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USDCAD fluctuates within set levels as traders wait for a significant breakout in momentum.
The USDCAD currency pair has bounced back, finding support in the 1.3589 to 1.3594 range, which has held in earlier trading sessions. This move pushed the pair up to 1.3628, a key resistance level that aligns with the highs from today and yesterday.
Attempts to break through the 1.3628 resistance have not been successful, keeping the pair trapped between 1.3589 and 1.3628. If it climbs above 1.3628, it could aim for 1.36388, 1.3651-54, and 1.3684, all of which correspond to previous technical signals. On the other hand, if it dips below 1.3589-94, it may target 1.3574, 1.3555, and 1.3539.
The technology sector shows mixed results: IBM declines sharply while Amazon and Nvidia thrive
The stock market is active today, especially in technology and consumer sectors. Technology stocks are doing well, with Amazon and Nvidia gaining 1.15% and 0.83%, respectively.
On the other hand, IBM is down sharply by 8.60%, which negatively impacts the information technology sector. The consumer cyclical sector remains strong, thanks to Amazon’s growth and a slight increase from Home Depot of 0.01%.
Financial Sector Performance
Financial stocks are mostly performing well, with JPMorgan Chase rising by 0.43% and Bank of America by 0.57%. The industrial sector shows mixed results; General Electric is up 1.68% due to positive market sentiment. Overall, market sentiment is cautiously optimistic, driven by strong performances from tech and consumer companies like Nvidia and Amazon. IBM’s drop may cause concern, but the market is showing confidence in specific sectors rather than a general downturn. A balanced investment strategy could focus on stable performers like Amazon and Nvidia while keeping an eye on IBM’s performance. Diversifying across financial and industrial sectors may help reduce the impact of volatility in the tech sector.Trading Volatility And Strategies
Given the mixed signals from the market, the upcoming weeks will likely involve volatility and varied outcomes rather than a clear market direction. Although the CBOE Volatility Index (VIX) is at a low 14, indicating little fear in the market, IBM’s steep 8.60% drop highlights that individual stocks can be very risky. This scenario makes single-stock options more appealing than broad index trades. The strong performance of select tech leaders suggests using bullish options strategies. For example, one of the major e-commerce and cloud companies recently reported a 17% growth in its cloud division. This presents an opportunity to buy call spreads, allowing us to benefit from further gains while minimizing risk. This approach takes advantage of the positive momentum without fully exposing us to a wider market decline. Alternatively, IBM’s significant drop creates a bearish opportunity. We could consider buying puts or setting up bear call spreads as the market reacts to news regarding its multi-billion dollar acquisition and disappointing revenue forecast. The high implied volatility following the drop leads to higher option premiums, making defined-risk spreads a wiser choice than outright options. The contrast between a thriving semiconductor firm and a struggling IT services company is an excellent setup for a pairs trade. Traders could use options to go long on the stronger company while shorting the weaker one, separating their investment from overall market trends. Historically, during times of sector rotation, gaps in performance between innovative and legacy companies tend to widen. To guard against unexpected weakness in tech stocks, the quiet strength of the financial sector offers potential. With major banks showing steady gains, selling cash-secured puts on broad financial sector ETFs could generate income. This strategy takes advantage of the stability in financials, which are currently benefiting from prolonged higher interest rates. Create your live VT Markets account and start trading now.Preliminary July Purchasing Managers’ Indices for the US will show continued economic growth on Thursday.
In July, S&P Global’s Composite PMI showed that US business activity picked up, moving from 52.9 to 54.6. This indicates that the private sector is gaining some strength. However, the Manufacturing PMI fell to 49.5, showing a slowdown, while the Services PMI rose to 55.2, reflecting higher demand.
Even with mixed results across sectors, the overall outlook for US economic growth is positive, estimated at a 2.3% annual rate. After this data was released, the US Dollar tried to rise, aiming for the 97.30-97.40 range.
Upcoming Data Insights
S&P Global is set to share more details from private sector surveys soon, which will help us understand the economy’s direction better. This report will cover Manufacturing, Services, and Composite PMIs. A PMI above 50 suggests growth. This timely information is useful for forecasting economic conditions before official stats come in. As talks about policy strategies and tariffs continue, analysts are closely watching the upcoming PMI data for signs of economic strength or weakness. How the markets respond will influence currency and policy expectations. More recent data from October shows the US Composite PMI rising to 51.0, a small but clear signal of growth. The services sector is leading this momentum, rising to 50.9, while manufacturing stayed flat at 50.0. This uneven strength in the economy complicates the outlook for monetary policy.Trade and Policy Implications
The difference between a strong services sector and a stagnant manufacturing sector indicates a two-speed economy. Traders in derivatives should think about pair trades, buying options on service-focused indices while short-selling industrial-focused ones. This approach allows for focusing on the specific trends identified in private sector surveys. The economy’s strength, mainly from the services sector, gives the Federal Reserve little reason to hint at future rate cuts. Therefore, we believe there is value in interest rate derivatives that predict borrowing costs will stay high into next year. This aligns with the “higher for longer” trend that is currently shaping market discussions. Historically, mixed economic signals often lead to increased market volatility. We suggest traders consider buying call options on the CBOE Volatility Index (VIX). This can be a cost-effective way to protect against potential market turbulence. The VIX, which recently hovered around 17, is well below its long-term average, indicating that protection is still relatively affordable. The strength of the US economy, especially when compared to recent PMI data showing declines in the Eurozone and slow growth in China, supports a bullish outlook for the US Dollar. We see opportunities in long positions on Dollar Index futures, which will benefit from the widening gap in economic performance between the United States and other major economies. Create your live VT Markets account and start trading now.UK PMI report shows sluggish growth, causing a decline in Pound Sterling’s value
The Pound Sterling is under pressure after the latest UK PMI data showed slower business growth than expected. The Composite PMI was at 51.0, lower than the predicted 51.9 and down from June’s 52.0, indicating only a small increase in overall business activity.
The Services PMI slowed down, coming in at 51.2 compared to the expected 53.0, while the Manufacturing PMI dropped to 48.2, though still better than forecasts. Chancellor Rachel Reeves’ recent policy changes, including those affecting employers’ social security contributions, have impacted these figures. There has also been a notable drop in staffing levels, with the fastest decline since February.
Looking Ahead to UK Retail Sales Figures
The market is eager for the upcoming UK Retail Sales figures for June, which are expected to show a recovery with a 1.2% increase, following a 2.7% drop in May. However, the Pound is struggling against major currencies, especially the Australian Dollar. On a global scale, optimism about a possible US-EU trade deal is reducing safe-haven demand and affecting the US Dollar. The Federal Reserve’s upcoming decision on interest rates, which is expected to remain unchanged, alongside the US Flash PMI data, are important events to watch. Currently, the GBP/USD is encountering resistance near the 20-day EMA. Given the recent business activity data, we expect the Pound Sterling to weaken further. The S&P Global/CIPS UK Flash Composite PMI dropping to a four-month low of 51.0 shows a clear slowdown in the UK economy, providing a basis for expecting a fall in the currency. Chancellor Reeves’ policies seem to be affecting the job market, with staffing levels experiencing their first decline since last November. This coincides with recent ONS data that shows the unemployment rate has risen to 4.4%. We think this weakening trend in employment might prompt the Bank of England to consider cutting interest rates sooner, which would likely be bad news for the Pound.Potential Opportunities and Strategies
While the upcoming UK retail sales figures are expected to rebound, we see this as a possible distraction from the overall trend. Historically, a single month of positive consumer data rarely reverses a broader economic slowdown. So, if the Pound strengthens after these figures, it could offer a good chance to take bearish positions. Globally, the Pound’s weak performance against currencies like the Australian Dollar stands out. This suggests Sterling is losing ground for its own reasons, not just due to fluctuations in the US Dollar. The Reserve Bank of Australia’s more cautious approach to rate cuts, in contrast to the Bank of England, highlights this relative weakness. The technical resistance for the GBP/USD pair near its 20-day moving average supports our bearish outlook. Given this barrier and the economic challenges ahead, we believe that buying put options on the Pound is a wise strategy. This enables traders to benefit from a possible decline while managing risk in the coming weeks. Create your live VT Markets account and start trading now.US stocks show mixed results due to tariffs, jobless claims, and slow new home sales
US stocks showed mixed results as the market looked at better-than-expected jobless claims, indicating steady employment. However, new home sales were slow, and flash PMI data provided mixed signals.
The European Central Bank kept interest rates unchanged, with no clear direction from Lagarde. Yesterday, the Dow industrial average nearly set a record, closing just four points away. Today, it is down 0.38% at 44,842, below the all-time high of 45,014.04.
Stock Performance Updates
The S&P index is up slightly by 0.15% or 9.45 points, now at 6,368.12. It reached a record high yesterday and hit an intraday high of 6,374.63 today. The NASDAQ index is also up a small amount by 0.06%, reaching 21,032.10, with an intraday high of 21,107. Alphabet shares rose by $1.94 or 1.0% to $192.05 after beating earnings expectations. The price did drop from an earlier high of $197.95. Since its low in April, the price has gone up by 35.20% but is still below the all-time high of $207.05 from January. The 50-hour moving average is at $186.44, indicating downside risk if it falls below this level and then the 100-hour moving average at $182.12. We see mixed performance at record highs as a reason to protect our gains. With the CBOE Volatility Index (VIX) recently close to multi-year lows around the 12-13 level, buying protective puts on broad market ETFs is a cost-effective strategy. This allows us to benefit from further rises while securing our portfolios.Market Strategy Considerations
The difference between strong employment data and slow new home sales creates uncertainty for the Federal Reserve. We expect more volatility around key reports, like the upcoming Consumer Price Index, as inflation remains a concern. Thus, we may consider using straddles on market indices before these events to take advantage of any significant price movements, regardless of direction. The European Central Bank’s neutral position adds to the global uncertainty. The lack of guidance suggests caution for European-focused investments, especially since recent ZEW economic sentiment surveys for the Eurozone showed ongoing pessimism. Hedging with options on European-focused ETFs is a smart move against unexpected policy changes abroad. Regarding individual stocks like Alphabet, the drop from post-earnings highs despite a strong report is a typical sign of profit-taking. We observe that implied volatility has likely decreased sharply since the earnings announcement, making it a good time to sell premium. A bear call spread above the recent high of $197.95 could benefit from a potential flat or downward move toward the moving averages. Create your live VT Markets account and start trading now.In June, new home sales reached 627,000, slightly below estimates, while the average price continued to rise.
US new-home sales for June 2025 reached 627,000, falling short of the expected 650,000 but up from 623,000 in May. Sales increased by 0.6% compared to last month, which experienced an 11.6% drop.
The supply of new homes slightly increased to 9.8 months from 9.7 months, indicating a high inventory level. The median sales price fell to $401,800, down 4.9% from May 2025 and 2.9% from June 2024.
New Home Sales and Prices
In June 2025, the average sales price of new homes was $501,000, a 2% drop from May 2025 but a 1.1% rise compared to June 2024. There are 511,000 new homes available, showing a 1.2% increase. Existing home sales for June were 3.93 million, below the estimated 4.00 million, and down from 4.04 million in the previous month. With the overall weakness in housing data, we suggest that derivative traders take a cautious and negative stance on housing stocks. The lower-than-expected new and existing home sales indicate that high interest rates are impacting buyer demand, which could lead to continued struggles for homebuilders and related businesses.Market Analysis and Strategy
The concerning figure is the 9.8-month supply of new homes, far exceeding the healthy range of 4-6 months. Historically, such high inventory levels have preceded significant economic downturns, similar to the buildup to the 2008 financial crisis. We recommend purchasing put options on homebuilder ETFs like ITB and XHB, anticipating further price drops. The decline in the median sales price is especially concerning, suggesting the market is weakening and affordability is an issue. The 4.9% monthly decrease indicates that sellers must lower prices to attract buyers. This trend further supports a negative outlook for the entire housing sector, including construction materials and mortgage lenders. Continued weakness in the housing market increases the chances that the Federal Reserve will adopt a more dovish approach. With real-time mortgage rates around 7%, the central bank is seeing clear signs that its policy is restrictive. Thus, trades that could benefit from potential rate cuts, such as buying futures on the 10-year Treasury note, should be considered. We view this as a chance to prepare for increased market volatility as the economy adapt to this slowdown. The combination of declining sales, rising inventory, and price pressure creates significant uncertainty. Purchasing options on a volatility index like the VIX could serve as a wise hedge against a broader market downturn caused by issues in the housing sector. Create your live VT Markets account and start trading now.The EUR/USD pair is declining after recent highs, now focusing on potential ECB developments.
The Euro has pulled back from three-week highs after initial optimism over an EU-US trade deal, featuring 15% tariffs, has cooled down. The European Central Bank (ECB) is expected to maintain current interest rates but might hint at possible future reductions. Despite strong Eurozone PMIs, the EUR/USD pair is losing ground as traders adjust their positions ahead of the ECB’s decision.
The Euro is trading around 1.1750, down from a peak of 1.1780 that it reached after the trade deal news. The appeal of the US Dollar as a safe haven is lessened in risk-on markets, which helps the Euro’s short-term upward trend.
Reports say EU and US negotiators are close to a deal that would apply 15% tariffs on Eurozone goods, while excluding aircraft and other select items. This aims to avoid the previously discussed 30% tariff by President Trump and possible EU responses that could escalate into a trade war.
Eurozone data is mixed. The German GfK Consumer Confidence Survey points to ongoing economic struggles, but PMI figures have been better than expected. Upcoming US Initial Jobless Claims and PMIs will add more context. The ECB’s rate announcement will be crucial, revealing hints about future policy changes.
The preliminary PMI for the Eurozone indicates a slight rise in manufacturing activity, and the services sector has performed better than predicted. However, German consumer confidence has decreased, falling short of expectations.
In the US, S&P Global PMIs for services and manufacturing are expected to increase, indicating strong economic activity. The EUR/USD pair remains unstable, with technical indicators suggesting possible corrections as traders take profits before the ECB meeting.
Key support for the pair is at 1.1740, with resistance at 1.1790 and longer-term highs around 1.1830. The ECB’s Deposit Facility Rate stays at 2%, and markets are keenly awaiting further policy direction.
The Euro’s recent pullback signals that it’s time to reassess trading positions, shifting focus from the potential trade deal discussed by Mr. Trump to the differences in central bank policies. This shift implies that any strength in the pair might be temporary and presents a trading opportunity.
Recent comments from the ECB suggest rate cuts could come as early as June, supported by over 80% of economists in a recent Reuters poll. The currency pair has demonstrated high implied volatility, making options more expensive. This indicates that the market anticipates significant price movements. This environment is suitable for strategies that can profit from a downward move or decreasing uncertainty.
The economic data suggests a cautious approach, with the latest German GfK Consumer Confidence dropping to -29.7, its lowest in months. Although Eurozone PMI data showed a slight rise to a six-month high of 47.9, it still falls below 50, indicating contraction. Historically, when the ECB has indicated a shift to easing before the US Federal Reserve, the EUR/USD has typically weakened for an extended period.
Given strong resistance near the 1.1790 level, we are considering strategies such as buying put options or setting up bear put spreads. These strategies would profit from a decline in the EUR/USD, allowing us to take a controlled risk while speculating on the currency weakening due to anticipated policy easing. This approach helps us benefit from the Euro’s fundamental challenges.
For traders who think the pair will stay in a range while the market processes information, selling out-of-the-money strangles could be a good strategy. This involves selling both a call and a put option to collect the premium from high implied volatility. The position will be profitable as long as the currency pair remains between the two strike prices until expiration.
Conway from RBNZ suggests global uncertainty may lower inflation as BBHNZD/USD stabilizes around 0.6050
The NZD/USD is steady at about 0.6050 after some recent gains. Paul Conway, the RBNZ Chief Economist, remains careful about monetary policy.
Conway has expressed worries about global tariffs and economic uncertainty. He believes these issues will lead to lower inflation pressures, as well as less business investment and household spending in New Zealand. He mentioned that the bank is ready to lower the Official Cash Rate (OCR) if medium-term inflation pressures keep falling.
Current Inflation In New Zealand
Inflation in New Zealand is currently within the target range, with the policy rate approaching the neutral range of 2% to 4%. The swaps market indicates an 86% chance of a 25-basis point rate cut by the RBNZ at the upcoming meeting on August 20. Market predictions suggest 40 basis points of easing over the next 12 months, which could bring the policy rate down to between 2.75% and 3.00%. New Zealand’s rate outlook suggests possible changes that may support the NZD. Given Mr. Conway’s cautious stance and the high likelihood of a rate cut, we expect the New Zealand dollar to weaken. The market has priced in an 86% chance of a rate cut in August, which creates a clear direction. We believe traders should prepare for this anticipated monetary easing. To support this view, New Zealand’s economy has recently faced a double-dip recession, with GDP shrinking in both the third and fourth quarters of 2023. Although Q1 2024 saw a slight increase of 0.2%, this weak growth gives the central bank strong reasons to boost the economy. This data indicates that rate cuts are necessary to help improve local economic activity.Policy Divergence Comparison
The policy differences between New Zealand and the United States are clear. The Federal Reserve is keeping interest rates high to fight inflation. A lower rate in New Zealand could reduce the attractiveness of the Kiwi dollar for international investors, putting downward pressure on the NZD/USD pair. We expect this growing interest rate gap to drive the currency’s value in the coming weeks. As a result, we plan to buy NZD/USD put options that expire in late August or September. This strategy lets us profit if the currency declines after the central bank’s meeting. It offers a risk-defined way to respond to the widely expected rate cut. However, traders should remember that a standard 25-basis point cut is mostly expected and may not lead to a dramatic fall by itself. The most crucial factor will be the central bank’s future guidance; a stronger signal for further cuts could trigger a bigger drop. If the bank surprises the market by holding rates steady, it could lead to a sharp, although unlikely, increase in the currency value. Historically, the NZD has weakened during periods of rate cuts, similar to 2019 when the currency pair fell significantly after the first rate cut. We expect a similar, though possibly more gradual, decline once the first cut is confirmed. A weaker currency trend after the start of a rate-cutting cycle is well established. Given the uncertainties surrounding the bank’s statement, positioning for higher volatility could be wise. Buying options like straddles, which benefit from significant price moves in either direction, might be an effective way to trade this event. This approach safeguards against a muted market reaction if the cut is already fully factored in. Create your live VT Markets account and start trading now.Flash PMI data shows a decline in manufacturing and unexpected growth in services amid inflation pressures.
The US Manufacturing PMI flash reading is 49.5, which is lower than the expected 52.7. However, the Services PMI flash reading is 55.2, exceeding the forecast of 53.0. Last month’s readings were 52.9, while the composite flash was 54.6, up from 52.9 the previous month.
The data indicates that the US economy grew at a 2.3% annualized rate at the beginning of the third quarter, an improvement from 1.3% in the second quarter. Still, this growth was uneven and heavily depended on the services sector, as manufacturing faced challenges due to diminishing benefits from tariff actions.
Business Confidence and Inflation Pressures
Business confidence in the future is down in both the manufacturing and services sectors, hitting a low point over the past two-and-a-half years. Concerns about government policies, including tariffs and cuts in federal spending, are affecting sentiment. Inflation is rising, driven by tariffs and higher labor costs due to shortages. In July, selling prices rose sharply, marking one of the highest increases in the past three years. This trend suggests consumer price inflation may continue to rise, potentially exceeding the Federal Reserve’s target of 2%. As prices climb, households will feel the effects, leading to further inflation. The current data shows a divided American economy, creating trading opportunities. Overall growth relies solely on the services sector, while manufacturing is contracting. This trend indicates an investment strategy that favors service-related companies over industrial and manufacturing sectors.Economic Divergence and Trading Strategy
This two-track economy is confirmed by other recent reports. The May ISM Services PMI jumped to a solid 53.8, while the manufacturing PMI fell to a contractionary 48.7. We recommend traders consider long positions in services-focused ETFs and possibly short positions in industrial sector funds to take advantage of this widening gap. The data suggests this trend is speeding up. Mr. Williamson’s comments on falling business confidence raise important concerns. This decline in sentiment, linked to government policies and tariffs, indicates that it may be wise to seek downside protection. We should think about buying put options on broad market indices, such as the S&P 500, to guard against a possible downturn if these issues worsen. The growing inflation pressures he mentioned are significant, especially with core inflation staying above the Federal Reserve’s target. His forecast of rising consumer prices puts the central bank in a tough spot, possibly leading to a more aggressive approach than the market anticipates, despite a struggling manufacturing sector. This mix of economic divergence and possible central bank surprises creates a likely scenario for increased market volatility. Historically, such uncertainty has caused spikes in the VIX, as seen during the 2022 rate hike cycle. It would be wise to consider purchasing options that could benefit from increased volatility, such as VIX calls or straddles on major indices. Create your live VT Markets account and start trading now.Lutnick: EU and South Korea seek trading agreement amid concerns over TikTok’s Chinese ownership and tech regulation
Lutnick mentioned that the European Union (EU) wants to make a deal, and South Koreans are also eager to negotiate.
He noted that the EU has been consistently targeting American tech companies. He emphasized the importance of the U.S. managing TikTok’s algorithm to address national security issues, insisting that TikTok should not be under Chinese control.
