Insights 
VT 
The Reserve Bank of Australia will discuss economic policies and publish its quarterly Bulletin today.
The Reserve Bank of Australia (RBA) is in the spotlight today with the release of its quarterly ‘Bulletin’. This document includes articles about the economy, policy, and other important topics.
A significant event is RBA Governor Bullock’s speech on “The RBA’s Dual Mandate – Inflation and Employment” at the Anika Foundation in Sydney. This is scheduled for 0305 GMT on Thursday, July 24, or 2305 US Eastern time on Wednesday, July 23.
US-Japan trade agreement provides temporary relief while USD/CAD rises slightly above 1.3600
USD/CAD is trading slightly higher, just above 1.3600, thanks to a recent trade agreement between the US and Japan, which has provided short-term support for the US Dollar. However, the overall outlook is still uncertain due to political issues with the Federal Reserve and rising trade tensions.
The Canadian Dollar could be volatile as the August 1 deadline for US tariffs approaches. US officials have confirmed that this deadline will not be extended, meaning a 35% tariff will be imposed on Canadian goods that are not covered under the USMCA. Additional tariffs include 50% on steel and aluminum, 25% on auto parts, and 10% on energy exports.
Canadian Dollar Resilience
The Canadian Dollar is demonstrating resilience due to strong domestic factors and a weakening US Dollar. Technically, USD/CAD is trading below important levels, indicating a possible shift in market sentiment. Immediate support is at 1.3540, with resistance at 1.3661 and 1.3714. Tariffs are taxes on imported goods that help domestic manufacturers by giving them a price edge. They also generate government income, similar to taxes collected post-purchase, but are paid upfront when goods enter the country. Economists have mixed views on tariffs; some see them as protective, while others think they could be harmful. Donald Trump intends to use tariffs to boost the US economy. In 2024, the US imported 42% of its goods from Mexico, China, and Canada, with Mexico being the largest exporter at $466.6 billion, according to the US Census Bureau. Trump’s aim with tariff revenue is to lower personal income taxes. With the August 1 deadline for new tariffs approaching, we expect significant volatility in USD/CAD. This environment presents opportunities for strategies that benefit from price changes rather than just direction. Historically, during the 2018 trade disputes, USD/CAD rallied towards 1.3600, indicating a tendency for a weaker Canadian Dollar if tariffs are confirmed.Canada’s Economic Picture
We should also consider Canada’s economic situation. According to Statistics Canada, inflation dropped to 2.9% in May 2024. The Bank of Canada has started a rate cut cycle, which may reduce some currency strength. Thus, any positive domestic news could be overshadowed by the threat of hefty import duties. Traders might want to buy options to navigate this expected volatility while minimizing risk. Purchasing call options on USD/CAD could be a direct bet on tariffs, likely pushing the pair above resistance levels like 1.3714. Increasing implied volatility in the options market suggests that many are already preparing for a significant move, so it’s vital to act before options become too expensive. On the other hand, put options can be profitable if a last-minute agreement is made, potentially lowering the pair sharply toward the 1.3540 support level. A straddle strategy—buying both a call and a put—can be effective for traders expecting a big move but uncertain of the actual direction. This approach helps hedge against the unpredictability of political developments related to the former president’s policy announcements. The focus on using tariffs to fund domestic policies is crucial, especially since Canada ranks among the top three US trading partners. Total trade between the two countries exceeded $790 billion in 2023, underscoring the significant economic impact of new trade barriers. We will be closely watching for any signals that could change the timeline, as this situation remains the key catalyst for USD/CAD in the coming weeks. Create your live VT Markets account and start trading now.Consumer confidence in the Eurozone exceeds expectations, reported at -14.7 instead of the anticipated -15.
Eurozone consumer confidence improved slightly in July, registering at -14.7, better than the expected -15. This points to a small boost in economic sentiment in the Eurozone.
The AUD/USD pair has risen to 0.6600, marking four consecutive days of growth. This rise is supported by a generally positive trading atmosphere, especially following a trade agreement between the US and Japan.
Eur Usd Momentum
The EUR/USD pair has been climbing for the fourth day in a row, approaching 1.1800. This upward trend is linked to recent trade news and the upcoming decisions on interest rates from the European Central Bank (ECB), which have improved market sentiment. Gold prices have dropped daily, falling below $3,400 per troy ounce. This decline is mainly due to a reduction in trade tensions following positive developments in international trade agreements. BNY Mellon and Goldman Sachs are using blockchain technology to facilitate investments in money market funds. This move highlights a growing trend of embracing modern technology for financial innovation. During Donald Trump’s second term, policy changes have come quickly, with a focus on “America First” across various sectors. Despite uncertainties, markets have remained stable.Eurozone Economic Resilience
The recent slight improvement in Eurozone consumer confidence, ticking up to -14.3 in May, suggests there may be some economic resilience in the region. Given this, we are cautiously optimistic about modest gains and may consider using call spreads on European indices to manage risk while aiming for potential upside. The Australian dollar has surged past 0.6650, reflecting improved global trade sentiment, but its trajectory is closely linked to China’s economy. With a 4.3% year-on-year increase in Chinese industrial profits, the demand for Australian commodities appears stable for now. We see buying short-dated AUD/USD call options as a wise strategy to capitalize on this momentum. As the euro hovers around 1.085, all eyes are on the European Central Bank’s meeting on June 6th, where a rate cut is widely anticipated. The real trading opportunity may arise during the press conference that follows, especially if there are clues about future policy. Any indication that this rate cut is a one-time measure could lead to a sharp rally in the currency pair, making it an important event to watch. Gold’s recent drop from its highs of around $2,400 per ounce is a reaction to uncertainty about when the US Federal Reserve will adjust rates. Historically, high interest rates have posed challenges for non-yielding gold. We expect further price stabilization, suggesting traders might consider using put options to hedge against a larger correction, especially if US economic data remains strong. The adoption of blockchain for money market funds by major firms like BNY Mellon and Goldman Sachs is part of a broader trend towards asset tokenization. BlackRock’s new tokenized fund, BUIDL, attracting over $400 million in just a few months, indicates a significant long-term shift in finance. While this may not immediately impact most derivative trades, it signals the future landscape of finance we need to prepare for. Looking ahead to the upcoming U.S. election, we are getting ready for potential returns to policies from Trump’s first term that focused on American industry. We recall the US-China trade war from 2018-2019, which pushed the VIX volatility index above 35 multiple times. Thus, holding some long-dated VIX call options may be a smart hedge against the market uncertainties that could arise later this year. Create your live VT Markets account and start trading now.Treasury Secretary Bessent suggests there could be one or two rate cuts this year after discussions with Powell.
Treasury Secretary Bessent has talked about the possibility of 1 to 2 rate cuts this year. This insight comes from regular breakfast meetings with Federal Reserve Chair Powell, where they discuss economic matters.
These conversations could shape decisions about the economy and monetary policy. The expected rate cuts may impact markets and investment strategies going forward.
Market Volatility And Predictions
Following Bessent’s remarks, traders should brace for increased market volatility focused on interest rate expectations. The close relationship between Bessent and Powell adds credibility to the forecast of one or two rate cuts. This outlook is quite different from a few months ago when such cuts seemed unlikely. Recent data supports the case for easing. The latest Consumer Price Index report showed inflation dropping to 3.3% in May, slightly below expectations. This data could give Powell the reason he needs to start cutting rates. Consequently, assets sensitive to lower rates, like technology stocks and long-term bonds, may become more appealing. However, the situation is complicated. The most recent jobs report indicated a stronger-than-expected gain of 272,000 jobs, making the inflation landscape more complex. This tension between cooling inflation and a robust job market creates a volatile environment. It’s a prime time for strategies that can benefit from price fluctuations. We are considering buying call options on indices like the Nasdaq 100 or bond ETFs, such as the TLT. Since the VIX volatility index is trading near a low of 13, options are relatively cheap right now, providing an affordable way to position for a potential rally. This sets up a favorable risk-reward scenario for bullish bets.Historical Market Patterns
Timing these potential moves is crucial, and the futures market offers clear guidance. The CME FedWatch Tool shows that traders expect more than a 60% chance of the first rate cut happening by the September meeting. This indicates that option strategies should extend through that timeframe. Historically, markets often rise in anticipation of the first rate cut in a new easing cycle. For instance, in 2019, equities did well leading up to the Fed’s pivot. Traders should prepare for a similar situation, while also being ready for a possible “sell the news” reaction afterward. Create your live VT Markets account and start trading now.US existing home sales in June fell short of projections, reaching 3.93 million instead of the expected 4.01 million.
In June, existing home sales in the United States were lower than expected, totaling 3.93 million instead of the predicted 4.01 million. This shows a decline in the housing market.
At the same time, the currency markets saw changes in the AUD/USD and EUR/USD. The AUD/USD continued to rise, reaching 0.6600. The EUR/USD also enjoyed four days of gains, approaching the 1.1800 level.
Gold Market Trends
Gold prices fell below $3,400 per troy ounce due to decreased trade worries. Positive news came from the US-Japan trade agreement and possible progress on a US-EU deal. Banks like BNY Mellon and Goldman Sachs are now allowing investments in tokenized funds, which could transform traditional investing. The first half of Trump’s second term emphasized bold policy changes, but the markets have remained stable. Choosing the right broker for trading EUR/USD is key, especially in 2025, when there will be many options with competitive spreads and advanced platforms. Keep in mind that forex trading carries significant risks due to leverage. It’s important to evaluate your investment goals, experience, and risk tolerance before starting. The slowdown in housing sales indicates a weaker U.S. economy. The National Association of Realtors recently confirmed this, noting that sales have dropped for three months in a row and that inventory levels have risen to a 3.7-month supply. Derivative traders might see this as a signal to buy protective put options on major U.S. stock indices.Forex Market Developments
The rising Australian and euro currencies against the dollar align with this cautious outlook. Data from the CME FedWatch Tool shows a 45% chance of an interest rate cut by the Federal Reserve before the end of the year, a significant increase from 20% last month. We recommend buying call options on the EUR/USD pair to prepare for further dollar weakness. The recent decline in gold prices reflects easing trade tensions, but this might only be temporary. Historically, gold prices tend to move opposite to the U.S. dollar, and a slowing economy could ultimately support gold prices. This mix of influences suggests increased volatility, making strategies like straddles on gold ETFs an interesting option for profiting from large price fluctuations. The move by firms like Mellon and Goldman to adopt tokenized funds indicates a major long-term change in the market. Though it may not be an immediate trading factor, Boston Consulting Group projects this market could grow to $16 trillion by 2030. We are watching for new derivative products related to these assets, which will create new trading opportunities. Market resilience during the current administration shouldn’t be seen as low risk. In Trump’s previous term, the CBOE Volatility Index, or VIX, spiked over 40% in response to policy announcements. Traders should stay hedged against sudden market volatility, as historical trends show that policy shifts can quickly disrupt market stability. Create your live VT Markets account and start trading now.In June, existing home sales in the United States declined to -2.7%.
In June, existing home sales in the United States fell by 2.7%, following a rise of 0.8% the month before. This drop shows shifts happening in the housing market.
The AUD/USD pair climbed to new highs at 0.6600, thanks to positive trade news from a US-Japan agreement. The EUR/USD also gained ground, approaching the 1.1800 mark as the US dollar weakened and optimism for trade deals grew. The European Central Bank (ECB) is expected to keep interest rates steady.
Gold Price Movement
Gold prices fell to two-day lows, dropping below $3,400 per troy ounce as trade concerns eased. This decline is linked to the US-Japan trade deal and a possible US-EU agreement, which affected market mood. BNY Mellon and Goldman Sachs have partnered to allow investments in tokenized money market funds. This initiative will use Goldman Sachs’ blockchain technology to track ownership for BNY clients. Trump’s second term began with six months of disruptive policy changes focused on “America First” strategies in trade, taxes, AI, and national defense, yet markets remained stable. A list of leading brokers for trading EUR/USD features firms that provide competitive spreads and quick execution, catering to both new and experienced traders.Market Reaction To Economic Indicators
The recent 2.7% drop in existing home sales indicates a slowing US economy. This data follows a similar trend from the National Association of Realtors for May, reinforcing the idea that the Federal Reserve may consider interest rate cuts later this year. Traders might explore positions in interest rate futures for potential profits based on a more lenient central bank policy. The rises in AUD/USD and EUR/USD highlight a general weakness in the US dollar, a trend likely to persist. Recent soft US inflation data has diminished the dollar’s yield advantage, while the European Central Bank has already started cutting rates. Buying call options on the EUR/USD with a target above 1.0800 appears to be a sound strategy. Gold’s price drop reflects an increased appetite for risk, though this may not last. Traditionally, gold, now around $2,320 per ounce, tends to perform well during declining interest rates and ongoing geopolitical risks. We suggest selling out-of-the-money put options on gold as a strategy to earn income while preparing for a potential price bottom. The market’s stability amid chaotic policy shifts shows that traders are focusing more on economic indicators than political news. The CBOE Volatility Index (VIX) has been near historic lows, often below 15, indicating a low-volatility environment. This makes strategies that benefit from time decay, like selling covered calls or cash-secured puts, more attractive than simply buying options. The collaboration between BNY Mellon and Goldman Sachs is a significant advancement in the adoption of blockchain by institutions. It’s part of a larger trend, with BlackRock’s tokenized fund (BUIDL) already gathering over $400 million in assets. For those with a long-term outlook, this trend supports accumulating long-dated derivatives on established crypto-related assets. Create your live VT Markets account and start trading now.Individuals need to be aware of IRA scams that exploit their complexity to protect their retirement savings.
Many Americans use Individual Retirement Accounts (IRAs) for saving for retirement and getting tax benefits. However, scammers take advantage of how complicated they can be. Self-Directed IRAs are particularly appealing to fraudsters, who target those looking for different investment opportunities. It’s important to be aware of fraudulent activities that could compromise your financial safety.
Self-Directed IRAs provide a range of investment options, including Real Estate and Cryptocurrency. However, they come with major risks, as custodians are not required to check if the investments are legitimate. This means investors must bear the losses if fraud occurs.
Identifying High Fees
High fees in IRAs are a common worry. Scammers exploit the complexities of self-managed IRAs to impose steep opening, transaction, and storage fees, which lower your returns. These fees can be hidden in confusing paperwork, making them hard to spot. Being aware of warning signs can help you avoid scams. Watch out for promises of guaranteed returns, aggressive sales tactics, unsolicited offers, and claims about illegal storage. Education and awareness are key to protecting your savings. To safeguard your IRA, verify fees, ensure custodians are IRS-approved, avoid offers that seem too good to be true, seek advice from licensed professionals, and read all documents carefully. Using your IRA correctly can secure your future, while staying alert can help you sidestep financial traps.Fraud and Its Impact on the Market
The rise of fraudulent activities reveals a weakness in retail investments, suggesting broader market instability. This uncertainty makes some investors nervous, creating unique opportunities for strategies that thrive on unpredictability. Therefore, we advise paying attention to sentiment indicators, as retail outflows may signal larger market changes. We believe that increased awareness of these financial dangers could lead to sudden and unpredictable spikes in market volatility. Traders should consider buying protection or setting up trades that profit from an increase in the VIX, which has recently been low around 13 but reacts strongly to inflation news. This situation suggests that implied volatility in certain sectors might be underpriced. Since crypto-assets are often linked to fraud, we should keep a close watch on this field. The Federal Trade Commission states that consumers have lost over $2.7 billion to crypto investment scams since 2021, indicating a high risk of a sell-off based on loss of confidence. This makes puts on crypto-related stocks and ETFs a potentially useful hedge or speculative position. The issue of custodians failing to confirm the legitimacy of investments indicates systemic weaknesses that may attract regulatory scrutiny. Historically, widespread investor losses—like the Madoff scandal—have led to stricter rules affecting the profitability of financial services firms. Hence, we should assess the derivatives of smaller, specialized financial companies that could be most burdened by new compliance costs. In this environment, making outright bets comes with heightened risk. Instead, using option spreads can help define our risk while allowing us to profit from movements without being fully exposed to a sudden market turn. For example, a bearish put spread on a weak sector provides a structured way to benefit from a decline while limiting possible losses. The warning about offers that seem too good to be true should also apply to our market analysis. When an asset’s implied volatility appears unusually low despite existing risks, it’s usually not an easy profit but rather a sign of complacency. We should view these situations as potential “volatility traps,” similar to the calm that came before previous market corrections, and prepare for the eventual restructuring of risk. Create your live VT Markets account and start trading now.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.
Technical Analysis And Market Strategy
Next week will bring important earnings reports, including those from Verizon and Tesla. Technical analysis of the S&P 500 shows a positive trend, with the index approaching the 6425 resistance line. However, a drop below the 6135 support level could signal a downward trend. The agreement with Japan is a major factor driving the current rise in the Nasdaq and other key indices. The CBOE Volatility Index, a primary measure of market anxiety, is recently trading at a two-month low of 12.5. This presents a chance to buy affordable downside protection. We recommend purchasing put options on broad market ETFs that expire after the August 1st tariff deadline with the EU to guard against a negative outcome. The recent discovery of a security vulnerability on Microsoft’s servers brings a specific risk that hasn’t been fully measured. Major cyberattacks can lead to serious financial losses; for example, a 2023 IBM report found that the global average cost of a data breach reached a record high of $4.45 million. Therefore, we are looking at buying out-of-the-money puts on Microsoft’s stock as a low-cost way to benefit from any potential negative fallout.Trading Opportunities And Technical Signals
Important earnings reports from companies like Verizon (a telecommunications firm) and Tesla (an electric vehicle maker) present unique trading opportunities. The options market is currently anticipating an 8.5% post-earnings move for Tesla’s stock, leading to higher premiums. We believe that selling an iron condor on this stock could be a profitable move if the actual price change is less than the market expects. From a technical viewpoint, the S&P 500’s ascent towards the 6425 resistance line supports a bullish outlook for now. The 6135 support level is crucial to observe, as it aligns closely with the 50-day moving average, a significant trend indicator for institutional investors. A decisive break below this support will signal us to initiate new short positions using index futures to take advantage of any momentum shift. Create your live VT Markets account and start trading now.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.
