Japan’s trade negotiator, Akazawa, will host a US delegation in Osaka this weekend. Before that, he will meet with Bessent in Tokyo tomorrow. These discussions come as progress between Japan and the US remains limited. The urgency is heightened by a warning from Trump about potential 25% tariffs starting on August 1.

US Delegation Visit

Bessent will arrive in Tokyo tomorrow. After the meeting, he will travel to Osaka for the US National Day event at Expo 2025 Osaka. The meeting between Akazawa and Bessent indicates possible market changes ahead. The approaching August 1st deadline for 25% tariffs brings uncertainty that traders can navigate with derivatives. Therefore, traders should ready themselves for significant moves in Japanese assets in the coming weeks. The Nikkei 225 index might be particularly affected, given its reliance on major exporters like Toyota and Sony. Past trade threats from 2018-2019 led to sharp falls in the Japanese stock market. To prepare for potential negative outcomes from the Osaka talks, we are buying put options on the index.

Market Volatility Strategies

We are closely monitoring the USD/JPY currency pair as the yen usually strengthens in times of geopolitical tension. One-month implied volatility for this pair has already risen above 9%, indicating the market is expecting larger price fluctuations. A setback in negotiations could lead to a stronger yen against the dollar. This situation suggests that strategies benefiting from increased volatility, regardless of the direction, are appealing. A long straddle—buying both a call and a put option on the Nikkei or USD/JPY—could effectively capitalize on significant market movements. The US goods trade deficit with Japan, which was $65.1 billion in 2023 according to the US Census Bureau, adds context to the pressure from America. Bessent’s background as a former hedge fund manager means these discussions are not typical diplomatic meetings, adding more unpredictability. His financial expertise suggests he understands how these negotiations affect asset prices. We will be watching the tone of any statements after his meetings in Tokyo and Osaka for hints on adjusting our strategies. Create your live VT Markets account and start trading now.

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The unemployment rate in the UK for May 2025 was 4.7%, higher than the expected 4.6%. This is the highest rate since 2021. Employment increased by 134,000, which is more than double the predicted 46,000. Average weekly earnings rose by 5.0%, meeting expectations, while previous figures were slightly adjusted from 5.3% to 5.4%.

Conflicting Labor Market Indicators

When excluding bonuses, earnings also increased by 5.0%, just above the expected 4.9%. However, payrolls in June dropped by 41,000. This is an improvement over May’s revised decrease of 25,000, which was originally 109,000. The Bank of England is facing challenges as rising unemployment and falling real wages put pressure on their economic plans. Total pay fell to 1.0%, while regular pay reached 1.1% in the three months to May, marking the lowest point since mid-2023. According to Mr. Low, the latest labor market report shows a mixed picture. However, the sharp increase in the unemployment rate is a crucial signal. Although job creation exceeded expectations, the rising unemployment rate, now at its highest since 2021, indicates a slowing economy. This suggests that the Bank of England is considering an interest rate cut. As a result, we are preparing for a weaker pound in the upcoming weeks. We find it worthwhile to buy GBP/USD put options or take short positions in sterling futures. Ongoing wage growth, though slowing, is unlikely to stop the central bank from easing policies due to the struggling job market.

Monetary Policy Implications

We think the UK interest rate market is underestimating how quickly easing will happen. When central banks begin to cut rates after a long period of high rates, as occurred from 2022 to 2024, the changes can happen rapidly. Thus, we are looking into SONIA futures contracts that predict lower overnight rates later this year. Lower borrowing costs should help boost UK stocks, benefiting the equity markets. We expect this to support the FTSE 100 index. Buying call options on the index could be an efficient way to capitalize on this potential growth. This mixed data may increase uncertainty in the market as we approach the next policy meeting. By mid-2024, the UK unemployment rate was already on the rise at 4.4%, so this new higher figure will spark more debates and could lead to higher implied volatility in sterling options. Strategies like straddles can be useful if we anticipate significant movement in either direction but are unsure when it will occur. Create your live VT Markets account and start trading now.

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Bitcoin is holding firm within the $116,000 to $120,000 range, keeping traders alert as it consolidates and prepares for a potential breakout.

In overnight trading, BTC briefly reached a high of $120,062 before easing back to the current level near $118,300. This suggests the market is pausing to absorb recent gains while setting the stage for its next directional move.

But it’s not just the price action driving optimism. According to CryptoQuant analyst Amr Taha, nearly $2 billion worth of newly issued stablecoins entered derivatives exchanges earlier today, primarily in the form of Tether (USDT). This sudden wave of liquidity is widely seen as a sign of institutional players gearing up for leveraged long positions in both Bitcoin and major altcoins.

Leverage Builds On Fresh Liquidity

Historically, large stablecoin inflows to derivatives platforms tend to foreshadow bullish trends. These deposits often coincide with an uptick in open interest, something already beginning to unfold.

As prices firm, open interest is rising in tandem, reflecting increased trader conviction and growing market participation.

However, this build-up also introduces risk. Greater open interest suggests higher leverage exposure, which may amplify both gains and losses. Momentum can accelerate quickly, but any sudden shift in sentiment could trigger sharp unwinding.

Technical Analysis

Bitcoin has entered a mild downtrend after failing to maintain its hold above $120,000, with a local peak at $120,062 before retracing to around $118,000.

The MACD confirms weakening momentum with a sharp bearish crossover and widening histogram divergence, signalling continued selling pressure in the near term. The price has now slipped below all three short-term moving averages (5, 10, 30), and the recent bounce appears corrective rather than a reversal.

Macro sentiment hasn’t helped. This week, Fed Chair Powell reaffirmed the Fed’s cautious stance on rate cuts, while on-chain data from CryptoQuant shows slowing inflows to derivatives exchanges, hinting at reduced appetite for aggressive long positions.

With a lower high now in place and 118,000 being retested, bulls will need to reclaim 119,000 swiftly or risk seeing BTC retest the 117,000–116,500 liquidity zone.

Temporary Pause Or Short-Term Peak?

While some short-term indicators hint at exhaustion, Bitcoin has yet to experience a major correction, highlighting the market’s underlying strength. So far, consolidation appears more likely than capitulation.

At the time of writing, BTC is trading at $119,171, marking a 2.4% gain over the past 24 hours. With billions in stablecoin liquidity still waiting on the sidelines and derivatives traders seemingly preparing for further upside, attention now turns to whether Bitcoin can establish a clean breakout above $120,000, or if it first needs to flush out weak-handed traders.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Gold prices increased by 0.78% as talks about possibly firing Federal Reserve Chair Jerome Powell gained traction. At that time, gold was priced at $3,348, having reached a high of $3,377. This discussion about Powell allegedly took place during a White House meeting about cryptocurrency legislation. Various data and geopolitical issues also contributed to the rise in gold prices. The US Producer Price Index (PPI) came in lower than expected but remained above the Fed’s 2% target. Israeli strikes on Syria helped prevent a larger drop in gold prices, while US consumer inflation reports kept gains below the $3,400 mark. Despite high prices, India’s gold supply fell by 40% in June. As the week unfolds, attention will turn to Fed speeches, retail sales, employment statistics, and consumer sentiment. Gold remained fluctuating between $3,300 and $3,380. There were reports suggesting that Trump might take action against the Fed chair, with Trump discussing potential removal due to “fraud.”

Economic Data Overview

In June, the PPI fell to a 2.3% year-on-year increase, below what analysts expected. Consumer inflation, however, rose to nearly 3%, straying from the Fed’s goal of 2%. US Treasury yields decreased, with the 10-year yield dropping to 4.459%. Stability in interest rates is anticipated at the next Fed meeting, with a 95% likelihood of rates remaining unchanged. The Fed aims to maintain price stability and full employment by adjusting interest rates. Its main tools include interest rates and, in exceptional cases, Quantitative Easing (QE). The effects of these policies influence the strength of the US Dollar; QE typically weakens the Dollar, while Quantitative Tightening (QT) may strengthen it. The Fed holds eight policy meetings each year, where the Federal Open Market Committee (FOMC) makes decisions. During crises, the Fed uses QE to boost credit flow, whereas QT represents the reduction of QE measures. Given the uncertainty around the Federal Reserve leadership, gold’s volatility currently seems undervalued. Any significant action or escalated rhetoric against the Fed’s chair could lead to sharp price changes. Derivative traders should consider strategies that benefit from increased volatility rather than predicting a specific price direction.

Volatility and Trading Strategies

Conflicting economic data—where producer prices are declining but consumer inflation persists—creates a tug-of-war that supports the existing trading range. Recent reports confirm this, with the latest headline CPI showing a modest 3.3% annual rate, while core inflation remains more stubborn. We view this as a chance to sell options at the upper and lower ends of the established range, allowing us to collect premiums as the market processes these mixed signals. Geopolitical tensions are providing a solid support level for gold prices, reducing downside risk for bullish positions. Beyond the Middle East conflicts, global disputes continue to drive safe-haven demand, making bets against gold risky right now. In this environment, buying call options or setting up bullish call spreads seems like a sensible, risk-defined method to prepare for a potential price surge. The market is nearly fully anticipating a rate hold at the next FOMC meeting, with the CME FedWatch Tool indicating over a 90% probability. This consensus leaves the market vulnerable to surprises, whether from hawkish central bank statements or political interference. We are on high alert for any deviations from this expectation, which could prompt us to adjust our range-bound strategies and embrace momentum. Historically, political pressures on the Fed, like the verbal criticisms from the former president in 2018, have resulted in significant market volatility and policy changes. That period led to heightened turmoil in equity and bond markets, affecting the central bank’s choices. We anticipate a similar pattern may unfold, suggesting that the current calm could be fleeting. In the upcoming weeks, we prefer strategies such as long straddles or strangles on gold futures, which are designed to profit from significant price movements in either direction. These positions would take advantage of the uncertainty surrounding potential leadership changes at the monetary authority. Such a strategy allows traders to benefit from coming turbulence without needing to predict its final direction. Create your live VT Markets account and start trading now.

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The Euro strengthened against the US Dollar after recovering from a three-week low, trading above 1.1600. This rise followed President Trump’s threats to remove Federal Reserve Chair Jerome Powell and a disappointing US Producer Price Index (PPI) report. Initially, there were claims that Trump wanted to fire Powell, which he later denied. Despite his denial, Trump criticized Powell for not cutting interest rates sooner. Additionally, the US PPI fell short of expectations, affecting the currency’s performance.

Fed’s Beige Book Report

The Fed’s Beige Book showed a slight uptick in economic activity but highlighted ongoing uncertainty, especially regarding employment and pricing due to tariffs. The June PPI showed a year-on-year rise of 2.3%, a drop from May’s 2.6%, and below expectations. Interest rate forecasts indicate a strong chance of no changes at the next Fed meeting, with few rate cuts expected by the end of the year. The European Central Bank (ECB) is also expected to keep rates steady, though some officials favor rate cuts due to potential growth risks. For EUR/USD to continue its upward trend, it must close above the 20-day Simple Moving Average at 1.1681, with several resistance and support levels identified. The Euro’s value depends on various economic factors and data releases. The recent bounce in the Euro seems more like a reaction to weakness in the US Dollar rather than a sign of strength. Political pressure on the Federal Reserve and softer inflation data are creating uncertainty. This makes directional bets risky and suggests a more careful approach in the upcoming weeks.

Traders’ Considerations

Traders should avoid overreacting to political remarks about the central bank’s leadership. Mr. Powell has consistently focused on data, and the recent US Consumer Price Index reading of 3.3% supports a cautious stance on rate cuts. The CME FedWatch Tool indicates a nearly 65% chance of a rate cut by September, but this could change quickly with the next employment report. Meanwhile, the ECB has already started its own easing cycle with a rate cut earlier in June but stated it is in no hurry to cut rates again. Officials attribute their caution to ongoing wage inflation. This difference in approach between the two central banks creates a complex scenario for the currency pair. Historically, such policy divergence—like in 2014 when the US planned to raise rates while Europe eased—has led to strong and sustained trends. Currently, 3-month implied volatility for the currency pair is close to multi-year lows at around 5.8%, indicating market complacency. This low cost of options may present opportunities for traders to buy straddles or strangles, setting up for significant market movements in either direction. Therefore, we advise monitoring key technical levels to confirm any fundamental shifts before making a strong directional bet. A consistent close above the 50-day Simple Moving Average, currently around 1.0810, would signal that the Euro’s upward momentum is reliable. Until then, trading within the established range with options is a more cautious strategy. Create your live VT Markets account and start trading now.

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Australia’s unemployment rate rose to 4.3% in June, up from 4.1% in May, which was higher than what analysts expected. The job market saw a slight gain of 2,000 jobs, falling short of the forecast of 20,000 new jobs. The participation rate increased to 67.1% in June from 67.0% in May. However, full-time jobs decreased by 38,200, while part-time jobs increased by 40,200. Hours worked dropped by 0.9%, following a 1.4% rise in the prior month.

Market Response

In response to the employment data, the Australian Dollar initially gained interest but was still down 0.56% at 0.6492. This currency struggled, particularly against the US Dollar, making it the weakest among major currencies this week. Analysts had expected the unemployment rate to stay at 4.1% and predicted an increase of 20,000 jobs for June. The Reserve Bank of Australia decided to keep the Official Cash Rate at 3.85%, taking a cautious stance while they monitored the impact of previous rate cuts. The Australian Dollar’s value is shaped by interest rates, iron ore prices, and the state of the Chinese economy. A decrease in the unemployment rate typically helps the currency, while an increase can hurt it. The mixed job market data suggests that any future changes in monetary policy will be thoughtful and careful. Given the weak job figures, we think the Reserve Bank of Australia is more likely to cut rates next rather than raise them. The shift from full-time to part-time work indicates a slowing labor market, which could encourage the central bank to pause or reduce its policies. Derivative traders should prepare for a more cautious monetary stance in the upcoming weeks.

Financial Market Expectations

This outlook is being reflected in financial markets, as ASX 30-day interbank cash rate futures now suggest a greater than 60% chance of a rate cut by year’s end. The most recent Consumer Price Index also backs this view, showing a drop to 3.4% for the year ending in May, well below its peak. We see opportunities in interest rate derivatives that could benefit from lower official rates. Historically, the Australian Dollar tends to weaken when the central bank eases policy. For instance, during the RBA’s 2019 easing, the currency fell more than 7% against the US Dollar in just six months. We expect similar downward pressure now, which could make short positions on the currency appealing. The currency’s challenges are heightened by external factors, especially regarding China’s economy. Recent data indicated that China’s manufacturing PMI struggled to stay in growth territory, which could reduce demand for Australia’s essential commodity exports. This external pressure adds to the risks of holding the local dollar. Considering both domestic and external pressures, we see potential in buying AUD/USD put options. This strategy could benefit traders from a potential decline while clearly limiting their maximum risk. The heightened market uncertainty following these economic updates creates good entry points for such positions. Create your live VT Markets account and start trading now.

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The Dow Jones Industrial Average rose early on as the US Producer Price Index (PPI) showed lower inflation. This news sparked hopes for a Federal Reserve rate cut. However, President Trump’s hint at wanting to replace Fed Chair Jerome Powell tempered some of that optimism, even though he does not have the authority to make such a change. After a brief dip, equity markets stabilized when Trump lessened his aggressive stance towards Powell. Still, his delivery of a termination letter to Congress suggests he is actively looking for a way to replace the Fed Chair.

US PPI Inflation Data

The latest US PPI inflation data indicated a drop to 2.6% annually from 3.0%, which boosted market optimism for potential rate cuts. However, traders remain cautious. The CME’s FedWatch Tool shows a 40% chance that no rate cuts will happen in September. Despite some gains, the Dow Jones faces challenges as it struggles below 45,000 and tests the 44,000 level. If key support levels, like the 50-day Exponential Moving Average around 43,095, do not hold, further declines are possible. The Dow Jones Index, which includes 30 major US stocks, is influenced by company earnings, broader economic data, and Federal Reserve rate decisions. While the lower PPI is a positive sign, the political pressure on the Fed Chair adds uncertainty. This mix of encouraging economic news and political risk may lead to market volatility. The market balances hope for easier monetary policy with concerns about instability in the central bank.

Trading Strategies for Uncertain Times

In light of these mixed signals, we recommend traders use strategies that benefit from price fluctuations rather than trying to predict direction. The CBOE Volatility Index (VIX), which measures market fear, has been relatively low at around 13. This makes options contracts cheaper, allowing for opportunities to hedge or bet on future price movements before volatility potentially rises. With the CME FedWatch tool recently suggesting a 62% chance of a rate cut in September, key event risks are present. Since this is not a market consensus, the outcome of the next Fed meeting could lead to significant price changes. Traders may consider using straddles on index ETFs, which can profit from either a strong rally or a sharp downturn. Technically, the Dow Jones is moving within a clear range, which is perfect for options strategies. We recommend selling out-of-the-money call options with strike prices above the 45,000 resistance to generate income. At the same time, buying protective puts below the crucial support of the 50-day Exponential Moving Average can shield against a sharp decline. Historically, markets have faced volatility when the independence of the central bank is questioned, increasing the current political risk. The situation with Mr. Powell poses an unpredictable risk that could overshadow any positive economic news. Thus, we advise adding longer-dated protective puts or VIX call options as a wise move to protect your portfolio against sudden, politically driven market shocks. Create your live VT Markets account and start trading now.

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The US Dollar’s rise stopped on Wednesday due to selling pressure from rumors about possible changes in the Federal Reserve’s leadership. This was happening alongside geopolitical tensions and lower-than-expected US Producer Prices. On Thursday, all eyes will be on US Retail Sales, Initial Jobless Claims, Business Inventories, and the Philly Fed Manufacturing Index. Federal Reserve officials will also speak publicly, offering more insights into the market.

Market Movements And Key Reports

EUR/USD bounced back from recent lows, with a focus on the final Inflation Rate for the euro area. GBP/USD increased after dropping before, as the UK labor market report comes into play. USD/JPY was volatile, and Japan’s Balance of Trade figures are awaited. AUD/USD saw a slight increase, with attention on Australia’s labor market report. WTI oil prices fell further, dipping below $66 per barrel due to trade concerns. Gold prices recovered some losses, while Silver rebounded from declines. This information includes forecasts with risks and uncertainties. It is for informational purposes only and is not investment advice. Calculating risk is the reader’s responsibility, and the information provider has no liability for errors or omissions.

Trading Strategies And Potential Impacts

We think the selling pressure on the dollar, stemming from uncertainty about central bank leadership, presents a good opportunity for traders. Consider buying short-term put options on dollar-tracking ETFs to hedge against or profit from further declines. This strategy limits risk if the dollar unexpectedly rises. The upcoming reports on consumer spending and employment will be important. Recent data shows mixed signals: September’s retail sales rose by 0.7%, but producer prices weakened. With potential for sharp moves in either direction, we’re positioning ourselves with straddles on major indices. This allows us to profit from increased volatility, no matter if the economic news is strong or weak. The euro’s recovery may be limited because inflation rates in the region recently dropped to a two-year low of 2.9%. This might weaken the central bank’s stance. In contrast, a strong UK labor market report could send the British Pound higher. Therefore, we prefer buying bull call spreads on GBP/USD over the euro, as it has a clearer catalyst. The volatility in the Japanese currency is important, and we expect further fluctuations based on Japan’s trade balance results. We are using options to trade around the Australian dollar’s labor market report, hoping a strong number triggers a rally. Historically, unexpected strength in Australian employment data has led to multi-day currency rallies. Gold’s recent rise toward $2,000 an ounce is a result of the dollar’s drop and ongoing geopolitical risks. We see this as a key hedge and are increasing our long positions with call options on gold. This gives us direct exposure to a flight to safety and continued dollar weakness. WTI prices are falling for reasons beyond trade worries; the latest EIA report revealed a surprise increase in US crude inventories of 5.6 million barrels. This trend suggests that prices may stay below $85 a barrel for a while. We will be purchasing put options on oil-related ETFs to take advantage of this weakness. Create your live VT Markets account and start trading now.

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The AUD/JPY has fallen over 1% from its six-month peak of 97.43. This drop is happening as the Japanese Yen gains strength, with the 10-year JGB yield reaching 1.6%, the highest since 2008. On Thursday, Australia will release its June employment report, which is expected to show a 20,000 job increase and maintain an unemployment rate of 4.1%. The Australian Dollar is retreating against the Yen due to profit-taking and a drop in momentum. Technical indicators suggest the rally is slowing down, with the Relative Strength Index falling from overbought territory. This indicates that the currency pair is undergoing a short-term correction.

Impact of Australia’s Employment Report on RBA Policy

The upcoming employment report will influence expectations for the Reserve Bank of Australia’s monetary policy. If job gains are strong, it could support current cash rates. On the other hand, weak job growth might lead to predictions of rate cuts. The market sees an 80% chance of a rate cut in August, especially with the upcoming Consumer Price Index report. In Japan, important economic updates this week include the trade balance and Consumer Price Index reports. These will shed light on Japan’s economic situation and affect the Bank of Japan’s policy outlook. Strong CPI numbers could push Japanese yields up, bolstering the Yen and putting more pressure on the AUD/JPY. We believe derivative traders face a crucial point in the AUD/JPY, fueled by differing views from central banks. The recent rise in Japanese government bond yields above 1.0%—a level not seen since 2012—signals a major shift. This scenario suggests that holding long positions has become much riskier. Australia’s latest monthly CPI was unexpectedly high at 4.0%, making the upcoming employment figures even more important. We recommend using options, like buying put options, to protect against a worse-than-expected jobs report that might back the Reserve Bank’s rate cut. This strategy limits risk while providing some downside protection.

Influence of Japan’s Inflation on Yen Strength

Meanwhile, Japan’s core inflation remains above the central bank’s 2% target, recently recorded at 2.5%. A strong CPI reading could spark speculation that the Bank will continue to normalize policy, following its first rate hike in 17 years last March. This possibility of a stronger Yen makes short-term bearish strategies on the pair appealing. The pair’s slip from overbought levels on the Relative Strength Index supports the idea of a continuing technical correction. We see an opportunity for a bear put spread, where traders buy a higher-strike put and sell a lower-strike one. This tactic allows profit from a moderate decline while limiting both potential gains and risks. With significant data coming from both nations, we expect increased volatility. Historically, the pair’s implied volatility jumps around key central bank announcements. Traders unsure of the market direction might consider a long straddle by buying both a call and a put option at the same strike price to benefit from a substantial move in either direction. Create your live VT Markets account and start trading now.

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