Insights 
VT 
CFTC’s gold net positions in the United States are $253K, up from $213.1K
The US CFTC gold net positions have risen to 253,000 from 213,100. This change shows the current feelings about commodities, as gold deals with various pressures that affect its market status.
EUR/USD is trading above 1.1700, even with some negative influences. The US Dollar remains stable despite political tensions and hopes for better US-China relations. On the other hand, GBP/USD aims for a support level at 1.3400 due to poor retail sales in the UK and a stronger US Dollar.
Gold prices expected to decline due to positive US economic indicators and trade progress
Gold prices have fallen as U.S. economic data and trade agreements lowered the demand for safe-haven assets. Currently, gold is priced at $3,336, which is almost a 1% drop.
The Federal Reserve is set to keep interest rates steady at 4.25%-4.50% for the fifth consecutive time. This follows a four-week decline in Initial Jobless Claims, indicating a strong labor market. However, Durable Goods Orders have decreased, mainly due to a drop in aircraft orders.
US and Japan Trade Agreement
The U.S. and Japan have struck a trade agreement, with possible discussions involving the EU. At the same time, the U.S. Dollar has bounced back from a two-week low, making gold more expensive for foreign buyers. Upcoming key events include the Fed’s decision, GDP data, and Nonfarm Payroll numbers. U.S. Treasury yields, including the 10-year note, have gone down, dropping three basis points. Core Durable Goods Orders showed slight growth, suggesting businesses are investing. The likelihood of the Fed keeping rates steady stands at 96% according to forecasts. Gold prices have dropped below $3,350 and are approaching the $3,320 mark, with a bearish reading on the RSI. Central banks, especially in emerging economies, have been boosting their gold reserves. Gold remains a safe asset against economic uncertainty and currency losses. With gold facing downward pressure, the resilient labor market is a major hurdle. The addition of 272,000 jobs in May exceeded expectations, reinforcing economic strength and reducing the immediate need for safe-haven assets. This points to a higher chance of further weakness or stability rather than a strong price increase in the near term.US Dollar Recovery
The recovery of the U.S. Dollar, as the Dollar Index (DXY) stays above 105, will keep gold pricey for holders of other currencies. This factor will be crucial since the Federal Reserve is being cautious about any rate cuts, unlike other central banks such as the ECB. This difference in policy should support the dollar. While Treasury yields have fluctuated, the 10-year note remains high at about 4.4%. This presents a significant cost for holding gold, which doesn’t yield returns. As long as there are decent, risk-free returns from bonds, gold’s appeal is weakened. We anticipate this trend will limit any short-term price increases. In response, we are considering buying put options or creating bear put spreads to guard against a possible drop toward the $2,300 support level per ounce. This strategy allows us to benefit from declines while limiting our risk. The bearish signal from the RSI backs our short-term negative outlook. However, we’re also keeping a close eye on central banks, which are making significant purchases, providing a solid price floor. The World Gold Council reported that central banks added a net 290 tonnes in the first quarter of 2024, showing strong strategic demand. This institutional buying is likely to prevent a large price drop. Moving forward, we will focus on inflation data and statements from the central bank. Historically, gold prices have bottomed and started to rise before or during a Fed rate-cutting cycle. Thus, we will take advantage of any further price weakness to establish long-term bullish positions through long-dated call options, preparing for a future policy shift. Create your live VT Markets account and start trading now.New Zealand dollar declines again, but weekly optimism remains due to improved US trade sentiment
The New Zealand Dollar (NZD) has fallen for the second session in a row, but it might still rise over the week due to better risk sentiment linked to potential US trade deals. The Kiwi’s gains are limited by a stronger US Dollar, buoyed by solid US economic data and expectations that the Federal Reserve will keep interest rates steady.
NZD/USD had a strong start to the week, hitting a high of 0.6059, supported by a weaker US Dollar. However, as the Greenback recovered, NZD/USD dropped to around 0.6011 by Friday, indicating a cautious market as the weekend approached.
Improved Trade Sentiment
Better trade sentiment is enhancing global risk appetite. This optimism comes as the US finalizes trade deals with Japan, Indonesia, and the Philippines, and is close to an agreement with the EU, as well as making progress with China. There is a 75% chance that the Reserve Bank of New Zealand will lower its rate by 25 basis points, although it may soon end its rate-cutting cycle. The Fed is likely to keep rates steady, with potential cuts expected by late 2025 due to strong US data and ongoing inflation. In the coming weeks, the New Zealand Dollar may face challenges mainly due to differing central bank policies. The Greenback’s strength is expected to limit any potential rallies in the Kiwi. Therefore, we should be careful about the currency’s upward potential. The expectation for the US central bank to maintain rates is supported by recent data, including April’s Consumer Price Index at 3.4%. While this represents a slight decline, it isn’t enough to trigger immediate cuts, keeping the US Dollar appealing. This monetary policy trend is likely to maintain downward pressure on the NZD/USD pair.Rate Cut Probability
On the other hand, market pricing indicates a strong likelihood that New Zealand’s central bank will start cutting rates from the current 5.5%. With New Zealand’s recent quarterly inflation still high at 4.0%, a rate cut would indicate some policy divergence, which historically weakens the Kiwi against the Greenback. This makes any rallies toward the recent high of 0.6059 look fragile. Given this situation, buying NZD/USD put options appears to be a smart strategy. This method allows traders to benefit from a potential decline while keeping the maximum risk limited to the premium paid. It’s a strategic way to position for a stronger US Dollar and a weaker Kiwi without incurring unlimited risk. The improved trade sentiment may not provide the anticipated support. Recent developments indicate renewed trade tensions, particularly regarding US tariffs on Chinese goods, which usually dampen global risk appetite. This environment typically works against commodity-sensitive currencies, adding extra risk to holding long positions in the Kiwi. Create your live VT Markets account and start trading now.WTI Crude Oil falls below $65 as global supply rises and demand remains uncertain
West Texas Intermediate (WTI) crude oil prices are falling due to concerns about global supply. Currently, WTI is trading below $65, with daily losses of over 1.50%.
The U.S. decision to restore Chevron’s license to operate in Venezuela is affecting the market. This move could lead to Venezuela exporting oil again, but because of infrastructure challenges, any immediate gains are likely to be small.
Venezuelan Oil and Global Supply
Venezuela has the largest crude oil reserves in the world, and a recovery there could influence global supply. Together with planned output increases from OPEC+, worries about oversupply are growing. OPEC+ plans to increase production by 548,000 barrels per day in August, with another rise expected in September. This potential oversupply is dampening positive news, such as stronger economic data. WTI prices have dropped below the 50-day Simple Moving Average of $65.44, testing important support levels. The Relative Strength Index (46) suggests weakening momentum, indicating heightened downside risks due to supply concerns. WTI is sourced in the U.S. and traded globally, serving as a key benchmark in the oil market. Factors that drive WTI prices include global supply and demand trends, OPEC decisions, and changes in the value of the U.S. dollar.Crude Oil Inventory Reports and Market Volatility
Reports from the American Petroleum Institute and the Energy Information Agency (EIA) also affect WTI pricing. Changes in oil inventory levels reflect shifts in supply and demand, which impact prices. Recently, although WTI was trading significantly higher at around $78 a barrel, it still shows substantial global supply uncertainty and rising fears about declining demand. The fundamental issues discussed remain important for traders. The outlook on planned output increases has changed, as OPEC+ has extended its production cuts of 2.2 million barrels per day until the third quarter of 2024. Typically, such cuts would boost prices, but the market’s weak reaction indicates traders are more concerned about a potential economic slowdown, particularly in China. This suggests we should be careful about expecting a lasting rally based solely on supply adjustments. The license renewal for operations in Venezuela is a long-term factor to watch. Venezuelan production has slowly climbed to just over 900,000 barrels per day, which is a small fraction of its capacity and not enough to immediately impact global balances. We see this as a gradual headwind rather than an immediate threat to prices. We need to focus on weekly inventory reports for short-term trading indicators. For instance, a recent EIA report showed an unexpected increase in U.S. commercial crude inventories of 1.2 million barrels, contradicting analysts who expected a decrease. These numbers will likely cause volatility and open opportunities for agile traders. With WTI struggling around the $80 mark, this level is now a significant psychological and technical resistance point. The declining momentum shown by the Relative Strength Index indicates that downside risks are likely. We believe that bearish option strategies, like buying puts, could be an effective way to hedge or bet on further price declines in the coming weeks. Create your live VT Markets account and start trading now.US dollar rises for the second day in a row following positive economic data and trade optimism
The US Dollar is performing well, thanks to strong economic data and new trade deals. Weekly Initial Jobless Claims and stable PMI figures have eased worries about a possible recession. The US Dollar Index (DXY) is slightly up at 97.77, though it risks ending its winning streak and is still below 98.00.
President Trump made a rare visit to the Federal Reserve, urging interest rate cuts while confirming that Powell will stay on as Chair. His comments, along with the upcoming Fed meeting, keep traders alert for any changes in policy. A Reuters poll shows that economists expect the Fed to maintain its current rate next week.
Trade Deals And Economic Outlook
On the trade front, Trump reported many finalized agreements, with ongoing talks with the EU potentially wrapping up soon. Durable goods orders dropped 9.3% in June after rising in May, largely due to fewer aircraft orders. However, some sectors remain strong. The US Treasury yield is stable at 4.39% as everyone waits for the Fed’s decision. Deals have also been reached with countries like Japan and the UK, with discussions still in progress with the EU, Korea, and India. South Korea is looking to invest to secure a deal, while Trump has indicated higher tariffs for countries that do not cooperate. Inside the Fed, there is ongoing debate about the rate decision, with some members supporting a cut. The DXY has gained traction after testing the upper boundary of a falling wedge and has settled above the crucial 97.00 level. The price is likely to test resistance between 97.80 and 98.00, with bullish momentum suggested by the 14-day RSI at 47, even though further gains may face obstacles. Given the positive economic signals, including the recent Non-Farm Payrolls report that added 272,000 jobs—well above expectations—we see the US economy as strong. We recommend that derivative traders pay less attention to daily data fluctuations and focus more on the upcoming Federal Reserve meeting, as it is expected to be the primary market mover. The current stability in the Treasury yield shows that the bond market has likely accounted for a specific outcome.Federal Reserve And Market Movements
The President’s unusual visit and call for rate cuts add a layer of political tension for the central bank. However, the CME FedWatch Tool shows over a 90% chance that the Fed will keep interest rates steady next week. This difference between political pressure and market expectations suggests potential volatility, which derivative strategies can effectively take advantage of. With mixed signals from declining durable goods orders and a robust labor market, we believe it’s wise to prepare for a significant move in either direction. We are considering buying straddles or strangles on major currency pair options, such as EUR/USD, in advance of Powell’s announcement. This strategy allows us to profit from substantial price changes, regardless of whether the Fed opts for a hawkish hold or a surprising dovish shift. Progress on trade agreements with countries like Japan and the UK offers support for the dollar, but ongoing talks with the EU may introduce challenges. Recent reports highlight major disagreements over subsidies and digital taxes in those negotiations. An unexpected update from these discussions could lead to sharp and unpredictable currency shifts. Technically, the dollar index holding above the key 97.00 level is a positive sign, but it faces strong resistance up to the 98.00 level. Historically, if the monetary authority maintains a “higher-for-longer” strategy, especially when the market hopes for cuts, the dollar tends to rise, as it did throughout much of 2023. If the central bank signals its intent to stay hawkish, we will consider buying near-term call options on dollar-tracking ETFs to take advantage of a potential breakout. Create your live VT Markets account and start trading now.The Canadian dollar weakens against the US dollar due to new tariff threats from Trump
The Canadian Dollar has been struggling lately, facing a two-day drop against the US Dollar as the US nears a deadline on August 1 for possible tariffs. The Trump administration is having difficulty finalizing trade agreements, with ongoing talks about tariffs with the EU and Canada.
In June, US Durable Goods Orders fell less than expected, providing some support for the US Dollar. The USD/CAD pair climbed significantly, surpassing 1.3700 and approaching a technical resistance at 1.3730, even though the terms of trade remained unchanged under the USMCA agreement, a successor to NAFTA.
Factors Influencing The Canadian Dollar
Several factors influence the Canadian Dollar, including the Bank of Canada’s interest rates, oil prices, the health of the economy, inflation, and trade balances. The strength of the Canadian economy and its relationship with the US are also crucial in determining the direction of the currency. The Bank of Canada’s monetary policy plays a huge role in interest rates, which directly affects the Canadian Dollar. Higher rates can attract foreign investment. Oil prices are significant as they directly impact Canada’s exports, with rising prices boosting the CAD’s value. Key economic indicators like GDP and employment data offer insights into how the currency may behave. With the pressure from the administration on trade, traders should brace for increased currency fluctuations. The uncertainty around potential tariffs makes using options to buy volatility a smart strategy, allowing traders to profit from large price movements in USD/CAD, no matter the direction. The fundamental outlook for the Canadian Dollar is weakening due to differences in central bank policies. The Bank of Canada’s recent rate cut to 4.75% in June, with another expected this year, contrasts sharply with the steady stance of the US Federal Reserve. This increasing gap favors the US Dollar.Market Sentiment And Future Events
Despite this, mixed economic signals suggest caution against making large bets. Canada’s annual inflation rate unexpectedly rose to 2.9% in May, which might lead the central bank to pause rate cuts. Meanwhile, oil prices remain above $80 per barrel, providing a supportive base for the currency tied to commodities. Looking back at the 2018-2019 trade negotiations, we noticed a significant spike in CAD options volatility, and we expect a similar trend now. As the currency pair tests the technical resistance near 1.3730, this level becomes crucial for options traders. A clear break could lead to further gains, while failure might result in a sudden drop. We advise those with long-term ties to the Canadian economy to use derivatives for protection. The formal review of the North American trade agreement set for 2026 presents a major source of uncertainty. Using forward contracts or long-dated options can safeguard against unfavorable currency fluctuations resulting from this event. Create your live VT Markets account and start trading now.The US oil rig count reached 415, below the expected 421.
The Baker Hughes US oil rig count is now at 415, which is lower than the expected 421. This decline reflects ongoing changes in the energy sector that may affect related markets.
The EUR/USD currency pair remains above 1.1700, even though it’s facing some downward pressure. The strong performance of the USD is catching attention. The GBP/USD pair is trending lower, nearing 1.3400, partly due to the stronger USD and poorer retail figures in the UK.
Gold Price Dynamics
Gold prices are falling, hitting around $3,330 per troy ounce. This is mainly due to increased interest in buying USD, changes in US yields, and trade discussions. In the cryptocurrency market, Bitcoin dropped, reaching an intraday low of $114,723. This decline has sparked efforts to stabilize it. Meanwhile, Ethereum and XRP are holding onto their key support levels during this bearish phase. Everyone is watching the Federal Reserve’s decisions, especially regarding potential rate cuts amid a resilient economy and trade uncertainties. Analysts are questioning if any delays in these cuts could significantly affect the US economy. The lower-than-expected rig count from Baker Hughes signals a tightening future supply. This supports a bullish view on crude oil, making long positions in WTI futures or call options appealing. OPEC+ has also extended its production cuts through 2025, historically helping to maintain higher prices by limiting global output. Given the ongoing strength of the US dollar, we expect more downward movement in major currency pairs. Traders in derivatives might look into buying put options on the EUR/USD since the European Central Bank has started a rate-cutting cycle before the Federal Reserve. With UK inflation recently falling to 2.3%, close to the central bank’s target, bearish strategies on GBP/USD could also be profitable.Implications Of Bitcoin Volatility
The decline in gold prices, due to a strong dollar and changing US yields, creates new bearish opportunities. We suggest traders might explore put spreads to take advantage of possible further drops toward the $2,300 support level. However, record purchases by central banks, with global official gold reserves rising by 290 tonnes in Q1 2024, should create a solid support against a significant sell-off. The recent decline in Bitcoin has increased volatility, which is perfect for specific options strategies. We recommend traders consider straddles or strangles to benefit from large price swings, regardless of the current pessimism. Despite the dip, significant net inflows into spot Bitcoin ETFs—over $880 million in a single day this week—highlight strong ongoing institutional demand. The uncertainty around the central bank’s timeline for rate cuts is a key focus for broader markets. With the latest jobs report showing an impressive addition of 272,000 jobs in May, we believe the likelihood of a summer rate cut is decreasing. This makes strategies betting on higher-for-longer interest rates a smart choice. Such delays could continue to support the dollar and put pressure on assets sensitive to interest rates. Create your live VT Markets account and start trading now.Rabobank’s analyst Jane Foley says the Euro stays strong despite US recession concerns
Since the US President announced reciprocal tariffs in April, the euro has been performing well compared to other G10 currencies, following closely behind the Swiss franc. The euro’s strength is partly due to Germany easing its debt rules in March, which positively affected the currency.
There are worries that these new tariffs could cause a US recession and increase inflation, leading investors to move away from US assets. Although the S&P 500 has hit new highs since June, the US dollar remains weak because people expect the Federal Reserve to cut rates aggressively.
Federal Reserve Rate Cuts
Current predictions indicate that the Federal Reserve may cut rates four times in 2026, following a cut in September. This could put pressure on the euro, potentially causing the EUR/USD exchange rate to drop to 1.15 in the coming months. Despite this, the US dollar is holding up due to improved relations between the US and China. On the other hand, the British pound and gold have struggled. The GBP/USD exchange rate has fallen to around 1.3420, and gold is priced at $3,330 per troy ounce. In the cryptocurrency world, Bitcoin recently reached an intraday low of $114,723, but attempts at recovery are underway. Given the risk of a US recession and expected rate cuts, we believe the euro will stay strong against the dollar. The easing of Germany’s debt rules serves as crucial support for the euro. Derivative traders might want to consider buying EUR/USD call options or bull call spreads, aiming for a rise toward the 1.15 level in the coming months. The expectation of monetary easing from the central bank plays a significant role, with the CME FedWatch Tool indicating over a 60% chance of a rate cut by September 2024. While inflation eased slightly to 3.3% in May, it remains a concern that supports fears of a policy shift away from the US dollar. We recommend using any strength in the dollar to enter short positions.British Pound and Gold Analysis
We note that the British pound has been negatively affected and is currently trading around 1.26, significantly lower than expected. This suggests a strategy of buying euros against pounds could be a smart move. For gold, the forecast of $3,330 indicates long-term growth potential, making it wise to hold long futures contracts as protection against inflation and dollar weakness. In the cryptocurrency market, we have seen major price drops, with Bitcoin trading closer to $60,000 rather than the cited low. We see this volatility as a chance to sell covered calls or use range-bound strategies. A return to previous highs around $73,000 seems more likely before attempting to set any new records. Create your live VT Markets account and start trading now.IMF warns UK about triple lock as concerns grow over financial bubble
Financial markets are acting unpredictably this week. Blue-chip stock indices are hitting new highs despite worries about US trade tariffs. Meanwhile, both gold and Bitcoin prices are falling. Tariffs on US imports have increased, with a 15% rate set for Japan. Companies like General Motors and Nike have mostly absorbed these costs without passing them on to consumers.
The average US import tariff rate is now 17%, up from just 2% last year. Still, the S&P 500 and Nasdaq indices are reaching record levels, driven by stocks like Moderna and Nike, despite economic challenges. Meme stocks are coming back but are also facing losses, particularly with companies like GoPro and Krispy Kreme. Bitcoin has dropped more than $2,500 as demand declines.
US Equity Market Trends
US equity markets are affected by dividend stocks, growth stocks, and large-cap equities. However, there are worries about a potential market bubble. In the UK, the FTSE 100 is performing well, but the pound continues to struggle. It has reached its lowest level against the euro since 2023, due to weak growth and political uncertainty. The IMF has maintained its growth forecast for the UK but has raised flags about fiscal risks. It suggested policy changes like replacing the state pension triple lock and expanding the VAT tax base to prepare for potential economic shocks. Concerns about public finance might make these changes necessary sooner than expected. There appears to be a gap between rising blue-chip indices and the pressures from increased import duties. This suggests we may need to brace for a potential market correction, as economic fundamentals cannot be ignored forever. With the CBOE Volatility Index (VIX) staying low around 12-13, buying put options on major index trackers is currently a cost-effective way to protect against a sudden downturn.Profit Margins And Market Volatility
The ability of large companies to absorb higher costs is not unlimited. We should look out for signs of weakening profit margins in the upcoming quarterly reports. Historically, when profit margins shrink too much, companies that miss earnings forecasts can see steep price falls. Thus, we are preparing for increased volatility around earnings reports for consumer and industrial companies. The decreasing gains in highly speculative stocks signal a reduced appetite for risk among retail investors. This is further supported by the recent drop in Bitcoin’s value, which has fallen below the critical $65,000 support level. These trends indicate that the momentum for broad speculative rallies is fading, so we are cautious about chasing short-term gains. In the UK, the best opportunities seem to be in currency markets rather than equities. The pound’s decline against the euro to its lowest level in nearly two years reflects serious concerns about fiscal stability and political uncertainty ahead of the general election. We expect continued downward pressure on the pound to be more likely than a significant drop in its blue-chip stock index, which is mainly composed of international companies benefiting from a weaker home currency. Create your live VT Markets account and start trading now.Australian dollar weakens against US dollar as rising US Treasury yields impact demand
The Australian Dollar is falling against the US Dollar due to rising US Treasury yields, which favor the Greenback. After hitting a yearly high of 0.6625, the AUD/USD has dipped below 0.6600.
The US Dollar is gaining strength, supported by President Donald Trump’s reassurances about the Federal Reserve’s actions. Trade talks between US and Chinese officials, as well as potential negotiations with the EU, are currently in the spotlight.
