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The US dollar strengthens against the Euro as markets expect Trump’s tariffs
The EUR/USD pair is going down while the US Dollar gets stronger, boosted by rising US Treasury yields. With the trade deadline on July 9, there’s renewed interest in the safe-haven status of the Dollar, causing the Euro to trade below 1.1720 in the European session.
German Industrial Production unexpectedly grew by 1.2% in May, but Eurozone Retail Sales showed a 0.7% drop for the same month. Adding to the uncertainty in the market, U.S. President Trump’s upcoming tariffs and a potential trade deal have made traders cautious.
Conflicting employment trends in the US indicate confusion in the job market.
The employment trends index from The Conference Board increased from a revised 107.49 to 107.83 in June. While this index does not offer new insights into the economy, it gives a snapshot of the current job market.
The job market shows mixed signals. Recent reports, like ADP and ISM, indicated weak job metrics, while non-farm payrolls showed strong results.
Stabilization Of The Index
After months of decline, the index seems to have stabilized. We see a slight rise in the Employment Trends Index (ETI), moving from 107.49 in May to 107.83 in June. This increase follows several months of declining numbers. The Conference Board creates this index using eight labor market indicators to provide an overview of employment conditions. The latest figures suggest that while some weaknesses remain, a stable baseline is forming, which can help us understand the future of hiring. Last week delivered conflicting signals. The ADP data was weak, raising doubts about the private sector’s strength, and the ISM services survey showed a slowdown in hiring. However, the non-farm payrolls report contradicted this by showing job gains that exceeded expectations. This conflicting data can be confusing, but focusing on the data within the ETI helps clarify the picture. It’s important that the index has stopped decreasing. Previously, we observed gradual declines across employment components, including fewer job openings and weaker hiring plans. So, even a slight increase deserves attention as we reconsider short-term pressures on interest rates and growth expectations. Some of the gains in June might be related to changes in temporary employment and job advertising trends, which often lead actual employment changes. If these aspects are improving, as the index suggests, we can anticipate broader job gains. This trend has wider implications, especially for inflation and interest rate expectations.Market Sensitivity To Employment Trends
As changes in labor indicators affect rate expectations, we may see pressure on the spread between the expected terminal rate and the current rate. This impacts curve positioning, especially in short-term derivatives. With stable prints like this, it’s less about new information and more about how people perceive trend changes. If the perception shifts toward stabilization, we might need to adjust probabilities, leading some near-term hedges to seem crowded. Short-term instruments respond sensitively to even small changes in labor data. A steady ETI, especially if it comes after a downtrend, reduces some of the risks that had been creeping back into the market after the ISM report. It’s not a complete reassurance—yet—but it suggests a pause in overly negative pricing. The timeline is less important than the trajectory. For those managing exposure in the short term or assessing spread momentum, this index supports avoiding risky downside positions. We should monitor whether July’s data continues this slight upward trend. Consistency will encourage reallocation. However, due to how leverage reacts to payroll numbers and other significant drivers, it’s wise to wait for confirmation of this direction rather than act on a single index movement. Create your live VT Markets account and start trading now.Concerns about US tariffs are driving the USD/CAD recovery towards the 1.3700 level.
The US Dollar rose against the Canadian Dollar, increasing 0.5% today and up 0.8% since last week’s lows. This change was influenced by worries about new US tariffs, following President Trump’s announcement about tariff letters.
US Treasury Secretary Scot Bessent hinted at a possible new deadline for tariffs on August 1, allowing some countries time to negotiate. However, China, the UK, and Vietnam already have deals from April. The Canadian Dollar struggled as Oil prices fell, with OPEC+ approving a larger increase in Crude supply.
Impact Of Oil Prices On The Canadian Dollar
West Texas Intermediate (WTI) prices dipped below $65.00 but later rose back above $66.00, affecting the Canadian Dollar since Oil is Canada’s main export. The currency is influenced by the Bank of Canada’s interest rates, Oil prices, and economic indicators like GDP and employment stats. The value of the Canadian Dollar is also affected by inflation and the US economy’s strength. The Bank of Canada targets inflation between 1-3% and adjusts interest rates based on this, impacting the CAD. Typically, higher interest rates and Oil prices strengthen the Canadian Dollar. Recently, the US Dollar gained momentum against the Canadian Dollar, climbing 0.5% during the day and nearly a full percentage point above last week’s low. This rise has been mostly due to new worries about trade and tariffs. Trump’s announcement of tariff measures created uncertainty, leading to a stronger demand for the Dollar. Bessent pointed to a potential new enforcement date of August 1, which might give negotiators a small window to secure new agreements. However, countries like China, the UK, and Vietnam have already established their positions. Meanwhile, the Loonie faces challenges.The Relationship Between Oil Prices And The Canadian Dollar
Oil dynamics have added more downward pressure. OPEC+ has approved an increase in supply, causing fluctuations in commodity prices. WTI fell below $65 before rising above $66 again. Since Canada relies heavily on oil exports, any drop in crude prices tends to weaken the CAD. Traders have adjusted short-term positions and recalibrated expectations around volatility. The connection between Canada’s currency and global oil is strong, and in the current market, energy price fluctuations can have a big impact. Traders are also adjusting rate expectations based on the Bank of Canada’s response to inflation. The central bank is managing persistent inflation that exceeds its 1–3% target range. If inflation doesn’t slow, policymakers may need to maintain or raise interest rates. Typically, tighter policies strengthen the currency, provided no external factors like oil prices interfere. On another front, the strength of the US economy and job data has increased demand for Dollars. Healthy growth and employment make it hard to predict Federal Reserve policy. This strength complicates the outlook for a CAD recovery, especially when commodity prices remain low and Canadian data lacks upward movement. In the coming week, we will keep an eye on volatility across different assets. Rate differences favor the Dollar in most pairs, especially with Canadian markets showing weakness amid uncertain inflation. Traders should monitor how risk skews shift with energy data and central bank hints. Flows appear cautious, and short-term positions may take precedence given the fast-changing narrative. Currently, volatility premiums on CAD-linked contracts seem undervalued considering the potential for fluctuations in oil prices and tariff news. Timing entries during key economic releases will likely provide better opportunities than chasing trades based on headlines. We’re also watching for any mispricing in rate futures that could influence future policy paths. In these situations, waiting for the right moment is usually more effective than rushing into trades triggered by headlines. Create your live VT Markets account and start trading now.The USDCAD pair tests the 200-hour moving average after recent fluctuations
The USDCAD pair bounced back from last week’s low, stopping just above the 2025 low and near the June 17 swing low at 1.3554. This recovery pushed the pair toward the 100-hour moving average around 1.3613.
Initially, the pair faced resistance during the Asian session but then broke through. Buyers gained strength, driving the price above the 200-hour moving average in the early European session. The upward momentum continued, reaching the 50% midpoint of June’s decline at 1.3676, where sellers appeared near the swing area low between 1.36858 and 1.36923.
As sellers took hold, over the last few hours, the price returned to the 200-hour moving average at 1.36401. This moving average is crucial for predicting future price movements. If the price falls below the 200 MA at 1.3640, it might weaken the bullish outlook and lead back to the 100-hour moving average at 1.36128.
Support levels are located at 1.3640 (200-hour MA) and 1.36128 (100-hour MA), while resistance levels can be found at 1.3647 (200-hour MA), 1.36763 (50%), and the swing area between 1.3685 to 1.3692.
In summary, the USDCAD currency pair saw a short-term rally after bouncing from last week’s low and testing key support levels. It rose from near the 2025 low and paused around 1.3554. The price climbed, breaking its 100-hour moving average at 1.3613, often seen as a signal for short-term direction.
Once buyers gained control and surpassed the 100-hour average, the pair surged past the critical 200-hour moving average, important for determining medium-term direction. The rally continued up to 1.3676, but sellers stepped in near the swing zone between 1.36858 and 1.36923, a barrier that had previously held back price advances.
After reaching that level, the rally faded, and sellers pushed the price back toward 1.3640, the 200-hour moving average. This moving average now acts as a balance point for current market sentiment. The price’s behavior around this level will signal the next move.
If the price drops below 1.3640, it would be disappointing and could break the recent upward trend, paving the way back toward the 100-hour average at 1.36128. This level has previously acted as support, and its ability to hold against selling pressure will determine whether the bounce was temporary or the start of a larger movement.
Conversely, if the price stays above 1.3640 and gains strength, attention will shift to higher resistance levels—first at 1.3647, then the midpoint at 1.36763. Any push toward these levels could lead to resistance in the swing zone above 1.3685, a critical area that has acted as a barrier before. Failing to hold within that range might trigger a faster market adjustment.
What we’re monitoring in this situation is not only the levels themselves but also how the price interacts with them. Are buyers consistent? Is selling pressure weakening, or are sellers just waiting in the upper range? These answers will start to emerge over the following sessions, depending on whether the price moves down or up.
In the near term, with uncertainty on both sides, we might see opportunities as the price fluctuates between these technical markers. Acting precisely, especially near the 200- and 100-hour moving averages, will be more critical than trying to predict the direction. The closer the structure, the clearer the reaction levels become. This may be where the real advantage lies for attentive observers.
Gold drops to around $3,300 amid increased risk aversion, with the 50-day EMA acting as key support
Gold prices have fallen by almost 0.8%, settling around $3,300. This drop is due to the strong performance of the US Dollar, which is now in demand as a safe haven. Traders are changing their expectations for interest rate cuts from the Federal Reserve, following better-than-expected US Nonfarm Payrolls data for June.
The US Dollar Index, which compares the dollar to six major currencies, hit a weekly high of about 97.45. Market sentiment is cautious with the US tariff deadline approaching on July 9. Recently signed trade agreements with the UK, Vietnam, and a limited deal with China have brought some hope, but more negotiations are planned.
Gold Technical Analysis
Gold is currently near an upward trendline within an Ascending Triangle pattern, facing potential resistance around $3,500. If the price dips below the trendline, it may drop significantly. However, if it rises above $3,500, it could reach $3,550 or even $3,600. In 2022, central banks acquired 1,136 tonnes of gold, worth $70 billion, to add to their reserves. Gold typically moves inversely to the US Dollar and US Treasuries, making it a favored asset during economic instability. Still, its price is heavily influenced by the Dollar’s movements. This week’s decrease in gold prices mirrors a broader shift in market risk sentiment. The robust performance of the US labor market, highlighted by the latest June Nonfarm Payrolls, has led to a decline in expectations for future Fed rate cuts. As employment figures remain strong, the US Dollar has gained traction, attracting investors away from higher-risk assets. The Dollar Index rising to 97.45 shows that investors are realigning their portfolios. Many are moving into the Dollar to protect against uncertainties related to the upcoming US tariff decision on July 9. New trade agreements—especially with the UK, Vietnam, and China—have eased some worries. Still, caution remains until the outcomes of future negotiations are clearer.Supply and Demand Factors
Gold’s recent price movements are closely tied to its relationship with the Dollar and US Treasuries. As prices edge closer to the trendline in the triangle pattern, the $3,300 level becomes crucial. If this level breaks down, downward momentum may build, with little support until much lower levels. On the other hand, if gold can close above $3,500, there is a clear upward path towards $3,550 and $3,600. Sovereign demand for gold remains strong. The acquisition of over 1,100 tonnes by central banks last year shows that many monetary authorities see gold as a reliable store of wealth. However, in the short term, traders are responding more to economic policy signals and the strength of the Dollar than to long-term accumulation. Given the current environment, it’s sensible to adjust positions with a focus on short-term opportunities. Volatility may stay elevated due to policy uncertainties and critical price levels being approached. Monitoring these key points while adjusting exposure seems like a more feasible approach until clarity emerges after the tariff deadline and subsequent economic data releases in the US. Create your live VT Markets account and start trading now.Hindustan Unilever indicates potential for stability and moderate growth, suggesting a cautious buy or hold.
Hindustan Unilever Limited (HUL) is India’s largest Fast-Moving Consumer Goods (FMCG) company, serving about 90% of Indian households daily. It offers a wide range of products, including foods, beverages, and personal care items, making it a solid investment choice for stability and moderate growth.
HUL leads the market thanks to its strong distribution network and healthy finances, with impressive profitability metrics like a Return on Equity (ROE) of around 21% and a Return on Capital Employed (ROCE) of about 29%. The company is nearly debt-free, with steady revenue streams supported by consistent demand for essential products and reliable dividend payments of around ₹24 per share for FY25.
However, HUL faces some challenges. Revenue growth is slowing to about 2% annually from FY23 to FY25. It also faces competition from Direct-to-Consumer (D2C) brands and rising raw material costs, which are squeezing profit margins. Keeping premium prices in a price-sensitive market is another concern.
Financially, HUL’s revenue rose from ₹47,028 Cr in FY21 to ₹63,121 Cr in FY25, maintaining consistent profits with no debt. Its P/E ratio of 51.5x is close to industry averages, indicating limited short-term growth potential.
The FMCG sector in India is expected to grow to $300 billion by 2030, providing HUL with opportunities to expand into rural markets and enhance digital initiatives. Analysts suggest a “Hold” rating, with modest upside potential. Investors should think about the tax implications on dividends and capital gains, especially for international investors. Retail investors seeking stability and dividends might consider HUL as a “Hold” or a cautious “Buy.”
This summary highlights HUL’s financial and operational strength, emphasizing its dominance in daily essentials through its extensive distribution network and low-debt status. While profits remain stable, rising input costs are pressuring margins. Revenue growth has levelled off in the low single digits annually, raising questions about whether current valuations can be sustained without renewed earnings growth.
For traders using leveraged instruments, valuation is a key concern. The P/E ratio is above 50x, higher than the sector average. Even with potential mid-single-digit growth, this high multiple may limit opportunities for aggressive long positions. When earnings fall short of expectations built into such high valuations, corrections can be severe. Timing is crucial here.
Institutional ratings haven’t changed from “Hold,” indicating a balanced outlook. This consensus suggests there isn’t strong support for momentum-based trading. Futures contracts may face low volatility due to HUL’s defensive positioning and predictable cash flows. This is more of a slow, steady situation rather than a fast-moving one, likely to stay flat unless something unexpected happens—like margin recovery or increased volume.
The decline in operating margins due to inflation, especially in raw materials, affects options pricing. In this environment, long-call strategies need strict controls, while straddles or strangles may lack sufficient movement without an external trigger.
New product launches or digital distribution efforts could generate interest, but rural demand is just starting to recover. Without clear execution timelines from management, leveraged positions should be monitored carefully and reassessed weekly. Additionally, reduced pricing stability in FMCG could add pressure.
In the current climate, options traders should conservatively evaluate strike prices, focusing on short-term positions supported by macro indices. Contracts with weekly expirations tied to broader FMCG sector indices could provide insights on pricing sentiment around input costs and rural sales trends. A strong rupee or stabilized crude oil prices could also serve as overlooked catalysts.
With dividends already factored into futures and potential upside limited under current projections, there’s little reason to pursue large delta positions. Unwinding contracts close to intrinsic value may be more sensible than speculative bets at the far end of the spectrum. Currently, the best approach is to practice restraint and responsive position sizing over anticipatory moves.
Keeping an eye on correlations with food inflation and ETF flows in the consumption sector might reveal favorable setups. These could signal shifts in sentiment before earnings create new volatility. Focus remains on timing and strategy, not solely on directional bets.
Investors seek safety as the dollar and franc rise amid tariff concerns
The US Dollar is making a comeback as it re-establishes itself as a safe-haven asset amid rising risk concerns. This rally is partly driven by fears about US trade tariffs and their possible effects on global trade.
The Dollar has outperformed the Swiss Franc, rising to just over 0.7970 against it. However, it has not yet crossed the important psychological level of 0.8000 and is still around 100 pips above the historic low of 0.7875 set last week.
US Tariffs and Economic Uncertainty
The US president has announced intentions to impose tariffs on certain countries, but specifics remain unclear. There is uncertainty about when these tariffs will take effect, as talks are suggesting a possible delay from July 9 to August 1. Concerns about tariffs impacting the US economy have eased following a strong US Nonfarm Payrolls report. This positive news has temporarily calmed worries and lowered expectations for an immediate interest rate cut by the Federal Reserve. The upcoming release of the Fed’s recent policy meeting minutes could influence the Dollar’s recovery. Differing opinions within the Fed about monetary policy might complicate sustained growth for the Dollar.Investor Sentiment Shifts
The recent rise in the US Dollar, especially against the Swiss Franc, signals a broader change in investor sentiment. Many seem to be prioritizing safety over higher returns as market uncertainty grows. It’s not just about trade headlines; there are deeper structural shifts at play. The Dollar has slightly crossed 0.7970 against the Franc but remains below the crucial 0.8000 mark, often viewed as a psychological benchmark. We need to closely observe price movements as the Dollar stays near multi-year lows, which may pull it down if optimism fades. Much of this activity occurs alongside speculation about tariffs. Public comments from the US government indicate new tariffs on certain countries, but the exact timing and scope are still unclear. The potential delay of implementing these tariffs from the expected July 9 date to as far as August 1 has created some uncertainty, possibly preventing a clearer upward movement for the Dollar. This gap between announcement and enforcement allows market participants to adjust their strategies and possibly reassess volatility expectations. The latest Nonfarm Payrolls report was stronger than predicted, reducing fears that tariffs might disrupt economic growth shortly. Following these labor market results, expectations for an imminent Federal Reserve rate cut have softened. This has provided a temporary boost for the US Dollar. However, that support will be tested when the Federal Reserve releases the minutes from its latest policy meeting. There are known divisions within the Fed, with some members advocating for patience while others are ready to act quickly at the first sign of disinflation. If the minutes reveal more disagreement than the market anticipates, it could add volatility. For those managing risk or adjusting positions, it might be wise to reassess short-term premium levels in advance of that release. While immediate panic has lessened, price movements remain tight yet responsive. The Dollar’s sensitivity to asymmetric risks makes poorly timed entries in directional trades costly. Therefore, strategies focusing on relative value might yield better setups, especially if the current narrative hasn’t fully matched pricing yet. For now, we are observing spreads between policy-sensitive pairs and key Dollar exchanges. Subtle yet revealing movements across yield curves provide important context to help shape strategies leading into August. Create your live VT Markets account and start trading now.Bessent discusses upcoming trade announcements, a 20% tariff on Vietnam, and the impact of stronger currencies on the deficit.
Scott Bessent announced that new trade developments are expected soon, with fresh offers already in hand. Upcoming tariff deals might exceed the current assessments from the Congressional Budget Office (CBO), indicating that higher tariffs are on the horizon.
These new tariffs aim to help reduce the trade deficit. Bessent also mentioned that while the US dollar weakens, other currencies are gaining strength. He has a meeting planned with a Chinese representative, which could foster greater cooperation.
Bessent’s plan for tariffs that exceed CBO forecasts shows a strategy focused on benefiting the US. It’s still unclear how other nations will respond to these changes.
This indicates a significant shift in trade policies, aimed at creating direct benefits for the US economy. Bessent’s focus on potential new tariffs suggests that current forecasts from the CBO might be outdated. We should pay close attention to policy details, especially regarding timing and scope. The underlying message is that existing estimates could quickly become irrelevant.
From our perspective, the arrival of new offers shows that preparations have started early. This isn’t about waiting to see what happens; it reflects proactive trading strategies ahead of decisions. Market participants may be starting to expect larger tariffs than anticipated. If confirmed, this could lead to rising pressure on US import and export prices, impacting consumer costs and corporate profits, particularly in sectors reliant on transport.
Another point to consider is the US dollar. If it continues to weaken, other currencies could gain strength, creating a challenging situation for those holding long dollar positions. Currency movements are interconnected. As Bessent noted, foreign currencies are moving in the opposite direction of the dollar’s recent trend. Those involved in leveraged foreign exchange trades may need to reevaluate quickly, especially if trade dynamics lead to escalation.
Bessent’s mention of an upcoming meeting with a Chinese official may seem like standard diplomacy, but in this context, it’s significant. Anyone connected to Asian trade flows should consider the chance of increased cooperation, which could lead to unexpected changes. These impacts often emerge in markets before traditional forecasts account for them.
We view Bessent’s emphasis on tariffs likely to surpass official forecasts as more than just talk. The impact will extend beyond macroeconomic data or broad market trends. Specific effects will be felt, especially by those in commodity markets or sensitive pricing sectors. Some players often misjudge the speed of implementation; however, given the groundwork already laid, it’s crucial to accurately measure risk exposure during this period.
Finally, Bessent’s comment about the uncertain global response is important; it’s a factor that cannot be relied upon for stability. The consequences of hesitance or retaliatory actions from other countries will be harder to manage once positions are established. We recommend monitoring bond market reactions and option premiums on country-specific exchange-traded funds (ETFs) for early signs of risk adjustments, as these often widen ahead of significant news.
OPEC+ plans to approve a 550,000 bpd production increase for September, sources indicate.
OPEC+ oil producers plan to increase oil production by 550,000 barrels per day in September. This decision was made during a meeting on August 3. The increase will return 2.17 million barrels per day from eight member countries, including Saudi Arabia and Russia.
Furthermore, the UAE will raise its output by 300,000 barrels per day because of its new production quota. Currently, WTI oil remains stable at $66, with a slight increase of 0.46%.
What is WTI Oil?
WTI Oil, or West Texas Intermediate, is a high-quality crude oil that is easy to refine. It serves as a benchmark in the oil market. Factors like supply, demand, political events, and OPEC decisions play crucial roles in determining WTI prices. Weekly inventory reports from the American Petroleum Institute and the Energy Information Agency significantly influence WTI oil prices. These reports show changes in supply and demand, with falling inventories typically leading to higher prices. OPEC’s role includes setting production quotas that greatly affect WTI pricing. OPEC+ includes ten non-OPEC members, such as Russia, which also impact the global oil market. The recent decision by OPEC+ to raise production quotas by 550,000 barrels per day in September isn’t surprising. Rising demand in recent months supports this move. This increase restores some of the 2.17 million barrels per day that eight participating countries had previously withheld from the market. With major players like Saudi Arabia and Russia involved, the decision reflects a response to stabilizing economic activity and seasonal demand that usually rises in the latter half of the year.The Impact of the United Arab Emirates and Market Reactions
The United Arab Emirates plans to add an extra 300,000 barrels per day to its production due to its new quota. This adjustment had been negotiated and signals a growing unity among the OPEC+ members. Despite the increase in expected supply, WTI’s spot price has increased slightly, remaining around $66 per barrel. This 0.46% gain indicates resilience rather than a strong reaction to the supply increase. Typically, news of increased supply leads to lower prices, but the market may have already anticipated these changes. The stability in WTI pricing suggests that market sentiment expects demand to remain strong, rather than facing an oversupply issue soon. As a light, sweet crude, WTI is sensitive to global cues and remains a key reference for oil pricing. Thus, keeping an eye on production signals from OPEC+ is crucial. Short-term WTI price fluctuations often stem from inventory data, provided weekly by the American Petroleum Institute and the U.S. Energy Information Administration. A drop in inventories generally leads to higher prices, while unexpected increases can cause immediate price changes. Given current market conditions, the importance of weekly reports is increasing. Traders should carefully monitor these inventory releases, especially as we approach late summer. This period usually sees refineries operating at higher capacity, and hurricanes may disrupt supply chains in the Gulf of Mexico. For traders involved in this market, adjusting strategies around these data releases can provide valuable insights ahead of major economic events or central bank announcements. Russia works closely with Gulf producers and has maintained steady cooperation with Riyadh’s policies, even amidst internal challenges or sanctions. Traders who overlook the strength of this alliance risk underestimating the support oil producers can provide. The coalition has shown that it can act swiftly to stabilize prices when necessary, as seen in previous cycles, and trading models should take this responsiveness into account. Moving forward, oil prices in the coming weeks will likely depend heavily on U.S. economic indicators and inflation signals that will influence the Federal Reserve. Energy hedging strategies for September and October should consider potential demand adjustments and weather-related logistical issues. Forward pricing structures may widen as autumn contracts incorporate producer reactions, especially if demand from Asia falls short or if European industrial activity weakens. This could lead to premium opportunities in WTI options on the call side, as long as implied volatility remains below recent averages. In summary, do not force a directional bias in trading. Maintain a flexible stance that allows for quick adjustments, particularly around mid-curve expiries where liquidity concentrations arise. Look for confirmations in inventory drops from the API and EIA. Pay attention to physical bottlenecks and the synergy between policy headlines and actual export data. That’s where today’s trading edge lies. Create your live VT Markets account and start trading now.Expectations for Trump’s tariff letters rise amid quiet session with few data releases
The European forex session on July 7, 2025, had limited new data. Key highlights included OPEC+ sources suggesting an increase of 550,000 barrels per day in September and the EU making progress in trade talks with the US.
With not much happening today, attention is on President Trump’s expected tariff letters. He might send out 12 to 15 letters to secure trade deals, with a deadline of July 9.
