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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.
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.
Market Opportunities
These points indicate a market that is being pulled in two different directions, which creates unique opportunities. The EU and South Korea’s interest in trade agreements suggests that multinational industrial and transport stocks may see less volatility. The trade relationship between the U.S. and the EU was valued at over $1.3 trillion in goods and services in 2023, so any official deal would be very stabilizing. On the other hand, the EU’s ongoing scrutiny of American tech sends a mixed message. We anticipate continued volatility in the tech sector, especially among large companies. This was highlighted when the EU fined Apple over €1.8 billion in March 2024, showing they are serious about their regulations. This uncertainty suggests a strategy of buying protective put options on tech-focused ETFs like the QQQ. At the same time, we might sell put options on an industrial ETF to benefit from the more positive outlook provided by potential trade deals. This approach would help us profit from the different directions these two sectors are heading.Geopolitical Risks And Opportunities
The push to sell TikTok introduces a significant geopolitical risk that could affect the whole market. The House of Representatives recently passed a bill that could either force a sale or ban, indicating this issue is moving quickly and may provoke a strong response from China. This signals an opportunity to consider buying call options on the VIX, which is a bet on rising market fear. Looking back, the trade war with China in 2018-2019 caused the CBOE Volatility Index to go over 30 multiple times, indicating high market stress. If the current situation escalates, we could see a similar pattern, making long-volatility positions potentially very lucrative. Given the current discussions, preparing for such a spike seems wise. The mention of South Korea also opens up specific investment opportunities in sectors like semiconductors and electric vehicles, where they are important partners for the U.S. A better trade relationship could positively impact companies in those supply chains. Therefore, we might consider long-dated call options on selected semiconductor companies with strong ties to South Korea. Create your live VT Markets account and start trading now.XAU/USD drops nearly 0.7% during European trading, staying near $3,360 without breaking the triangle
Gold prices (XAU/USD) fell nearly 0.7%, reaching around $3,360 during Thursday’s European session. This drop came after global trade tensions eased. The expectation of a US-EU trade agreement before the August 1 tariff deadline lowered the demand for safe-haven assets like Gold.
The US-Japan trade deal, which includes a 15% auto tax, raised concerns among EU officials about losing their market share. With trade disputes possibly being resolved, interest in Gold has diminished, worsened by a strengthening US Dollar.
Major Dollar Movements
The US Dollar Index (DXY) climbed to nearly 97.40, rising from a low of about 97.00. A stronger USD can make Gold more expensive, negatively impacting its price. In 2022, central banks bought a significant amount of Gold, totaling 1,136 tonnes, the highest annual amount on record. Several factors influence Gold prices, including geopolitical instability and the strength of the US Dollar. If Gold falls below the May 29 low of $3,245, it could drop to $3,200 or even $3,121. On the other hand, if it rises above $3,500, we may see resistance around $3,550 and $3,600. Gold remains a hedge against inflation and currency loss, making it appealing during economic uncertainty. We advise derivative traders to be wary of the challenges in currency markets. The US Dollar Index has recently climbed above 105, its highest level in over a month, driven by strong US job data that dampens hopes for quick Federal Reserve rate cuts. This ongoing strength in the Dollar is likely to limit any significant short-term gains for Gold.Institutional Demand And Inflationary Pressures
Nevertheless, strategic buying gives Gold a strong support base. The World Gold Council noted that central banks continued their strong buying into 2024, adding 290 tonnes in the first quarter—the best start to any year on record. This demand from large players implies that price dips will be seen as buying chances, creating a solid price floor. Inflation data also clouds the bearish outlook. The latest US Consumer Price Index shows that inflation stays stubbornly high, above the central bank’s target. Gold’s traditional role as a hedge against inflation remains crucial. This factor will likely offset some pressure from a strong Dollar and rising interest rates. Considering these mixed influences, we expect heightened price volatility instead of a clear trend. For derivative traders, this environment suits strategies that benefit from price swings, like buying straddles or strangles on Gold options. This strategy allows traders to profit from significant price movements in either direction without needing perfect predictions. Traders should closely monitor key technical levels, which have shifted from those in the initial report due to current market values. A critical support level is near $2,280 per ounce; a strong break below this may indicate a deeper correction toward $2,200. Conversely, if Gold climbs back above $2,350, it would suggest that buyers are regaining control, aiming to retest the all-time highs near $2,450. Create your live VT Markets account and start trading now.US Dollar slightly recovers against Canadian Dollar, near 1.3600 amidst positive market sentiment
The US Dollar is under pressure as risk-on markets react positively to news of a possible EU trade deal. This deal might exempt certain goods from tariffs, creating a better outlook in Asia and Europe.
Right now, the US Dollar is slowly rising against the Canadian Dollar, crossing 1.3600 but still close to its year-low of around 1.3540. This movement comes after the release of the US preliminary PMIs and weekly jobless claims data.
Recent Trade Developments and Economic Indicators
New trade agreements with Japan, the Philippines, and Indonesia have raised hopes for lower trade tariffs. US Treasury Secretary Bessent has arranged a new round of talks with China next week. Today’s preliminary PMIs in the US are expected to show growth in both the services and manufacturing sectors. On the other hand, Canada’s retail sales are predicted to drop, which may lead to further monetary easing by the Bank of Canada (BoC). The President will be visiting the Federal Reserve, which could increase pressure for interest rate cuts. In Canada, retail sales excluding automobiles are also expected to decline, which might not support the Canadian Loonie.Potential Strategies for Market Conditions
The S&P Global Manufacturing and Services PMIs are important indicators of economic health, with values above 50 signaling growth and below 50 indicating a slowdown. These figures influence how people view the strength of the US Dollar. There’s a chance to capitalize on the differing economic trends between the US and Canada. The latest S&P Global Flash US Composite PMI jumped to 54.4, hitting a 25-month high, while Statistics Canada projects a decline of 0.6% in Canadian retail sales. This economic gap favors a stronger US Dollar compared to its Canadian counterpart. Given this situation, we may consider call options on the USD/CAD or bullish futures contracts to benefit from further upward movement. The Bank of Canada has already reduced its key interest rate to 4.75%, and there’s a strong expectation of another cut this year. This difference in monetary policy will likely put more strain on the Loonie. However, the overall strength of the dollar may be uncertain due to the positive sentiment from potential trade agreements. The upcoming talks with China next week are crucial; any good news could weaken the dollar against other global currencies. Therefore, we need to be selective with our bullish positions on the dollar. The President’s visit to the Federal Reserve brings political uncertainty, especially since fed funds futures suggest a nearly 65% chance of an interest rate cut by September. With the CBOE Volatility Index (VIX) close to a low of 13, the market might be underestimating the risk of an unexpected policy change. In this context, buying volatility could be a wise strategy. To navigate this environment, we might look into purchasing straddles on major currency pairs like the EUR/USD, which are currently inexpensive because of low volatility. Historically, periods of low volatility often lead to sharp price movements. This strategy allows us to profit from significant shifts in either direction and acts as a hedge against a fixed view on the dollar. Create your live VT Markets account and start trading now.USDCHF reaches session highs but faces resistance at the 100-hour moving average and previous levels.
The USDCHF tried to decline on Wednesday and again earlier today, but neither attempt was successful. Sellers couldn’t keep the price below 0.7919, leading to a bounce back to a range of 0.7938 to 0.7947.
After stabilizing in this range, the price hit 0.7938 before climbing higher in the early US session. However, it now faces resistance from significant technical levels, with the next target being the 100-hour moving average at 0.7963.
Key Moving Averages
If the USDCHF breaks through this level, the next target is the 200-hour moving average at 0.79855. These moving averages, along with a previously broken trendline that is now resistance, create a significant barrier for buyers seeking short-term control. Surpassing these levels would change the short-term direction upwards, targeting the area around 0.8017 and reaching last week’s highs up to 0.80628. If the price remains below these averages, sellers keep some influence, and traders may revisit the range between 0.7938 and 0.7947. Currently, we view the price activity as a short-term consolidation in a broader uptrend. The main factor driving this trend is the difference in monetary policy between the U.S. Federal Reserve and the Swiss National Bank. This difference strongly supports a stronger dollar against the franc in the medium term.Interest Rate Factors
In June 2024, the Swiss National Bank surprised many by lowering its key interest rate to 1.25%, indicating a clear easing approach. This is in contrast to the latest U.S. inflation data, which, although slightly lower in May, has kept Federal Reserve officials cautious about reducing rates too quickly. This increasing difference in interest rates encourages capital to move toward the higher-yielding currency. For traders who believe the uptrend will continue, buying call options with strike prices just above the 200-hour moving average makes sense. Setting a target around 0.8017 provides a defined-risk way to profit from a potential breakout. This strategy assumes that the recent dip is just a temporary pullback rather than a trend reversal. If the moving averages continue to present strong resistance in the near term, traders may want to sell cash-secured puts with a strike price near the 0.7938 swing area. This approach generates premium income and prepares for a possible long position at a better price if the pair dips. This aligns with the perspective that sellers remain in control until those key levels are broken. Historically, lasting trends in this currency pair have been influenced by central bank policies. The strong uptrend throughout most of 2024 reflects the SNB’s dovish stance while the Fed has remained steadfast. Therefore, we should view the ongoing struggle at the moving averages as a crucial test to determine if this prevailing trend will continue in the coming weeks. Create your live VT Markets account and start trading now.Strategists say the Japanese Yen stays steady against the US Dollar due to mixed PMI releases.
The Japanese Yen (JPY) is holding steady against the US Dollar (USD) during Thursday’s North American session, following mixed reports on Purchasing Managers’ Index (PMI). The services PMI was better than expected at 53.5, while the manufacturing PMI fell short at 48.8.
