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The report examines US trade agreements, market gains, Microsoft concerns, and S&P 500 analysis.
US markets are on the rise, with the Nasdaq, S&P 500, and Dow Jones all gaining ground since last week. A significant trade deal between the US and Japan was announced, in which Japan will invest $550 billion in the US and enforce a 15% reciprocal tariff. This agreement has boosted market confidence, and further deals with the EU could happen before the tariff deadline on August 1st. Meanwhile, the EU is readying potential tariffs on US goods if no agreement is reached.
Microsoft has found a “zero-day” vulnerability in its self-hosted SharePoint servers. This attack, believed to be by Chinese state-sponsored groups, has impacted around 100 organizations and some government entities. The full extent of the breach is still unclear, and it could hurt Microsoft’s stock if more weaknesses are discovered and not quickly resolved.
GBPUSD rises above the 50% retracement as buyers regain control and target higher levels
GBPUSD has hit a new session high, breaking past the 50% midpoint of the July trading range at 1.35764. Earlier attempts to break this level faced selling pressure, causing a dip to 1.3552, just below the support at 1.3561.
However, buyers took control again, pushing the pair back above the midpoint and reaching new highs. The key support level is now at 1.3561, which buyers need to maintain to keep moving up.
Upcoming Technical Targets
The next target is 1.35918, with potential further gains pushing towards the 61.8% retracement level at 1.36265. Given the buying momentum noted by Michalowski, we suggest that derivative traders look into bullish strategies. The successful hold of lower levels and the break above the midpoint indicate underlying strength. Buying call options with strike prices close to the next target levels may be a smart way to join this rally. This technical momentum is backed by recent data from the U.S. The latest Consumer Price Index (CPI) for April revealed that inflation has eased slightly to 3.4% annually, increasing chances that the Federal Reserve might lower interest rates later this year. A weaker dollar benefits the pound, aiding its rise.Impact of Central Bank Policies
Historically, when both the U.S. and U.K. central banks signal potential rate cuts, increased volatility often follows. The recent Bank of England meeting recorded a 7-2 vote to hold rates, hinting at possible rate cuts as well. We can use derivatives like call spreads to manage our risk while still aiming for the 61.8% retracement level discussed earlier. We’ll keep a close eye on the 1.3561 level, as it’s crucial for any long positions. If the price stays above this level, it confirms that buyers are in control. However, a solid break below this support would lead us to exit bullish trades and reassess the market situation. Create your live VT Markets account and start trading now.Silver consolidates under $39.50 after reaching multi-year highs amid cautious optimism
Silver is currently trading below $39.50 after a strong three-day rally, which has boosted its value by 3.33% this week. The metal hit a 14-year high of $39.48, with the Relative Strength Index (RSI) close to 73, indicating strong momentum. However, this overbought condition might limit further gains soon.
On Wednesday, silver paused its rise, staying under $39.50 as the US Dollar remained stable after a trade deal between the US and Japan impacted market sentiment. Throughout this rally, Silver has benefited from a weaker US Dollar, maintaining near its 14-year highs.
The daily chart shows that Silver has been moving within a rising channel since April, staying above the increasing Exponential Moving Averages (EMAs). While the RSI remains overbought, there are no signs of a reversal yet. The Average Directional Index (ADX) at 23.60 suggests that underlying trends are strengthening.
The target to watch is $40.00, and if conditions are favorable, we might see moves towards $42.00 or $43.00. Support levels are around $38.45 to $38.10, with further backing at the 21-day EMA near $37.59 and the 50-day EMA at $36.20.
Silver is often seen as a safe haven and its prices can shift due to geopolitical factors, interest rates, and USD performance. Demand from the industrial sector and the price of Gold also play key roles in shaping Silver’s market dynamics.
Given the strong upward trend, the current environment appears positive for a bullish outlook. We consider buying call options with strike prices targeting the $40.00 psychological barrier, as the trend remains strong. Recent data from the CME Group shows rising open interest in silver futures alongside increasing prices, indicating that new investments are entering the market and supporting the rally.
However, we should be mindful of the overbought signal, which suggests a short-term pullback is likely. The latest U.S. Consumer Price Index (CPI) report was lower than expected at 3.4%, putting pressure on the dollar and increasing expectations for a Federal Reserve rate cut later this year. For traders with existing long positions, this may be an ideal time to purchase protective put options to guard against a possible dip toward initial support levels.
We remember the rapid rise to nearly $50 an ounce in 2011, which also came after extreme overbought conditions leading to a sharp reversal. This historical pattern indicates that while the overall momentum may be upward toward higher price targets, volatility is likely to increase. Therefore, using strategies with defined risk, like bull call spreads, can be a wise way to benefit from potential upside while managing risks from sudden drops.
Silver’s role as an industrial metal creates a strong demand base that traders need to consider. The Silver Institute projects that global industrial demand for silver will reach a record 711 million ounces in 2024, largely driven by its use in solar panels and electric vehicles. This robust industrial use, distinct from investment demand, supports a long-term bullish outlook, even if we experience some technical consolidation in the near future.
Hasbro reports earnings of $1.3 per share, beating expectations of $0.78 per share
Hasbro reported earnings of $1.3 per share this quarter, which is higher than the expected $0.78 per share. This is an increase compared to last year’s earnings of $1.22 per share, showing a positive surprise of +66.67%.
In the previous quarter, Hasbro had an earnings surprise of +55.22%, reporting $1.04 per share when analysts expected $0.67. Over the past year, the company has consistently beaten earnings expectations.
For the quarter ending June 2025, Hasbro’s revenues were $980.8 million, exceeding the expected $888 million by 10.43%. This is a drop from last year’s revenue of $995.3 million, but Hasbro has outperformed revenue estimates three times in the last four quarters.
Since the beginning of the year, Hasbro shares have risen by 38.7%, while the S&P 500 has only increased by 7.3%. The future price of Hasbro’s stock will likely depend on what management says about future earnings.
Analysts expect the next quarter to bring $1.63 EPS on $1.27 billion in revenues. For the current fiscal year, estimates are $4.30 EPS on $4.23 billion in revenue. In comparison, Jakks Pacific, a competitor, is predicted to report a quarterly loss of $0.38 per share.
Given the strong earnings report, we believe Hasbro’s stock will keep its positive trend in the short term. Its strong performance compared to the S&P 500 is backed by solid results, not just speculation. Following this news, analysts at Bank of America reiterated a “Buy” rating, suggesting the stock could rise an additional 15-20%.
For those trading derivatives, now is a good time to sell put options instead of buying costly calls. This strategy takes advantage of high implied volatility often seen before an earnings announcement. By selling out-of-the-money puts, traders can earn a premium while agreeing to buy the stock at a lower price.
Historically, Hasbro’s stock has seen a decrease in options’ costs, known as a “volatility crush,” after earnings reports. In the days following its last four earnings announcements, implied volatility fell by an average of 25%, which is a great opportunity for option sellers. Current market data shows unusually high interest in put options for the next cycle, suggesting many are expecting a decline, which we can counteract.
The estimates for the next quarter are quite ambitious, but Hasbro’s track record of exceeding expectations inspires confidence. Additionally, expected weaknesses from competitors give Hasbro a chance to gain more market share. We will closely monitor management’s comments for any updates to their revenue outlook for the full year.
Navarro suggests that the Japan-US agreement could lead to more trade deals, particularly with the EU.
White House trade advisor Navarro thinks that the trade agreement between Japan and the US could pave the way for more deals with other countries. He is doubtful about reports suggesting a 15% tariff on EU goods, stating that the result depends on what the EU offers to President Trump.
Currently, there are reports that the US and the EU are close to a deal involving 15% tariffs, but some products, like airplanes and spirits, might be exempt. To secure an agreement, the EU may need to strengthen its relationship with the Trump administration.
Market Implications
Following the advisor’s comments, derivative traders should brace for increased market volatility. With over $1.3 trillion in trade between the US and the EU every year, uncertainty over a potential 15% tariff will likely cause significant price fluctuations in key markets. This “will they or won’t they” situation is perfect for options traders. We suggest focusing on European stock indices, such as the Euro Stoxx 50 or Germany’s DAX, by buying volatility. Strategies like long straddles or strangles can profit from large price movements, whether there’s a relief rally from an unexpected deal or a sharp drop due to new tariffs. The Financial Times highlights that companies like Airbus and LVMH may be at risk, making their options valuable. This scenario is similar to the US-China trade war from 2018 to 2019, during which the CBOE Volatility Index (VIX) often rose above 20 due to negative news. Back then, markets would rally on any news of a “deal” and drop on tweets about new tariffs. We expect a similar trend, where sentiment may change quickly based on statements from officials like Navarro.Currency Market Focus
The currency market, particularly the EUR/USD pair, will be a key focus in these developments. If a deal isn’t reached, as the advisor warned, it would likely put downward pressure on the Euro. Trading options on currency ETFs like FXE can be an easy and effective way to speculate on these tense negotiations. The main issue is what the EU will offer President Trump. Traders should watch official statements and news closely, as any indication of vague or “aspirational” goals from Europe without real concessions could provoke a negative reaction from the administration. Staying agile and ready for swift, headline-driven changes will be crucial in the upcoming weeks. Create your live VT Markets account and start trading now.Canada’s New Housing Price Index improved to -0.8% in June from -1% year-on-year.
The Canada New Housing Price Index reported a yearly decline of just -0.8% in June, improving from -1% in May. This indicates that the drop in housing prices is slowing down.
The EUR/USD currency pair is recovering, moving closer to the 1.1750 level after advances in a US-EU trade deal. In contrast, GBP/USD has reached daily highs near 1.3560, coinciding with shifts in the US Dollar driven by the US-Japan trade agreement.
Gold Market Trends
Gold prices have dipped to a two-day low, falling below $3,400 per troy ounce. This decline is due to reduced trade worries after the US-Japan agreement and potential positive moves in US-EU relations. Cryptocurrencies like Bitcoin, Ethereum, and XRP are facing difficulties, leading to a 3.5% decrease in total market capitalization, now at $3.9 trillion. However, a rise in Open Interest indicates that some investors are still optimistic about the crypto market. During Trump’s second presidency, early months have seen unpredictable policy changes. Despite this, markets have remained steady. His administration focuses on “America First” policies that influence trade, taxes, AI, and national defense.Canadian Real Estate Outlook
The slower rate of decline in housing prices suggests that the market is stabilizing. Recent data from Statistics Canada shows that the New Housing Price Index dropped only 0.1% year-over-year in May 2024, a significant improvement compared to the steeper declines in late 2023. This presents a potential opportunity for call options on Canadian real estate ETFs, as we expect the market to stabilize. With the EUR/USD pair around 1.07, the disparity in inflation data between the US and the Eurozone presents trading opportunities. While US CPI remains over 3%, Eurozone HICP has cooled to 2.6%. This suggests that the European Central Bank might diverge from the Federal Reserve regarding interest rate cuts. Derivative traders might look to profit from this difference by selling euro call options. The recent trading pattern of precious metals indicates the market adjusting to a “higher for longer” interest rate climate. Holding non-yielding bullion becomes more costly when assets like US Treasury bonds yield 4.7%. We expect continued price pressure on gold, making put options a smart choice for hedging against or speculating on further price drops if rates stay high. The cryptocurrency market is showing a classic divergence. Prices for major assets like Bitcoin are stabilizing, while derivatives open interest has surged, recently exceeding $32 billion for Bitcoin. This suggests that leveraged traders expect a significant price shift even though the spot market momentum is waning. We recommend using options strategies like straddles to take advantage of upcoming volatility, no matter the direction. The political climate, particularly the upcoming US election, is fostering sector-specific uncertainty, similar to the previous administration’s focus. Historically, election years often bring increased market volatility; for example, the VIX index spiked ahead of the 2016 and 2020 elections. We’re preparing for this by utilizing derivatives on sector-specific ETFs, like those related to defense and energy, which could experience notable changes based on Mr. Trump’s policies. Create your live VT Markets account and start trading now.The Canadian New Housing Price Index declined by 0.2% month over month, falling short of expectations.
In June, the Canada New Housing Price Index fell by 0.2% compared to the previous month. This drop was greater than the expected 0% change.
The Index serves as an economic indicator that shows trends in Canada’s housing market. It tracks the prices of newly built homes across the country.
Impact Of Higher Borrowing Costs
The unexpected decline in the New Housing Price Index clearly indicates that rising borrowing costs are cooling the market. This decline, especially seen in major cities, points to strained consumer purchasing power. We should prepare for further softening in the real estate sector. This housing data creates a challenge for the Bank of Canada, which raised its policy rate to a 22-year high of 5.0% in July to tackle ongoing inflation. However, new data for July shows inflation unexpectedly rose again to 3.3%, putting the central bank in a tough spot. We believe the weakening housing market may lead them to pause rate hikes, despite the inflation figure. For interest rate derivatives, this presents opportunities to bet that the central bank will not raise rates in September. We are looking into positions that could benefit from rates stabilizing or falling sooner than expected. Historical data from the early 1990s demonstrates how aggressive rate hikes can lead to long housing downturns, which policymakers will want to avoid.Currency And Equities Strategy
This economic outlook may put downward pressure on the Canadian dollar, especially if the U.S. Federal Reserve continues to be aggressive with its rates. We should consider strategies that profit from a weaker Canadian dollar against the U.S. dollar, like buying put options on the currency. Divergent central bank policies typically drive currency pair movements. We also expect financial and real estate equities will underperform. Canadian bank stocks, which have significant mortgage exposure, may struggle due to slowing loan growth and increasing credit loss provisions. We see put options on major bank ETFs or homebuilder stocks as a smart way to hedge against, or benefit from, this anticipated sector decline. Create your live VT Markets account and start trading now.Pound Sterling strengthens against most currencies despite emerging fiscal risks in the UK, except for the antipodeans
The Pound Sterling rose against most other currencies, even with concerns about UK fiscal risks highlighted by the Office for National Statistics (ONS). The ONS showed that the UK government raised its second-largest funds since 1993 to tackle rising debt costs due to inflation, which may lead to higher taxes in the upcoming Autumn Statement.
The GBP/USD stayed steady above 1.3500, helped by better risk sentiment. The US Dollar faced selling pressure amidst ongoing trade issues between the US and concerns regarding the relationship between President Trump and Federal Reserve Chairman Powell.
Euro Dollar Developments
The Euro regained some value against the US Dollar, aiming for the 1.1750 level as US-EU trade talks progressed. Meanwhile, the USD struggled as traders reacted to the recent US-Japan trade agreement. Gold prices fell below $3,400 per ounce due to reduced trade worries after the US-Japan agreement. Major cryptocurrencies like Bitcoin, Ethereum, and Ripple also declined, with the overall market cap dropping by 3.5%, likely due to profit-taking. During Trump’s presidency, major policy shifts faced resilient markets. Experts suggest that brokers offering competitive features are essential for effectively trading EUR/USD in the changing forex landscape. Currently, we see the Pound’s strength as fragile due to significant fiscal risks pointed out by the ONS. Recent data shows UK government borrowing in April 2024 reached £20.5 billion, the fourth-highest for an April since records began, stressing the burden on public finances. Derivative traders might consider buying put options on GBP/USD to guard against potential downturns ahead of the Autumn Statement.Opportunities and Risks in Forex Markets
We see ongoing selling pressure on the US Dollar as a prime opportunity, given the changing monetary policy outlook. Although the quarrels between the former president and the Federal Reserve chairman are in the past, tensions between policy and politics remain. Markets are predicting at least one Fed rate cut by the end of 2024, leading us to consider shorting the dollar against currencies with more hawkish central banks. We’re closely watching the Euro’s potential rise against the dollar. Recent data shows Eurozone inflation steady at 2.6% in May, allowing the European Central Bank to adopt a cautious approach, unlike the Fed. We recommend traders look at call options on the EUR/USD pair, aiming for a move towards the 1.0950 level in the coming weeks. As for gold, its price is influenced less by trade deals and more by global interest rate expectations and central bank demand. With gold at around $2,330 an ounce, historical data shows its value tends to rise during times of declining real yields. Traders should use futures to capitalize on this range, as central bank purchases, which totaled a record 1,037 tonnes last year, provide a solid support for the market. In cryptocurrency, recent price drops reflect broader market stabilization rather than mere profit-taking. The approval of spot Ethereum ETFs follows over $15 billion in net inflows into spot Bitcoin ETFs since their launch, indicating a significant shift toward institutional adoption. We recommend using options to trade implied volatility, as regulatory updates and macroeconomic data are likely to cause sharp price fluctuations. Create your live VT Markets account and start trading now.EUR/USD pair declines after a three-day rally as focus shifts to Eurozone sentiment and the ECB
The Euro has dropped from its recent peak against the US Dollar due to uncertainty about a trade deal between the EU and US. Traders are likely to be cautious before the European Central Bank’s (ECB) upcoming meeting.
After a 1.3% rise over three days, the EUR/USD pair is now lower, reflecting worries about stalled trade talks. All eyes are on the release of the Eurozone Consumer Sentiment Index and the ECB’s policy decision.
Euro’s Decline Against the Dollar
On Tuesday, the Euro fell to 1.1730 from a two-week high of 1.1760, but it remains above the support level of 1.1720. Market sentiment will depend on the ECB’s upcoming decision, especially with fears of a trade war looming. The preliminary Consumer Sentiment Index for July is expected to show a reading of -15, slightly better than the previous -15.3. In other news, a trade deal between the US and Japan has resulted in lowered tariffs, with Japan promising to invest heavily in the US. The EUR/USD pair still has a positive outlook while staying above 1.1720, supported by a strong market structure. However, falling below this support could lead to a drop toward 1.1680. We think the current caution about the Euro is warranted before the central bank’s meeting. Traders should be aware that these events often lead to increased volatility, making long-term, unhedged positions particularly risky in the coming days.Market Expectations and Policy Divergence
With Eurozone inflation reaching a record high of 8.6% in June, there are high expectations for a strong policy response. We anticipate at least a 25 basis point rate hike, the first in over a decade. If analysts’ predictions of a surprising 50 basis point increase are realized, it could lead to a significant spike in the currency pair. Given the key support at 1.1720, there are opportunities for derivative plays. Buying put options with a strike price just below this level could be a cost-effective way to guard against a drop. This would protect against a market disappointment following the policy announcement. The overall economic outlook suggests caution, highlighted by the German GfK Consumer Climate index plummeting to a record low of -27.4. This weak sentiment indicates vulnerability in the economy, which could limit any rallies in the Euro. It also illustrates a potential conflict for policymakers between controlling inflation and fostering growth. Concerns about stalled trade negotiations between major economic powers will likely cap the Euro’s potential for growth. While smaller collaborative efforts continue, the lack of a significant agreement means there’s less chance for a major boost for the Euro. Sustained rallies above recent peaks seem unlikely for now. Historically, different policies from central banks have created strong trends in currency values. If European officials indicate a more aggressive rate hike than expected, it could lead to a significant shift. Using long-dated call options could be one strategy to benefit from a longer-term bullish reversal. Create your live VT Markets account and start trading now.A $13 billion auction of 20-year bonds showed strong demand, yielding 4.935% with excellent performance.
The U.S. Treasury recently auctioned $13 billion in 20-year bonds, achieving a high yield of 4.935%. At the time, the WI level was 4.951%, resulting in an auction tail of -1.6 basis points, compared to a six-month average of -0.1 basis points. The bid-to-cover ratio was 2.79, which is higher than the six-month average of 2.62.
Direct bidders acquired 21.86% of the bonds, up from the six-month average of 18.0%. Indirect bidders made up 67.43%, slightly down from an average of 68.0%. Dealers received 10.72%, below the typical 14.0%.
### The Auction Grade
This auction received an ‘A’ grade, reflecting strong domestic interest. International buyers participated at a level close to their average, easing the dealers’ burden. Despite this robust auction, yields in the U.S. have been rising.
The 10-year yield rose to 4.387%, an increase of 5.2 basis points. The 30-year yield reached 4.957%, up 5.4 basis points, closely matching the auction level.
The solid demand in the report indicates that investors view current yield levels as appealing for long-term debt. However, this strong auction result comes amidst rising overall market yields, hinting at other influential factors affecting the bond market.
### The Impact of Inflation
One major factor is ongoing inflation. The latest Consumer Price Index revealed a 3.2% annual increase in February, which was higher than expected. This suggests the Federal Reserve may delay interest rate cuts, putting upward pressure on rates. We anticipate that this trend will overshadow specific auction results for now.
This environment creates a mix of signals—strong bond demand against persistent inflation—which could lead to continued volatility. The MOVE Index, which measures bond market volatility, remains high around the 100 level, significantly above its historical average, indicating uncertainty. As a result, we are exploring strategies that benefit from price fluctuations, such as buying straddles on Treasury-linked ETFs.
The strong participation from direct bidders indicates that domestic investors are securing long-term yields, betting that rates might be at a cyclical peak. This situation could make selling out-of-the-money call options on 10-year Treasury note futures (/ZN) an appealing strategy for earning income, as we believe yields are unlikely to spike significantly from current levels.
Reflecting on late 2023, we experienced similar volatility before yields dropped, prompted by a clear change in Federal Reserve communication. Recent meeting minutes show that officials are wary of cutting rates too soon, so we are not preparing for a major bond rally just yet. Instead, we aim for strategies that manage risk and operate within a range until a clearer trend develops.
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