be a slowdown in demand from importers, who had previously stockpiled goods. Although many export categories improved, Industrial Supplies saw an 8.65% drop, amounting to a $5.7 billion decrease.
Trade Balance Improvement
The trade balance improved by $10.44 billion, or 10.83%. Total exports declined by $1.1 billion, a drop of 0.61%. Exports for Foods, Feeds, and Beverages increased by 4.50%. In contrast, Industrial Supplies exports fell by 8.65%. Capital Goods rose by 0.33%, and Automotive Vehicles increased by 3.59%. Consumer Goods and Other Goods grew by 1.42% and 5.09%, respectively. Total imports dropped by $11.18 billion, or 4.06%. Imports of Foods, Feeds, and Beverages declined by 2.82%, while Industrial Supplies fell by 5.60%. Capital Goods imports went down by 0.98%, Automotive Vehicles by 1.93%, and Consumer Goods by 3.11%. Other Goods imports decreased by 1.73%. The much smaller-than-expected trade deficit for June can be misleading. It resulted primarily from a significant $11.5 billion decline in imports, rather than a boost in exports. This suggests a decrease in consumer and business demand in the US, which is a concerning sign for the economy.Global Demand Weakness
The worrying sign here is the sharp 8.65% decline in industrial supplies exports. This strongly indicates that global demand for both raw and manufactured goods is significantly falling. This is not just a domestic issue; it highlights a broader decline in global manufacturing. This trade data aligns with other trends we’ve observed. The latest Non-Farm Payrolls report showed job growth slowing to just 150,000. Additionally, manufacturing PMI data from Europe and China has shown contraction. Together, these factors suggest a widespread global slowdown is gaining strength. Given these signs of economic weakness, we think US Treasury yields are likely to decrease in the next few weeks. Traders might want to consider buying call options on bond ETFs like TLT to benefit from rising bond prices. Although the US dollar may receive a short-term boost from the trade deficit number, we expect it to weaken if the Federal Reserve hints at future rate cuts due to the slowdown. For the stock market, this data is negative, especially for cyclical sectors. We are looking at buying put options on industrial (XLI) and consumer discretionary (XLY) sector ETFs since they are most vulnerable to this slowdown. Increased uncertainty in the market also makes buying VIX call options a smart way to hedge against a potential decline in stocks. The drop in industrial supplies trade directly impacts demand for commodities. We expect this will put downward pressure on the prices of crude oil and industrial metals like copper. Derivative traders might consider shorting commodity futures or purchasing puts on relevant commodity ETFs to prepare for this anticipated weakness. Create your live VT Markets account and start trading now.US wholesaler inventories increased by 0.2%, while retail stock stayed the same
In June 2025, US wholesale inventories rose by 0.2%, a shift from a previous decline of 0.3%. This reflects changes in the wholesale sector’s inventory for that month.
Retail inventories, excluding automobiles, stayed the same, showing a 0.0% change, compared to a revised 0.1% increase from the earlier 0.2%. These number adjustments highlight trends in stock levels and consumer demand.
Signs of a Slowing Economy
The June inventory data suggests that the economy is slowing down. The small uptick in wholesale inventories, along with unchanged retail stock, indicates that businesses may have too much merchandise as consumer demand weakens. This mismatch hints that companies might need to cut back on future orders. Other recent economic reports support this view. The latest estimate for Q2 GDP shows that annualized growth has slowed to 1.7%. Additionally, the ISM Manufacturing PMI for July dropped to 49.8, indicating slight contraction in the manufacturing sector. Together, these figures suggest the economy is losing momentum as we move into the third quarter. Given this situation, we think market volatility is currently undervalued, with the VIX staying around 15. The calm market response to these warning signs creates an opportunity. We see potential in purchasing longer-dated volatility, like VIX futures for September or October, before the market adjusts to the growing risks.Managing Equity Portfolios
For traders managing equity portfolios, we recommend adding downside protection in the coming weeks. Buying out-of-the-money put spreads on the S&P 500 can be an effective way to hedge against a potential 5-10% market drop. This strategy allows for upside potential while limiting losses if the market declines. We’re also watching the consumer discretionary sector closely, as it responds directly to trends shown by retail inventory data. The stable inventory levels, especially excluding automobiles, reflect retailers’ caution about consumer spending. Taking bearish positions on select retail ETFs could offer a more focused approach to this trend. Create your live VT Markets account and start trading now.US dollar faces resistance against yen after recent gains as central bank decisions near
The US Dollar is struggling to maintain its gains against the Japanese Yen after a three-day rally. The Dollar has paused just below the 140.75 level, well below the multi-month high of 149.15. Focus is now on the upcoming decisions from the Bank of Japan (BoJ) and the Federal Reserve regarding their monetary policies.
Investors are waiting for important data, including US JOLTS Job Openings and the Conference Board’s Consumer Confidence reports. These numbers will help gauge whether trends in employment and consumer spending support the idea of a strong US economy. However, the Dollar’s movement may stay limited until Wednesday, when US GDP data and the Federal Reserve’s decision are released.
The US economy is expected to have bounced back strongly in the second quarter, with GDP forecasted to grow at a yearly rate of 2.5%, recovering from a previous 0.5% decline. This data could reinforce the Federal Reserve’s cautious stance, keeping interest rates within the 4.25%-4.50% range.
On the other hand, the BoJ plans to continue tightening its monetary policy, but it is not expected to raise rates soon, as it needs to evaluate the effects of tariffs. A more cautious approach could weaken the Yen. Economic signals from both the Federal Reserve and the BoJ can shift currency trends.
Currently, the US Dollar is finding it hard to rise against the Japanese Yen, holding steady just below the 158.50 level ahead of important decisions from central banks this week. This pause follows a significant rally, so attention remains on the upcoming Federal Reserve and BoJ meetings, which will likely influence currency movements throughout the summer.
Before these major events, key US data on JOLTS Job Openings and Consumer Confidence will be released. Recent statistics show job openings have slightly decreased to 8.2 million, indicating a stabilizing labor market, while consumer sentiment is delicate due to higher borrowing costs. These data points will be closely examined, although trading might be quiet until Wednesday’s GDP figures and the resulting policy announcement.
The market expects the Federal Reserve to maintain its key interest rate at 5.00%-5.25%. This outlook is supported by recent core CPI data, which dropped to 2.9%, suggesting the Fed feels its current policy is effective in controlling inflation without needing another rate hike right now. A confirmation of this cautious yet firm approach is widely anticipated.
In contrast, the Bank of Japan is likely to keep its ultra-low interest rate steady at 0.1%, despite hopes for policy normalization. Recent GDP data indicated a contraction in the first quarter, and early figures for the second quarter of 2025 suggest ongoing economic weakness. This domestic softness will probably keep officials cautious, widening the interest rate gap between the US and Japan.
This ongoing difference in policy has been a significant driver, similar to the strong rally seen in 2022-2023, when the currency pair rose above 151. This historical trend supports the view that the currency pair is likely to trend upward. We are closely monitoring whether the pair can break and maintain levels above recent highs.
Given this backdrop, we believe derivative traders should consider strategies that take advantage of further Yen weakness. Buying USD/JPY call options could benefit from potential growth due to a hawkish stance from one central bank and a dovish one from the other, while setting a clear risk limit. Traders should select specific strike prices and expiration dates to align with anticipated movements in the coming weeks.
With two major central bank announcements on the horizon, a sharp rise in volatility is also possible. We are looking into strategies like a long straddle, which involves buying both a call and a put option. This setup would allow for profit from significant price changes in either direction, offering a way to trade the extent of the market’s reaction.
