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Australia’s July manufacturing and services PMIs showed positive growth, with Bullock discussing monetary policy afterward
Cboe Global Markets to close its Japanese equities operations by August 29, 2025, citing challenges
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.The European Central Bank plans to keep interest rates steady while waiting for trade negotiations to become clearer.
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.Elon Musk expects higher Tesla sales in Europe thanks to Full Self-Driving system approvals and expansions
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.
Trump plans tariffs of 15% to 50% while discussions on global trade agreements continue
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.US dollar stabilizes as US-Japan trade tensions ease, despite recent decline
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.Fiserv’s stock drops 21% after Q2 sales miss and reduced guidance
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.
Production starts on budget electric vehicle, with expansion plans for 2025-26
Tesla’s Q2 earnings report reveals that the company is starting production on a new, affordable electric vehicle. While details like the name, features, and starting price are not yet available, mass production is expected to begin in the second half of 2025. This new model will be priced lower than the Model 3, which currently starts at $42,490.
In addition, Tesla plans to ramp up production of the Tesla Semi and the autonomous Cybercab robotaxi by 2026. The Q2 financial results show a revenue of $22.5 billion, down 12% from last year. Net income also dropped 16% to $1.2 billion, and vehicle deliveries fell by 13.5% compared to the same quarter last year.
Sales may be affected by CEO Elon Musk’s political views, which have led to some consumer backlash. Tesla has launched a limited robotaxi service in Austin, Texas, with safety riders on board. The company aims to expand this service to other cities with low costs and eventually operate the robotaxis without onboard safety drivers.
The next few months will be crucial as Tesla rolls out its more affordable EV and pursues its plans for autonomous vehicles.
The recent report highlights a clear challenge for derivative traders. With a 12% drop in revenue and a 13.5% decrease in vehicle deliveries, there is a strong case for bearish sentiment in the short term. These figures suggest that short-dated put options might be a smart choice as negative momentum continues.
On the other hand, the announcement of a more affordable vehicle that will enter production sets a promising long-term narrative. Traders optimistic about this goal for 2025 might consider buying long-dated call options to benefit from potential stock price increases as the new model approaches mass production. Currently, Tesla’s implied volatility is high, around 55%, indicating that the market is expecting significant price fluctuations.
However, we need to consider Tesla’s history of missing production deadlines, as shown by the Cybertruck’s delays. This execution risk makes the 2025 and 2026 goals speculative, offering a chance for bearish positions. Traders could set up bear call spreads to profit if the stock stagnates or declines due to possible setbacks.
External pressures are also significant, especially with growing competition in China. Rivals like BYD sold over 300,000 battery-electric vehicles in the first quarter of 2024. Consumer sentiment is a concern too; a Caliber survey indicated that Tesla’s “consideration score” among U.S. car buyers dropped to 31% early this year from 70% in 2021. These challenges, influenced by the CEO’s public remarks, might continue to hurt sales.
Given these conflicting dynamics, strategies that take advantage of volatility—rather than betting on a specific direction—seem wise. A long strangle strategy, which involves buying both an out-of-the-money call and put option, would allow traders to profit from significant price movements. This approach is well-suited for the critical 12-18 months ahead as the market weighs current struggles against future potential.
US-Japan trade deal sparks speculation about EU negotiations as stocks and yields rise with new economic data
The North American trading session had positive news following a US-Japan trade agreement that reduces tariffs on Japanese imports to 15%. In this deal, Japan will buy 100 Boeing planes and agricultural products. Now, attention is shifting to the European Union as there are hints of a possible 15% tariff agreement with the US. However, White House advisor Peter Navarro cautions against jumping to conclusions.
Impact Of EU Tariffs
The EU is said to be preparing counter-tariff measures, which could strain relationships. Despite this, stock markets reacted positively. US production is expected to rise to help reduce trade deficits. Although home sales in the US were lower than expected, prices increased, and inventory levels rose to 4.7 months, which is below the typical six-month standard. US stocks climbed, with the S&P, NASDAQ, and Dow indices reaching record highs. After-hours trading showed Alphabet shares rising due to strong earnings, while Tesla saw slight growth despite mixed results. In the debt market, treasury bond yields increased, and crude oil prices fluctuated around $65. Gold prices dropped by $45.15, and Bitcoin fell by over $2000. Treasury Secretary Bessent hints at possible rate cuts, and discussions with the EU are improving. Looking at today’s events, the market appears optimistic but might be overly relaxed. With the S&P 500 and Nasdaq at record highs, implied volatility is low. The VIX index recently hit a multi-year low of 11.5, indicating cheap options pricing and an opportunity for a future volatility spike.Opportunity In Market Volatility
The mixed signals about a European trade deal create a clear situation for traders. Mr. Navarro’s cautious view contrasts with earlier optimism, setting the stage for a significant market reaction based on the outcome. We suggest buying straddles on major indices, like the SPX, or European-focused ETFs to take advantage of this uncertainty. Even though Mr. Bessent suggests rate cuts, the bond market is reacting differently, with rising yields. This shows that bond traders are more focused on growth and potential tariff-related inflation than on the Treasury’s dovish signals. We see value in positioning for higher short-term rates, possibly through futures on the 2-year note to bet against a dovish forecast. The strong performance of semiconductors, positive earnings from Alphabet, and the White House easing AI regulations support the leadership of the technology sector. We are keeping a bullish outlook, favoring call options on tech-focused ETFs. Historically, deregulation boosts innovation and stock performance in those sectors. The significant drops in gold and Bitcoin indicate a clear shift toward risk-taking, with investment moving from safe havens and speculative assets to stocks. The $45 fall in gold suggests a stronger dollar environment, which we expect to continue if more trade agreements follow Japan’s example. We are considering buying put options to protect against further declines in gold and Bitcoin as the market seeks performance in equities. Create your live VT Markets account and start trading now.Euro declines against the British Pound as investors await the ECB’s policy announcement
The Euro is losing value against the British Pound. Currently, the EUR/GBP exchange rate is about 0.8655, which is a drop of nearly 0.43% during American trading hours. This comes as attention shifts to the European Central Bank’s upcoming policy decision, where the deposit rate is expected to stay at 2.00%.
Recent data indicates a small improvement in Euro Area Consumer Confidence. The index has risen from -15.3 in June to -14.7 in July, exceeding expectations. Although challenges remain, this improvement suggests better household outlooks. Additionally, there is a rising demand for mortgages and business loans, as noted in the Bank Lending Survey.
