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S&P and NASDAQ reach record highs, while Dow and Russell 2000 decline
The S&P and NASDAQ indices hit record highs, with the S&P gaining 8.81 points, or 0.14%, to close at 6305.60. The NASDAQ rose by 78.52 points, or 0.3%, ending the day at 20974.17.
On the other hand, the Dow Jones Industrial Average dipped slightly by 19.12 points, or 0.04%, finishing at 44323.07. The small-cap Russell 2000 also fell, dropping 8.87 points, or 0.40%, to close at 2231.13.
Reserve Bank of Australia’s meeting minutes to be released today after New Zealand’s trade data
The Reserve Bank of Australia is releasing the minutes from its meeting in July today, along with New Zealand’s trade data from June. Many expected a 25 basis point rate cut, but the bank decided to keep rates steady, which led to an increase in the Australian dollar (AUD).
People are eager to gain more insights from these minutes, and financial commentators might analyze them closely. Most were surprised by the bank’s decision.
Popular Financial Discussions
Currently trending discussions include the benefits of PrimeXBT’s crypto wallet and exchange, technical analysis of the USDJPY, and early trading trends in Europe. Attention is also on upcoming economic and political events, such as the European Central Bank (ECB) meeting, the People’s Bank of China’s (PBoC) Loan Prime Rate (LPR), and Japan’s Upper House election. A general warning about foreign exchange trading highlights its high-risk nature and that it may not be suitable for everyone. Using leverage can increase this risk, so potential traders should carefully consider their financial situation. Understanding risks and seeking independent advice is crucial. InvestingLive offers market news and educational services but does not give investment advice or endorse outside content. The site is not responsible for any inaccuracies or losses incurred from its information, and it may receive compensation from advertisements.Reaction to Reserve Bank Decision
Since we were surprised by the Reserve Bank’s choice, our main focus now is to see today’s details. The minutes will clarify if the decision to hold rates was just a short pause or if a bigger policy change is happening. Placing new trades without fully understanding the bank’s reasoning would be purely speculative. The recent rise in the Australian dollar has likely increased implied volatility, making options strategies appealing. Historically, one-week implied volatility for the currency can increase over 15% around such news, creating opportunities for those who can predict market direction after the minutes are released. We believe it’s wiser to use defined-risk positions, like buying calls or puts, rather than taking unhedged futures positions right now. The reason for the unexpected hold likely relates to persistent domestic inflation, with the latest Trimmed Mean CPI at 3.6%, which is well above the bank’s target range. If the minutes emphasize this, it could mean no further rate cuts for several months, which would support the local currency. We should also look at external factors, especially from Australia’s largest trading partner. China’s recent Caixin Manufacturing PMI remains in growth territory at 51.4, which may lessen the pressure on the Reserve Bank to provide more stimulus. A stable China helps reduce key risks for Australian exports and economic growth. Caution is advised regarding recent comments about the former US president’s influence on Powell. Market pricing suggests a different picture, with Fed funds futures showing only a 40% chance of one rate cut by year-end. This implies the dollar may still hold some strength against other currencies. This complex global situation, along with our recent forecast mistakes, highlights the importance of disciplined risk management in the coming weeks. Create your live VT Markets account and start trading now.US Treasury Secretary Scott Bessent says lower interest rates could revitalize mortgages, according to CNBC.
United States Treasury Secretary Scott Bessent suggested that lowering interest rates might help boost the mortgage market. He also mentioned possible reviews of the Federal Reserve but did not confirm reports about advising President Trump on Jerome Powell’s position.
During trade discussions, Bessent noted that the European Union is getting more involved, and talks with China are on the agenda. On Monday, the US Dollar Index fell by 0.42%,indicative of broader market trends.
Forex Market Trends
The EUR/USD has risen above 1.1700, supported by uncertainty over the Federal Reserve’s interest rate plans and ongoing trade talks between the US and the EU. At the same time, GBP/USD hit multi-day highs, exceeding 1.3500, thanks to a more positive market sentiment. Gold prices jumped above $3,400 per ounce at the week’s start due to weaker US yields and a generally sluggish US Dollar. China reported a 5.2% year-on-year growth rate for its second-quarter GDP, but slowing investments and retail sales present challenges. Trading foreign exchange comes with significant risks that can lead to serious losses. It’s important to evaluate your investment goals and risk tolerance before trading in foreign exchange, and seek independent advice if needed.Interest Rate Speculation
We see the suggestion of a possible interest rate cut as a key indicator for derivative traders in the next few weeks. Due to the uncertainty surrounding the Federal Reserve’s timing, we believe strategies that benefit from interest rate fluctuations, like options on Treasury futures, are fitting. The CME FedWatch Tool currently indicates a 65% likelihood of a rate cut by September, highlighting a focus on short-term contracts. The recent drop in the US Dollar Index, now around 104.5, makes currency derivatives appealing. We see potential in purchasing call options on the EUR/USD, aiming for strike prices above the current level of 1.0850 to speculate on further European strength. Historically, differing central bank policies, as noted in the trade discussions, often lead to lasting trends in major currency pairs. With gold prices steady near $2,350 per ounce, we believe the current environment is favorable due to weaker US yields. Traders might consider selling out-of-the-money put options on gold, which allows them to collect premiums under the assumption that prices will stay stable or increase. The World Gold Council’s data shows strong central bank purchasing in the first quarter of 2024, providing a solid foundational support for gold. China’s mixed economic data, which shows a 5.3% GDP growth in the first quarter alongside ongoing issues in the property sector, contributes to global uncertainty. This suggests that it’s wise to consider strategies that can gain from market volatility, like buying options on the VIX index. This approach can serve as a hedge, as past declines in Chinese retail sales often precede broader market instability. Create your live VT Markets account and start trading now.Understanding IRA fees is important because even small costs can significantly affect the growth of retirement savings.
Saving for retirement with an Individual Retirement Account (IRA) is a smart choice. It comes with tax benefits, but be cautious about fees, as they can affect your savings growth. Knowing and managing these fees is crucial for effective retirement planning, since they can reduce your returns over time.
Both Traditional and Roth IRAs can have hidden costs. You may face maintenance fees ranging from $20 to $50 each year. When buying or selling stocks or ETFs, transaction fees can range from $5 to $20. Also, expense ratios for mutual funds or ETFs can greatly influence your returns, with low-cost index funds around 0.05% and active funds over 1%.
Importance Of Managing Fees
Ongoing IRA fees can have a big impact over the years. A small fee difference of 0.25% can cost you tens of thousands of dollars in lost capital after 20 years. According to the US Securities and Exchange Commission, a 0.5% fee can decrease a $100,000 portfolio by $10,000 over the same time, while a 1% fee could cut it by nearly $30,000. To reduce IRA fees, compare providers before opening your account, and choose low-cost index funds or ETFs. Avoid advisors with wrap fees, pick fee-only fiduciary advice, and limit trading. A passive, long-term strategy usually works best. Keeping an eye on IRA fees is vital for retirement planning. Knowing what fees you face and making smart choices can boost your retirement savings. Besides investing wisely, being aware of the maintenance costs for your IRA is essential for securing your financial future.Market Volatility And Derivative Trading
While small fees have a big long-term effect on retirement planning, derivative traders may face immediate costs from misreading market volatility. The current economy shows mixed signals, making any specific market prediction quite risky. So, it’s important to manage the risks of being wrong in a sudden, sharp market move. Recent data tells a complex story for traders. The May Consumer Price Index showed inflation cooling to 3.3%, which initially lifted market optimism. However, the Federal Reserve kept interest rates stead and dialed back predictions to just one rate cut in 2024, creating uncertainty. With the difference between inflation data and central bank guidance, there’s a strong case for using options in trades. The Cboe Volatility Index (VIX) is low at around 12, meaning it’s relatively cheap to buy puts or calls for protection. We recommend this low-cost insurance against potential market swings as the economy digests these mixed signals in the weeks ahead. In history, times of Fed policy uncertainty often lead to spikes in volatility, even when things seem calm on the surface. Chairman Powell highlighted the need for confidence in sustainable inflation decline before making cuts, signaling a “higher-for-longer” policy. For derivative traders, this means strategies should aim to protect against the central bank’s cautious outlook instead of betting on just one economic scenario. Create your live VT Markets account and start trading now.The AUD/USD faces resistance and support at 0.6495, remaining in a tight trading range without movement.
The AUDUSD started with a small drop in the Asian session but stabilized at 0.6495, a key support and resistance level. Buyers stepped in, stopping the decline and pushing the pair above the 100-hour moving average.
The upward movement continued toward the 200-hour moving average at 0.65339, near the lower edge of the resistance zone, which ranges from 0.6536 to 0.6542. The day’s high reached 0.6537 before resistance appeared, as sellers returned to cap further gains.
Breaking the Resistance Zone
For the pair to move toward the July high of 0.65947, buyers need to break through the 200-hour moving average and the resistance zone. Until then, the pair will remain in a stable range. Current support is at 0.6495, while resistance sits between 0.6534 and 0.6542. A break past these levels will likely set the direction for future sessions. Key levels to monitor are resistance at 0.6534–0.6542 and support at 0.6507 (100-hour MA) and 0.6495, linked to the recent swing level. According to Michalowski’s analysis, the current price action shows a standoff between mixed economic signals. In the US, inflation is cooling, with the annual CPI rate dropping to 3.3% in May. This suggests potential Federal Reserve rate cuts later this year. This fundamental pressure could push the pair higher, but the technical resistance remains strong.Trade Strategy Insights
Traders expecting a breakout above the resistance zone should consider buying call options. This could be triggered by ongoing weak US economic data or hawkish comments from the Reserve Bank of Australia, which is facing a low unemployment rate of 4.0% as of May 2024. A clear break above 0.6542 would indicate that fundamental factors are overcoming technical barriers. On the other hand, a downturn in China’s economy poses a significant risk and might push the pair below support. China’s Producer Price Index has shown deflation for 20 months, signaling weak industrial demand that affects Australia’s export-driven economy. A drop below the 0.6495 support level might lead us to buy put options to hedge against or profit from further declines. As the pair is currently “stuck in a familiar range,” selling options premium through strategies like an iron condor could be effective. This strategy benefits from low volatility and time decay as long as the price stays between the critical support and resistance levels noted earlier. Historically, AUD/USD can stay in stagnation when US and Australian central bank policies are not diverging clearly. In the coming weeks, we’ll keep an eye on the next US inflation report and employment data for direction. Any surprises in these figures might provide the catalyst needed to break the current stalemate. Until a decisive move occurs, treat this as a range-trader’s market, respecting the defined levels. Create your live VT Markets account and start trading now.Silver is trading around $38.50 and aims to break above the $39.00 level after last week’s pullback.
Silver is currently priced around $38.50, bouncing back from a drop last week and close to the July high of $39.13. Key resistance points are at the important $39.00 mark and the July 14 high, while support is found around the $38.00 and $37.50 areas.
Momentum indicators, like the RSI near 70 and a rising ADX, show a positive trend. The price of silver is benefiting from a weaker US Dollar, which is under pressure due to lower Treasury yields. Silver remains strong, trading above the 50- and 21-period EMAs, indicating buying interest.
The RSI is close to the overbought level at 70, while the ADX at 20 suggests a strengthening trend. For silver to gain more upward momentum, it needs to break above the resistance zone of $38.80-$39.00. Key support levels are at $38.00 and $37.50, with resistance still at $39.00 and $39.13.
On the daily chart, silver is trending upward within an ascending channel that has been in place since April. Key support is provided by the 21-day EMA at $37.18 and the 50-day EMA at $35.92. If silver stays above the $37.00-$37.50 area, the bullish outlook remains strong, with potential for a breakout towards $40.00.
We see a clear opportunity for derivative traders due to the current bullish momentum. The price consistently staying above key moving averages—alongside a weakening U.S. Dollar after lower-than-expected inflation data—supports this positive view. The crucial level to watch is a solid break and hold above the $39.13 resistance.
For those expecting further price increases, we recommend buying call options with strike prices at or above $40.00, especially if silver surpasses the July high. Recent Commitment of Traders (CFTC) reports show that money managers are boosting their net-long positions, indicating institutional confidence in this upward trend. This strategy allows traders to take advantage of a possible sharp price rise towards the next key benchmark.
Alternatively, selling out-of-the-money put options with strike prices around the support level of $37.50 could be a wise strategy for collecting premiums. This tactic benefits from rising prices and time decay, supported by the strength of the 21-day EMA. The ascending channel since April assures us that these lower price levels will hold.
The broader outlook backs this technical strength, as industrial demand remains very robust. The Silver Institute predicts that demand from the photovoltaic industry will contribute to 20% of total silver consumption this year, creating a solid demand base. This demand helps shield the price from minor speculative declines.
While indicators show strong buying interest, the RSI nearing 70 signals some caution against jumping in too early. We prefer to wait for confirmation of a breakout above the $38.80-$39.00 range before making new aggressive moves. This strategy will help us avoid getting caught in a potential short-term reversal or consolidation period.
Historically, once silver surpasses key multi-year highs, it can see quick price increases similar to the rallies of 2010-2011. A sustained move above the current resistance could mark the beginning of a larger upward trend. Thus, we are positioning ourselves for a breakout while using identified support zones to manage our risk.
Raw material price index in Canada exceeds predictions at 2.7%
In June, Canada’s Raw Material Price Index exceeded expectations, increasing by 2.7% when a drop of 0.2% was forecasted. This rise indicates significant shifts in raw material costs within the country.
The EUR/USD exchange rate has recently hit multi-day highs, surpassing the 1.1700 mark due to growing weaknesses in the US Dollar. This trend is driven by ongoing trade concerns and discussions about the US Federal Reserve’s independence.
Gold Prices Stay Strong
Gold prices remain high, surpassing $3,400 per troy ounce. This increase is supported by falling US yields and a weaker US Dollar, making gold a more attractive investment during uncertain economic times. China’s economy showed a year-on-year GDP growth of 5.2% in the second quarter, fueled by strong trade and industrial activity. However, a slowdown in fixed-asset investment and retail sales, along with declining property values, raises concerns for future growth. Ripple’s XRP is getting closer to its all-time high of $3.66, driven by increasing demand from institutional investors. This rise is supported by growing activity in both spot and derivatives markets, indicating a rising interest in digital assets.Weakness of the US Dollar
The unexpected increase in Canada’s raw material prices is a positive sign for its currency. With the Bank of Canada focused on inflation, we are considering call options on the Canadian dollar, hoping to profit from its potential rise against the US dollar. Historically, an increase in commodity prices, which make up a large part of Canada’s exports, has often led to a stronger currency. The ongoing weakness of the US dollar presents a clear opportunity in the foreign exchange market. Current data from the CME FedWatch Tool suggests that markets anticipate a greater than 60% chance of a Federal Reserve interest rate cut by year’s end. We are utilizing bull call spreads on the EUR/USD pair to take advantage of this trend while managing our risks. Gold’s performance above key levels is a trend we expect to continue. The US 10-year Treasury yield, an important factor for gold, has dropped over 25 basis points in the past month, enhancing the metal’s appeal since it has no yield. We plan to increase our long positions through futures contracts to benefit from this upward trend. Mixed signals from the Chinese economy suggest that traders should expect considerable volatility instead of picking a direction. While GDP numbers look strong, reports of new home prices declining for eleven straight months reveal serious underlying weaknesses. We are setting up long straddles on major Chinese market ETFs, a strategy that profits from large price changes in either direction. The significant rally of this digital asset toward its previous peak is being fueled by a noticeable uptick in market participation. Recent data indicates that open interest in its perpetual futures has risen over 40% in the last 90 days, showcasing strong institutional interest. To manage potential risks, we are buying protective put options to safeguard our spot holdings against sudden downturns. Create your live VT Markets account and start trading now.Fed Powell’s upcoming speech may focus less on economics and policy discussions.
Fed Chair Jerome Powell will speak tomorrow, even though the Federal Reserve is currently in a quiet period before the FOMC rate decision on July 30. He will deliver opening remarks at the Integrated Review of the Capital Framework for Large Banks Conference in Washington, DC.
Attendees should not expect comments on the economy, policy, or any sensitive issues, as the quiet period restricts such discussions. His remarks are likely to be general and follow usual protocols.
Richmond Fed Manufacturing Index
The Richmond Fed manufacturing index will be released at 10 AM, with expectations of a reading of -3, compared to the previous -7. In contrast, the Philly Fed manufacturing index surprised everyone last week with a result of 15.9, significantly better than the estimated -1.2. We think traders should not focus too much on Powell’s upcoming speech about the capital framework for banks. This talk is mainly a technicality and will probably not provide any hints about future monetary policy. Getting caught up in news about Powell’s speech could distract from the important data points this week. Mixed signals from manufacturing data make this a good time for derivatives trading. While the Philly Fed number was unexpectedly strong, the latest S&P Global Flash US Manufacturing PMI for July dropped to 49.0, indicating a contraction. If the Richmond index shows improvement, it will only add to the confusion, making bets on market direction risky. This inconsistency isn’t unique. The broader ISM Manufacturing PMI has been below 50 for eight months, with a reading of 46.0 in June. This ongoing weakness suggests the economy isn’t on a clear recovery path, making it tougher for the Federal Reserve to decide its next steps. We think the market might be underestimating the risk of a surprise in the Fed’s statements.Market Expectations and Volatility
The market is nearly certain of a 25-basis-point rate hike at the July meeting, according to the CME FedWatch tool. This makes the actual decision feel less significant. The real focus will be on the statement and press conference that follow, which will have to deal with mixed economic data. We anticipate increased volatility as the market processes the forward-looking statements. Given this situation, we see the current levels of volatility as attractively low. The CBOE Volatility Index (VIX) has been between 13-15, close to its 52-week low and historically low before an important policy decision. This suggests that options are relatively affordable, giving us a chance to profit from a larger-than-expected price movement. Therefore, we plan to buy volatility before the FOMC announcement. We are considering purchasing near-term straddles or strangles on indices like SPX or QQQ. This strategy allows us to benefit from significant price moves in either direction, which could arise from the mixed data and ongoing policy uncertainty. Historically, times of uncertain economic data leading up to a key central bank meeting often result in a sharp breakout once the policy direction is clear. We aim to take advantage of this expected release of built-up market energy. The key is not to guess the direction but to acknowledge that the market will move decisively once new information is available. Create your live VT Markets account and start trading now.Canada’s industrial product prices increased by 0.4% in June, surpassing the expected 0.1% rise.
In June, Canada’s industrial product prices rose by 0.4% from the previous month, exceeding the expected increase of 0.1%. This shows stronger pricing trends in Canadian industrial products than anticipated.
The AUD/USD pair bounced back, climbing above the 0.6500 mark due to a sell-off in the US Dollar. Likewise, EUR/USD moved above 1.1700 as the US Dollar weakened, amid trade concerns and speculation about the Federal Reserve’s independence.
Gold Prices Surge
Gold prices soared past $3,400 per troy ounce, benefiting from low US yields and a weak US Dollar. Additionally, Ripple (XRP) is nearing its all-time high, fueled by strong institutional demand and increased market activity. China’s GDP grew by 5.2% year-on-year in the second quarter, thanks to strong trade and industrial activity. However, slowdowns in investment and retail sales, along with falling property prices, are still concerning for the economy. Given the surprising rise in industrial prices, we see a potential for ongoing inflation in Canada. The latest Consumer Price Index of 2.9% supports this idea. We believe this strengthens the case for call options on the Canadian dollar, as the central bank might need to maintain a more aggressive stance longer than other central banks.Opportunities In The Forex Market
The overall weakness in the US dollar, with the Dollar Index (DXY) falling below 105, presents a clear opportunity in the forex market. The recovery of the Australian and European currencies is a direct result of this trend. We are considering put options on the US dollar or call options on these major currency pairs to take advantage of this momentum. The price surge in precious metals, which recently reached a record high above $2,400 per ounce, serves as a direct hedge against a weaker dollar and lower yields. Long-term futures contracts on these commodities allow us to benefit from this ongoing safe-haven demand. Regarding the digital asset mentioned, it is still well below its 2018 high, making options that capitalize on its high volatility a smarter strategy than betting on new peaks. China’s latest Caixin Manufacturing PMI reading of 51.7 confirms the industrial strength reflected in the growth data. However, ongoing weakness in the property market and sluggish consumer spending paints a mixed economic picture. This encourages us to consider pairs trades, such as going long on industrial commodities that benefit from exports while exercising caution on assets tied to domestic consumption. Create your live VT Markets account and start trading now.GBP/USD recovers after three weeks of losses, trading near 1.3450 during the European session
After three weeks of losses, GBP/USD started the week near 1.3450, showing less bearish momentum. A stronger risk appetite at the week’s start weakened the US Dollar, allowing GBP/USD to benefit from this change.
