AMD’s CEO, Lisa Su, has acknowledged that semiconductor chips made at TSMC’s new Arizona facilities will cost more—5% to 20% higher than those produced in Taiwan. This difference in price is due to variations in labor, infrastructure, and supply chains. Building these Arizona facilities is part of a larger effort to boost domestic chip manufacturing in the U.S. The goal is to enhance national security and improve supply chain resilience. However, this cost difference highlights the challenges of relocating advanced semiconductor production back to the U.S. Su did not confirm whether AMD would pass these costs on to consumers, but she emphasized their commitment to a diverse global supply chain, which includes U.S. sourcing. She also noted the benefits of having a reliable supply chain with chips produced domestically. For derivative traders, the most important takeaway from Su’s comments is the increased uncertainty about future profit margins. The acknowledged cost premium adds a new factor that could lead to speculation and price fluctuations in the coming months. We should prepare for larger price movements than the market currently anticipates. As AMD recently reported a non-GAAP gross margin of 52%, the introduction of these higher-cost chips from Arizona, although initially a small part of total supply, will draw close attention. Traders will be particularly focused on any guidance that could suggest this could impact profitability. This is likely to be a major driver for future stock fluctuations. However, these effects won’t be felt immediately. Reports indicate that TSMC’s Arizona production is delayed until 2025, with a second facility not expected until 2027 or later. This means cost pressures will be a medium-term issue, allowing implied volatility on shorter-dated options to be potentially undervalued. We must also consider the U.S. government’s financial support in dealing with these higher costs. TSMC has received $6.6 billion in grants and up to $5 billion in loans through the CHIPS Act to help offset these expenses. This support could soften the financial impact on companies like AMD. Intel is a competitor to watch closely, as it is also establishing domestic manufacturing with government assistance. Traders will compare the total costs and efficiency of Intel’s U.S. facilities with AMD’s Arizona options. A cost advantage for Intel could lead to trades focused on the relative performance of the two stocks. Historically, the semiconductor industry shows high volatility, which makes options-based strategies appealing. For example, the VanEck Semiconductor ETF (SMH) has a 5-year monthly standard deviation exceeding 8%, compared to about 5% for the S&P 500. This suggests that significant, news-driven price changes are likely. Thus, traders should think about buying options that could benefit from a large price movement in either direction, such as straddles or strangles, on AMD. The conflicting narratives of supply chain security and rising costs create an ideal setup for a substantial price adjustment. These strategies would capitalize on the uncertainty highlighted by the conversation with Ludlow.

here to set up a live account on VT Markets now

US Treasury Secretary Bessent announced that we can expect a new nominee for Federal Reserve Chairman by December or January. This comes after efforts to persuade President Trump not to remove Fed Chair Powell, as Bessent aims to keep the markets stable. In response, Trump expressed his frustration and emphasized that he understands market needs. Bessent’s announcement suggests that discussions about the Federal Reserve leadership may soon come to an end.

Increased Uncertainty for Monetary Policy

We think Bessent’s statement points to greater uncertainty regarding monetary policy. A change in Federal Reserve leadership is a major event that can impact the markets significantly. Derivative traders should now prepare for increased market volatility, rather than focusing on a specific market direction. When there’s tension between the president and the central bank, it often leads to sharp market fluctuations. For example, during past pressure on Powell in late 2018, the CBOE Volatility Index (VIX) jumped from the low teens to over 35, indicating strong market anxiety. We expect a similar reaction as this new discussion heats up in the coming weeks. With the VIX trading at low levels recently, often below 15, we see a clear opportunity. Purchasing options is relatively cheap right now, before the market fully accounts for the risks of a leadership change. We are considering long volatility positions, like straddles on the SPX, to capitalize on a significant price movement in either direction.

Effect on Interest-Rate-Sensitive Assets

The uncertainty around the nominee creates two possible outcomes for interest-rate-sensitive assets. A more dovish nominee could lead to gains in tech stocks and bonds, while a hawkish choice might result in a sharp decline. Traders can use options on specific sector ETFs to speculate on whom the president may prefer for the position. For those with significant long exposure in their portfolios, this is a crucial time to hedge. The risk of a nominee unfavorable to the market replacing Powell presents a major downside risk. We recommend buying protective put options on broad market indices to safeguard against a negative outcome following the announcement in December or January. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The AUD/USD has reached its highest point in eight months at 0.6604, thanks to a generally weaker USD during morning trading in Asia. The Australian Dollar is performing well, alongside other currencies like the EUR, NZD, and GBP, which have also gained this morning. Recent data shows that Australia’s preliminary manufacturing PMI for July 2025 rose to 51.6 from the previous 50.6. This increase signals growth in the manufacturing sector and supports the rise of the AUD.

Risk Management In Forex Trading

Forex trading carries a high level of risk and can lead to significant losses. Leverage can increase risks and exposures, making it essential to carefully assess your investment goals, experience, and risk tolerance. Only invest what you can afford to lose, and seek guidance from qualified professionals about the risks involved in forex trading. The information on investingLive is for informational purposes only and should not be taken as investment advice. It is provided “as-is” and may not be complete or accurate for specific markets. investingLive is not responsible for any losses stemming from reliance on this information and does not endorse any opinions or analyses in its sources. We view the Australian dollar reaching an eight-month high as an important indicator, influenced by a weak US dollar and positive local data. This momentum creates opportunities for traders betting on further strength. While we believe the trend will continue, volatility remains a primary risk.

Factors Affecting AUD/USD Performance

The improving manufacturing PMI provides a solid foundation for the currency’s strength. Australia’s annual inflation rate remained at a two-year low of 3.6% in the first quarter of 2024, which is still above the central bank’s target. This situation lessens the likelihood of interest rate cuts and supports a stronger local currency. We should closely monitor the weaker US dollar, as markets have reduced expectations for aggressive rate cuts by the Fed. With strong US job data, the dollar could regain strength, which might limit the AUD/USD rally. We see a tug-of-war between the monetary policies of the two economies. Mr. Trump’s comments about tariffs and the Fed chairman add headline risk. Such statements can lead to sharp, unpredictable market movements, making them hard to trade. This geopolitical volatility must be included in our strategy as we prepare for sudden changes. Given these mixed signals, we are inclined to buy call options on the AUD/USD to benefit from potential further gains while strictly limiting our potential loss. The implied volatility for the pair has increased, showing this uncertainty, but it’s a manageable risk for defined rewards. This strategy allows us to capitalize on a sustained rally without exposing us to unlimited downsides. For those already holding long positions, buying out-of-the-money put options could provide effective protection. Historically, the AUD/USD can experience sharp corrections during risk-off events, like it did in early 2020. A low-cost put option serves as an insurance policy against similar big drops. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Forex and Currency Analysis

Australia’s preliminary July 2025 manufacturing PMI is 51.6, up from 50.6 in June. The flash services PMI for July is at 53.8, rising from 51.8 the previous month. The Composite PMI increased to 53.6 from 51.6. These figures indicate growth in both the manufacturing and services sectors. Reserve Bank of Australia Governor Bullock will discuss “The RBA’s Dual Mandate – Inflation and Employment” at 1:05 PM Sydney time, 03:05 GMT, and 11:05 PM US Eastern time. Topics of interest include the USDJPY technical analysis, influenced by the Japanese upper-house election, and AUD/USD reaching an 8-month high of 0.6604. There’s also talk about Trump’s proposal for tariffs on EU goods and its impact on EURUSD. Foreign exchange trading involves risks that can lead to losses exceeding your initial investment. It’s important to understand these risks and seek advice from independent financial advisors. InvestingLive is not a registered investment advisor and may earn compensation from advertisers based on user actions. Always consider your investment goals, experience, and risk tolerance when trading forex.

Central Bank Strategies and Market Implications

The latest PMI figures show that the Australian economy is growing faster than expected, challenging any thoughts of an interest rate cut. These strong results suggest that the central bank is unlikely to change its policy soon, so traders should reconsider any bets on rate reductions. Supporting this view, recent inflation data showed that the monthly CPI unexpectedly rose to 4.0% in May 2024, significantly above the Reserve Bank’s target of 2-3%. With inflation remaining high, we believe the central bank will concentrate on controlling prices. This increases the likelihood of a hawkish stance in the upcoming weeks. Moreover, the job market is tight, with the unemployment rate dropping to 4.0% in May 2024, a historically low figure. Bullock’s upcoming speech on the bank’s dual mandate, combined with this strong employment data, justifies holding rates steady or possibly hinting at future tightening. This scenario nearly eliminates the chances for a rate cut this year. For derivative traders, this means we should dismiss rate cuts and prepare for a “higher for longer” situation. Strategies like buying options to guard against a rate hike, or using interest rate swaps to speculate on short-term rates remaining high, are becoming more appealing. The market has been overly optimistic about easing, and a reassessment of expectations could happen soon. Given the robust domestic data, we anticipate continued support for the Australian dollar. Historically, when Australian economic performance exceeds expectations and rate cut speculation fades, the AUD tends to strengthen against currencies like the US dollar. We see potential in buying call options on AUD/USD to benefit from further upside, especially if the governor’s speech signals a hawkish outlook. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Cboe Global Markets is planning to close its Japanese equities operations. This means they will shut down the Cboe Japan proprietary trading system and the Cboe BIDS Japan block trading platform. The closure is scheduled for August 29, 2025, depending on discussions with regulatory authorities, due to tough market conditions affecting their financial health. Based in Chicago, Cboe Global Markets is well-known for its options and volatility products, like the Cboe Volatility Index (VIX). The company runs several global exchanges that cover equities, options, futures, FX, and digital assets. Cboe plays a key role in market innovation and electronic trading, serving both institutional and retail traders. Their network includes exchanges such as the Cboe Options Exchange, BZX, BYX, EDGX, and EDGA.

Strategic Pivot

For traders, Cboe’s exit from Japanese equities indicates a smart shift in strategy. It shows a renewed focus on their core, high-margin derivatives and volatility products. This move is wise as it helps cut losses in a non-essential business, strengthening their financial standing. This allows management to focus on the VIX and its related options, which are vital for our trading strategies. This news shouldn’t be seen as bad for the overall Japanese market. Cboe had less than 1% market share in Japanese cash equities, making their exit a minor event for overall market liquidity, which is mainly held by the Japan Exchange Group. The Nikkei 225 index reaching a 34-year high earlier this year indicates that the market is strong; the challenge was entering a highly consolidated local exchange system. For those trading options on Cboe’s stock, this announcement is actually positive. It shows that the company is carefully controlling costs and focusing on profitable activities. Historically, markets favor companies that exit underperforming segments to enhance shareholder value. We believe this will stabilize the stock, making it a good option for selling puts or establishing bullish spreads in the coming weeks.

Market Volatility

Regarding market volatility, this news is not likely to affect major indexes. However, we should view it in the wider context of market structure changes. Past data shows that shifts in exchange operations can sometimes create unexpected liquidity gaps. Therefore, we will keep an eye out for signs of stress in block trading or unusual price movements in related markets, even though the direct impact is expected to be limited. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The European Central Bank (ECB) will likely keep interest rates steady during its meeting on July 24, 2025. An announcement is set for 12:15 GMT, followed by remarks from President Christine Lagarde at 12:45 GMT. This decision comes after a year of rate cuts and aligns with ongoing U.S.-EU trade talks. With inflation returning to the 2% target and slow economic growth, leaders are taking a cautious approach ahead of the August 1 deadline for possible U.S. tariffs. A proposed 30% tariff from the U.S. could influence the ECB’s views on growth and inflation.

Trade Tariff Uncertainty

While there’s talk of a lower 15% tariff, uncertainty remains. This could lead to a rate cut in December. Past trade agreements with Japan and the UK have created varied tariff levels, raising worries about disruptive tariffs for the EU. Despite these external pressures, some parts of the eurozone economy are stable. Demand for loans has risen, equity markets are steady, and there’s an increase in foreign investment. However, a stronger euro, partly due to U.S. policy concerns, poses challenges for exports and inflation. President Lagarde is likely to discuss these risks and reassure that the ECB is prepared to respond if inflation worsens. Right now, traders should focus on the press conference after the interest rate decision, not just the decision itself. It’s essential to monitor short-term implied volatility in EUR/USD options, as any changes in the language around future policy could create big fluctuations. What President Lagarde says about the euro’s strength will be a crucial market event this week. The August 1 tariff deadline is the main uncertainty factor. We recommend preparing for increased market volatility, perhaps by investing in strategies that benefit from significant price swings, like buying straddles on the Euro Stoxx 50 index as the deadline nears. Historical data shows that during the 2018-2019 trade conflicts, volatility measures like the VSTOXX index spiked more than 40% around tariff announcements.

Interest Rate Markets Outlook

Interest rate markets are already looking beyond this meeting to potential changes later in the year. We are tracking overnight index swaps, which now suggest a 40-50% chance of a 25-basis-point cut by the December meeting. President Lagarde’s comments on inflation risks will be crucial, as they could significantly alter this probability and impact short-term interest rate futures. The stronger euro, currently close to a three-month high around 1.0900 against the U.S. dollar, is a significant issue. This rise makes imports cheaper and exports less competitive, complicating the central bank’s task of managing inflation. Therefore, any direct comments aimed at reducing the euro’s value could greatly affect the foreign exchange options market. While loan demand remains strong, recent economic data supports a cautious stance, justifying a wait-and-see approach. For instance, the latest Eurozone flash composite PMI reading was 50.8, just above the 50 mark that divides growth from contraction. This fragility indicates the eurozone has little room to absorb negative trade shocks, making European equity indices vulnerable. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Tesla expects to boost its sales in Europe once its Full Self-Driving (FSD) system gets the green light from regulators. The company is also navigating regulatory hurdles in China to launch FSD. In spite of global trade issues, Tesla is growing. It is making strides with its robotaxi service, pushing for approvals in U.S. states such as California, Nevada, Arizona, and Florida. Tesla hopes that by the end of the year, autonomous ride-hailing will be available to half of the U.S. population. In Europe, supervised FSD approval in the Netherlands is close. We think the CEO’s recent remarks are shifting the market’s focus from Tesla’s latest production numbers to future growth opportunities, like FSD approvals. This change suggests that traders should prepare for increased volatility in Tesla’s options. We anticipate that stock prices may swing sharply based on regulatory news rather than it being tied to fundamental performance in the short term. The recent tentative approval for FSD in China—possibly linked to a partnership with Baidu for mapping—is a major opportunity. A formal announcement could lead to a significant rise in stock price since China accounts for over 20% of Tesla’s revenue. This presents a good chance to buy near-term call options in hopes of a favorable outcome. While the news from Europe is positive, traders should stay aware that regulatory timelines can be uncertain. The stock price has faced pressure recently after first-quarter deliveries dropped to 386,810 vehicles, falling short of the forecast of about 449,000. This weakness suggests that strategies like bull call spreads could be wise, letting traders profit from a slight increase while limiting potential losses if news is delayed. The robotaxi story will depend on these approvals, and it’s a longer-term plan. Historically, the stock has surged ahead of major announcements, as seen during past “AI Day” events. We recommend keeping an eye on increased call option volume and open interest, as these could signal the start of a speculative, news-driven rally.

here to set up a live account on VT Markets now

Trump announced plans to impose tariffs between 15% and 50% on certain countries. He emphasized that these tariffs would be simple and easy to understand. Ongoing discussions with the European Union aim to reduce tariffs if they allow more access for U.S. businesses.

Progress With China

Trump noted progress in negotiations with China. Most other countries are expected to face these tariffs. He is also working on lowering oil prices and is involved in energy agreements with several Asian countries. More information will be shared soon. We expect increased market volatility due to Trump’s comments about these broad tariffs. In the past, the CBOE Volatility Index (VIX) spiked above 20 several times during the trade disputes of 2019, so we should be ready for similar fluctuations. Traders might want to buy call options on the VIX or put options on major indices to protect against possible declines. The serious talks with the European Union create uncertainty for transatlantic stocks. With over $1.3 trillion in annual trade at risk, any new tariffs could greatly affect German automakers and U.S. industrials. We see potential in buying straddles or strangles on ETFs that track the DAX index to benefit from large price swings, no matter the direction.

Deal With China And Impact On Oil Prices

Finalizing a deal with China could be a big positive event, but any setbacks might hurt certain sectors. In 2023, the U.S. goods trade deficit with China reached $279 billion, showing how vulnerable American tech and retail companies are. We’re keeping an eye on options for semiconductor ETFs, as they may react strongly to news related to this deal. The goal of lowering oil prices could put downward pressure on energy markets, despite current geopolitical tensions. This plan comes while U.S. crude production is nearing a record level of 13.2 million barrels per day, which might intensify the effects of any new supply agreements. Therefore, we are looking into put options on WTI crude oil futures or bearish positions on energy sector ETFs. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The US Dollar is on a downward trend, continuing its three-day decline as traders remain cautious ahead of an August tariff deadline. A trade agreement between the US and Japan has brought some optimism, but the dollar is still under pressure due to political issues surrounding the Federal Reserve. The US Dollar Index (DXY) is currently around 97.20, having dipped after failing to surpass 97.50. This week, the index has decreased by about 1.30%, moving away from nearly four-week highs.

US-Japan Trade Agreement

President Trump has revealed a trade deal with Japan that reduces tariffs on Japanese goods from 25% to 15%. Japan has committed to investing $550 billion in the US, with 90% of the profits intended to support American industries. The EU is close to finalizing a trade deal with the US, discussing a flat 15% tariff on some products. If negotiations stall, the EU is ready with €93 billion in backup tariffs. US Existing Home Sales fell by 2.7% in June, marking the slowest pace since September 2024. The median home price is now $435,300, making it harder for many to afford homes. Fed Chair Jerome Powell is facing criticism from President Trump, but there is still support for him to remain in his role until his term ends in May 2026.

Investment Strategy Amid Market Volatility

The Dollar Index’s struggle to break through the 97.50 mark suggests weakness, indicating a likely downward trend. Traders might want to consider strategies that benefit from a falling dollar, such as buying put options or taking short positions in currency futures. The recent 1.30% drop this week backs up this bearish view. The scrutiny on Powell could heighten market volatility, especially with major economic announcements coming up. According to the CME FedWatch Tool, the market now anticipates a rate cut in the next quarter with over a 60% probability, reflecting this pressure. We recommend using options to take advantage of increased price fluctuations, especially around the August tariff date. With the trade agreement with Japan, the yen is expected to strengthen against the dollar, making a short USD/JPY position appealing. The situation with the European Union is less predictable, so a strategy that benefits from significant price movements in either direction on the EUR/USD pair could be effective. The €93 billion in potential tariffs poses a considerable risk that could lead to drastic market changes. The decline in existing home sales to its slowest rate since September 2024 clearly shows an economic slowdown. Historically, a weak housing market, similar to the downturn from 2006 to 2007, often leads to looser monetary policy. This trend supports our belief that the central bank will face increased pressure to bolster the economy, further impacting the US dollar. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Fiserv stock fell 21% on Wednesday after the company reported disappointing second-quarter results. The stock price dropped from about $166 to a low of $128 during morning trading. While the markets improved with a trade deal with Japan, European tariffs remain a concern if the U.S. imposes unilateral tariffs. Other companies also saw stock declines, with Texas Instruments dropping 12% and Enphase Energy 8%. Investors are now waiting for further Q2 results from Tesla and Alphabet. In its second quarter, Fiserv’s organic revenue grew 8% year-over-year to $5.18 billion, but this was below the expected $5.2 billion. As a result, management lowered its full-year forecasts. They did increase EPS guidance by 5 cents, but the market largely ignored this. Fiserv’s adjusted EPS came in at $2.47, with revenue of $5.52 billion, exceeding Wall Street’s expectations. However, despite decent Q2 results, Fiserv’s shares returned to levels last seen in February 2024. Technical indicators like the Relative Strength Index (RSI) suggest there could be buying opportunities ahead. The candlestick pattern resembles a hammer, which suggests possible interest from buyers as shares recover from earlier lows. If trading opens above the previous day’s high, it could signal the start of an upward trend. The steep decline in stock price has led to a sharp increase in implied volatility, indicating expected price swings. The 30-day implied volatility has risen to over 45%, significantly higher than its 52-week average of around 25%. This atmosphere makes selling options premium an appealing strategy for those thinking the stock will stabilize. Given the current technical indicators and oversold RSI, we plan to sell out-of-the-money puts in the coming weeks. This strategy allows us to benefit from the volatility spike while setting a comfortable buying price below the recent low. Historical patterns show that after similar post-earnings drops of over 15%, the stock often finds a base and trades sideways or slightly higher in the following month. For traders hoping for a quicker rebound to February levels, high volatility makes buying calls quite expensive. A smarter approach would be a bull call spread; this reduces initial costs by selling a higher-strike call alongside the one being bought. While this limits maximum profits, it offers a better risk-reward profile if the stock begins the suggested uptrend. We must also consider the fundamental reasons behind the decline, as the reduced full-year forecast may limit any major rally. The potential for European tariffs adds another level of macro risk that could affect investor sentiment. Therefore, a defined-risk strategy is crucial since failing to open above the previous high could negate the bullish technical signals.

here to set up a live account on VT Markets now