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China announces final decision on EU brandy, imposing duties of up to 34.9% over five years
China has put a halt on its support for a new agreement with French cognac producers. The issue stems from China’s desire to connect this cognac deal with ongoing talks about electric vehicle (EV) tariffs.
Starting July 5, China will impose tariffs on certain imports for five years. Some imports might be exempt from these tariffs if they meet specific requirements. These conditions seem to depend on actions that the European Union might take about EV tariffs on China.
China’s decision to pause its endorsement of the cognac agreement sends a clear message: trade issues are now interconnected. This delay reflects a strategic change, where various sectors are linked together in response to Western trade measures. The spirits industry finds itself in a challenging position; it’s not about volume but rather the underlying symbolism that matters.
Beijing’s approach is now noticeably reactive. Discussions about electric vehicles have opened the door. The tariffs set to begin on July 5 are significant—they are carefully timed, targeted, and flexible. Not everything will be treated the same way, and some exemptions have been intentionally included. While limited, these exemptions suggest that there is still a narrow pathway available, depending on regulatory changes from Brussels regarding Chinese electric cars.
For those watching the derivatives market, there’s now more to consider than just product flows and domestic demand. Political factors add additional complexity. Relying too much on historical trends while trade measures change can lead to serious mispricing. What was once a stable view of duty frameworks may now need to be reassessed weekly.
Tariffs on consumer products like cognac, which hold strong national value, have not typically influenced broader market pricing; that could be changing. It’s not just about costs being passed through supply chains anymore. We need to be alert to increased hedging activities in sectors that don’t seem related to transportation or vehicle electrification.
By delaying its endorsement, China hasn’t merely postponed a drinks agreement; it has introduced uncertainty in regulatory norms. This uncertainty impacts the expected confidence in trading futures. Decreased certainty in trade relationships can widen basis spreads, especially when policy updates come in clusters rather than clear announcements.
Tariff expectations should be reviewed daily, not quarterly. Strategies relying on stable prices for euro-area consumer goods or inputs for affected manufacturing must be revised. Any uncertainty in tariff exemption rules will raise the risk of misalignment. This doesn’t imply a one-way pricing trend, but it does suggest increased volatility near previous tipping points. A more aggressive identification of potential tariff impacts will be crucial in short-term contracts.
We should prepare for July 5, which not only marks the start of new tariffs but also a deadline for integrating new conditions into pricing models. Those using simple models will need to adapt to incorporate EU Commission behavior.
We must also consider precedent. Tying duty decisions across unrelated sectors could become a recurring strategy. Evaluating pricing policy risks now requires a detailed examination of regulatory negotiations. No assumptions should be made about historical trade independence between sectors.
Tariff terms are no longer fixed. Every update from Beijing or Brussels should be assessed for its potential impact on trading strategies. The market’s previous insulation from these diplomatic developments seems to be fading. This subtle shift brings risks for price distortions that models must start to account for—not just in logical sectors but also in traditionally low-volatility goods that may be affected by these exemptions.
In the end, impending policy decisions are becoming a key factor in pricing. Current trades must go beyond simple value-chain considerations. They need to factor in the diplomatic ties between alcohol and alternative energy.
In June, India’s foreign exchange reserves rose from $697.94 billion to $702.78 billion.
India’s forex reserves rose from $697.94 billion to $702.78 billion in June 2023, indicating the country’s strong financial health.
EUR/USD remains stable, staying below 1.1800. With US markets closed for the July 4th holiday, this currency pair is set to end the week positively.
GBP/USD Price Action
The GBP/USD pair is fluctuating around 1.3650. Trading is light due to ongoing political uncertainty in the UK. The market showed little volatility with the US markets inactive. Gold prices are stable at around $3,300 per troy ounce as speculation grows about potential interest rate cuts from the US Federal Reserve, which could affect the future of this precious metal. While geopolitical worries ease, tariff risks continue. There are still concerns about possible aggressive tariff increases proposed by Donald Trump, though previously announced high rates may not return. Attention is focused on developments in Asia and the US, especially recent legislative actions. Trump’s “Big, Beautiful Bill” has passed the Senate, stirring reactions and discussions.Trading EUR/USD in 2025
When trading EUR/USD in 2025, various competitive brokers can offer quick execution and robust platforms that are suitable for both beginner and expert traders in the Forex market. India’s forex reserves surpassing $700 billion again highlights a solid external balance. While this may not directly influence currency traders, the gradual increase often leads to better exchange rate management. With more dollars available, the rupee faces less pressure from external shocks, whether from commodities or geopolitical events. While this isn’t a buying signal, it’s important to consider when making positions related to the rupee or correlated assets. In major currency pairs, EUR/USD is stable below 1.1800, aligning with broader US dollar trends. The US Independence Day holiday prevented major movements midweek. The pair’s ability to hold its recent gains suggests that the market is currently leaning towards a weaker dollar narrative for the summer. Inflation expectations and commodity inputs affecting European macro data haven’t disrupted this trend. If you’re trading options or futures based on EUR/USD, maintaining long positions seems favorable given recent buying activity. For sterling, GBP/USD hovering around 1.3650 shows a different scenario. Price action has struggled to break out of this range due to political standstills and low liquidity. The pound’s earlier gains have faded, leading to a more cautious market stance. High hedging costs indicate caution, but if recent UK political developments clear some uncertainty, we may see a gradual return to pound-related investments, potentially reshaping future trends. In the metals market, gold’s trading range at $3,300 per ounce reflects a tug-of-war between interest-rate expectations and demand for safe-haven assets. The market is currently indecisive. Persistent US core inflation complicates forecasts for the Federal Reserve. Traders with long-term gold contracts must navigate the uncertainties of an election year alongside fluctuating interest rate expectations. We’ve noticed an increase in call volume around $3,350 strikes, suggesting some traders are betting on a US policy change later this year. On the geopolitical side, while tensions have eased for now, market players are still wary of possible trade policy issues. The risk of new tariffs is not fully priced in but is present in the options market through skewed implied volatilities. Recent US legislative successes, like Trump’s large-scale bill passing the Senate, have sparked discussion about potential effects on trade and technology. How this impacts sector rotation in FX markets is still unfolding, but early signs in derivatives show a slight tilt towards hedging positions linked to Asia. For 2025, having access to deep liquidity and fast execution is critical, especially for those trading short-term shifts in euro or dollar volatility. In periods with tighter spreads and quicker reversals—especially during calendar roll periods—having platforms that can handle high volume is essential. We’ve noted that algorithmic trading flows haven’t reached extremes yet, although some early indicators show stretched RSI levels. As we approach quarterly rebalancing—a time known for erratic movements, particularly in low participation sessions—it’s wise to maintain a flexible trading structure, preferably with set stop-losses but also some breathing room. Create your live VT Markets account and start trading now.Despite a positive NFP report, the USD struggled while the JPY was influenced by risk sentiment
The USDJPY pair went up after the US Non-Farm Payroll (NFP) report came in better than expected, leading to a temporary rise in interest rate expectations. However, weaker wage growth suggested that only two rate cuts might happen by the end of the year. This reduced support for the USD and erased some of its earlier gains.
The JPY’s fundamentals remain unchanged, mainly swayed by risk sentiment. The Bank of Japan (BoJ) kept interest rates at 0.5% and adjusted its bond tapering plan for fiscal 2026 as expected. They are focusing on the US-Japan trade deal and inflation changes before making any rate decisions.
Technical Analysis of USDJPY
On the daily chart, USDJPY is between a support level at 142.35 and a resistance level at 146.00, showing no clear direction. The 4-hour chart indicates that prices went above the key level of 144.25 following the NFP report, with the potential to reach the 146.28 resistance. Buyers are trying to maintain their position above this area, while sellers are aiming for a drop to the 142.35 support. The 1-hour chart reveals a slight upward trend supporting bullish momentum. Buyers are working to keep prices rising and possibly reaching new highs, while sellers are looking to break lower to reinforce bearish trends toward the 142.35 level. The red lines highlight today’s average daily range. Recently, the initial spike in USDJPY after the NFP report has faded. This is mainly because the increase in job creation didn’t match significant wage inflation, making a strong USD less likely. Although the dollar initially rose after the positive US employment report, expectations for major policy changes were quickly tempered by softer earnings data. Now, it seems only two rate cuts are expected for the rest of the year. With Japan’s interest rates remaining stable and the BoJ making only slight changes to its long-term bond reduction plans, the focus has shifted. Tokyo’s monetary policy is predictable for now. Daily price movements are now more influenced by global equity market swings and overall investor confidence than by domestic factors. Sharp shifts in global sentiment are still important to watch.Trading Strategies and Market Insight
Currently, price activity is focusing on holding above the level of 144.25, supported by active short-term trendlines. The movement hasn’t been very strong, indicating that traders are consolidating before making the next move. Volatility around the 144.80–145.50 area could present short-term opportunities, as prices try to test the weekly high again. Prices stuck between the clear resistance at 146.00 and support at 142.35 suggest that buyers might push higher gradually, or there could be a sharp correction if this upward trend fails. Without confirmation, significant trade opportunities above these levels are limited. Tracking momentum on smaller timeframes is beneficial since they provide clearer insights than the broader daily chart, which is still lacking clear directional signals. The lower timeframes show immediate changes in sentiment and have seen small buying spikes, although these haven’t had consistent follow-through. If prices drop below 144.25, it could tempt profit-taking from recent long positions. Falling below the hourly trendline may push the pair to test the lower boundary near 143.50. Further declines could lead to a move toward 142.35, especially if macro headlines impact risk-taking. As we move forward, it is better to stay focused on reaction levels rather than predict breakout directions for better trade setups. Watching for sessions where trading volume increases near key levels can indicate more sustainable movements. The best edge comes from aligning price structure with momentum and sentiment. Create your live VT Markets account and start trading now.Dollar Index falls below 97.00 as tariff concerns increase
The US Dollar Index (DXY) has fallen from a high of 97.40 on Thursday to below 97.00. This drop follows initial excitement over a strong payroll report, which is now fading as concerns about upcoming tariff deadlines set in.
President Trump plans to alert trade partners about new tariffs on their products. He has only signed three trade agreements with China, the UK, and Vietnam. Worries about rising inflation and slow economic growth are impacting the US Dollar since “Liberation Day” on April 2.
Implications of Trump’s Tax Bill
Trump’s Tax Bill is expected to increase US debt by $3.3 trillion over the next ten years. It has passed Congress and just needs his signature. This situation raises concerns about whether the US can sustain this debt and poses a challenge for the Dollar’s recovery. With US markets closed for Independence Day, trading activity is limited, keeping the Dollar’s movement steady. Unlike taxes, tariffs aim to support local industries but are collected differently. While some view tariffs as protective measures, others warn they could lead to higher prices and trade wars. Trump’s emphasis on tariffs aims to shield American industries, especially from Mexico, China, and Canada, which represent 42% of US imports. The decline of the Dollar Index from 97.40 to below 97.00 is not merely a short-term change in sentiment. It reflects traders adjusting to holiday slowdowns and responding to employment data. As the initial boost from strong job numbers fades, there’s a noticeable shift towards caution. Uncertain trade announcements, with only a few agreements made, add to this unpredictability. Trump’s plans to inform trading partners about new tariffs weigh heavily on the Dollar’s outlook. With formal agreements limited to a few nations, markets are bracing for interruptions. This tension is evident not just in current pricing but also in options markets, where traders are hedging against significant changes around important dates. Fears of inflation and slowing growth dating back to early April have been intensified by the new tax commitments. The tax bill, expected to increase US debt by $3.3 trillion in a decade, has cleared Congress and is awaiting Trump’s approval. This situation calls for a closer examination of the sustainability of US financial policies. If bond yields rise due to supply concerns, it could negatively impact the Dollar’s value unless growth surprises positively.Independence Day Market Dynamics
With markets closed for Independence Day, trading activity is limited, but this doesn’t eliminate risk; it just postpones it. When liquidity returns, we may see sharper movements, particularly as Asian and European markets react to tariff news without full US market participation. Given the tightening ranges, any breakout could be more volatile if driven by geopolitical or monetary news. Tariffs, while different from taxes in collection, still affect consumer prices and corporate profits. Some argue that they are necessary for fair trade or to protect industries, but there’s a growing sentiment that they might provoke retaliatory actions or extended conflicts. Since Mexico, China, and Canada account for nearly half of US imports, the success of these policies depends on their responses, not just on announcements from Washington. Currently, derivative markets reflect this tension. Option skews show a preference for downward moves for the Dollar, and risk reversals indicate a tendency among traders to bet against the US currency around key policy announcements. Short-dated futures suggest more stable movements for now, but a broader range of possible outcomes could emerge in the coming month. For those managing investments, the current volatility compression could present an opportunity. Straddles on the DXY or related futures may underestimate risk just as political developments threaten to cause price fluctuations. Timing is crucial. Keeping an eye on when Trump reveals tariff details could help anticipate market movements—not only for spot prices but also for how spreads act across currency pairs tied to North American trade. Create your live VT Markets account and start trading now.European indices open lower due to cautious sentiment on tariffs and US market closure
European indices dropped at the start of trading. The Eurostoxx fell by 0.6%, Germany’s DAX went down by 0.2%, and France’s CAC 40 decreased by 0.8%.
The UK FTSE saw a 0.3% drop, Spain’s IBEX fell by 0.5%, and Italy’s FTSE MIB declined by 0.1%. In the US, S&P 500 futures were also down by 0.3%.
The US markets are closed today for the 4th of July holiday. There is a cautious mood as countries prepare for potential tariff hikes set for August 1, largely influenced by Trump’s recent trade announcements.
This morning’s declines in Europe show increasing concern among investors. The Eurostoxx’s 0.6% drop, along with similar losses in other major indices, points to softened sentiment. The DAX’s slight decline of 0.2% and France’s larger drop of 0.8% remind us how sensitive these markets are to trade news. In the UK, the FTSE slipped by 0.3%, while declines in Spain and Italy, although smaller, indicate widespread selling. Over in the US, with S&P 500 futures down 0.3% ahead of reopening, there’s no quick boost to improve outlooks.
The markets are quieter today due to the Independence Day holiday in the US, and this lull has brought more unease than calm. The current mood isn’t dramatic, but rather cautious, shaped by upcoming tariff changes and recent comments from the former president. Pricing now reflects more than just holiday effects.
These trends suggest a need for careful exposure management in the near future. There’s a shift toward reduced directional confidence and more complex outcomes. Implied volatility is low across key maturities, showing little interest for significant market shifts. The easing of exposure is calm and methodical, not driven by fear, but rather focused on efficiency and stability.
When Trump discussed upcoming tariff actions, it was more than just talk. These proposed changes are set for the future, but preparation from a derivatives perspective is crucial now. Contracts expiring in August, and even into September, are already feeling the effects of this readjustment.
It’s important to note that Vega exposure in short-dated contracts may not provide the expected support. With less trading volume, spreads might widen more than predicted. Our strategy should focus on calendar spreads in skew-neutral setups, allowing for participation if volatility rises, but limiting losses if price movements stay stable.
In terms of gamma, there’s no rush to make big changes. Let’s see where real demand lies as trading begins to pick up with the US returning. We can expect asset allocators to adjust their positions after keeping exposure low before policy changes.
So, caution is key. The macro calendar is light, but sentiment is enough to cause shifts in skew profiles. Through mid-month, we’ll monitor open interest in out-of-the-money puts—changes there will indicate how widespread the demand for protection is.
UOB Group analysts suggest that USD/CNH may trade between 7.1600 and 7.1750.
The USD is expected to keep trading between 7.1600 and 7.1750. Recent changes show it’s part of a range trading phase between wider levels of 7.1550 and 7.1850.
In the last 24 hours, the USD was predicted to drop slightly but instead rose sharply to 7.1740 after falling to 7.1570. This indicates that the upward movement of the USD may be slowing down.
Short Term USD Expectations
Looking ahead one to three weeks, we expect the USD to decline. Even though the currency spiked recently, the strong resistance level at 7.1790 has not been broken. This suggests that momentum for a downward trend may be easing within the trading range. Please note that this information includes predictions with risks and should not be considered direct investment advice. It’s crucial to do thorough research before investing. Investing carries risks, including the possibility of losing your entire investment. The authors are not responsible for any inaccuracies or omissions. Based on what we’ve seen, it’s clear the recent rise in the dollar, while sudden, still fits within a known pattern. The jump to 7.1740 after a dip lacked enough strength to break past the upper resistance. This indicates that the upward movement may be stalling. We’ve witnessed similar quick bursts of strength before; they often remain confined within limits, especially as ranges tighten and investors show less conviction.Longer Term Currency Outlook
In the slightly longer term, the overall situation hasn’t changed much. Although the US dollar had a brief surge, it hasn’t convincingly broken through the known resistance level. The 7.1790 mark is not just a random number; it acts as a ceiling. The recent failure to exceed this level suggests that the prior downward trend may be slowing but hasn’t completely reversed. What we’re seeing is a buildup, where compressed volatility often points toward a potential shift. For those employing derivative strategies, the current market offers chances within defined limits. While breakout conditions haven’t appeared, the existing channel structure remains. Strategies benefiting from limited moves—such as straddles with tight deltas or short strangles—could continue to succeed, provided risks are managed with clear exit points. Right now, it’s not a market for aggressive directional bets. Short-term traders should look for signs of fatigue near the top of the range. If the dollar continues to struggle near this upper limit, especially with declining volume or momentum, it may be better to bet against those rallies rather than chasing momentum that isn’t sustainable. We need to avoid overreacting to a single session’s strength, especially if it doesn’t break longer-term trends. Overtrading based on isolated strength is a common mistake. Considering volatility, current conditions suggest that pricing in possible adjustments is still an option. If you compare implied volatility with actual results and they keep diverging, it may indicate the premium is overpriced, which could lead to a chance of selling gamma once again. So, even if it’s tempting to make directional bets after a sharp move, remember that movement isn’t significant unless it breaks new boundaries. Create your live VT Markets account and start trading now.Switzerland’s unemployment rate rises to 2.9% in June after May’s revision
Switzerland’s unemployment rate for June is 2.9%, meeting expectations. This follows a revised lower rate for May, showing a slight uptick.
The Swiss job market has shown signs of weakness. This aligns with challenges faced by other major economies over the past year.
Signs of Slower Demand for Workers
The change from May’s lower figure to June’s 2.9% suggests that the earlier strength in the job market might be fading. While this number matched forecasts, the small increase from the previous month hints at a slowing demand for workers. This slowdown is related to how companies usually rethink hiring during times of economic decline. A small rise in unemployment can affect feelings about wage pressures and inflation expectations. For those monitoring derivative pricing, this shift is more important than it might seem. Switzerland has enjoyed a stable and flexible labor framework. If this framework shows signs of hesitation, it deserves our attention. While the headline jobless rate may not cause immediate volatility, changes in employment conditions can influence monetary policy direction. Short-term futures related to interest rates may already reflect some of this change, evident in the narrowing spread between shorter-dated contracts and mid-curve pricing. Jordan and his colleagues at the central bank have a tricky balancing act. If the job market weakens, there is a greater chance that current policy settings won’t need more tightening. In fact, there may be increasing pressure to hold or even lower rates in the coming quarter.Monetary Policy Implications
Recently, we’ve noticed that implied volatility in short-term Swiss franc rate options has decreased after peaking earlier this quarter. This change comes from lowered expectations for significant policy shifts. It’s not a sign of complacency, but rather an adjustment to the idea that new data—like inflation and unemployment—may not drive the central bank to act as aggressively as before. Swap spreads have also narrowed, especially in the middle of the curve. This reflects a market that is becoming more comfortable with stable policy in the near term. However, careful management is essential. Tightening spreads, coupled with minor data changes indicating weaker labor dynamics, often signal a broader shift in risk assessments. Rates traders are carefully adjusting their exposure to duration risk. While not aggressively, there is enough conviction that trend-following strategies could gain momentum if more data supports this view. The next employment report and CPI figure will be crucial for shaping short-term positioning, especially in 2s and 3s. Meanwhile, trades with longer durations might still gain if growth improves. We need to keep an eye on liquidity in the overnight indexed swap market. Any unexpected tightening could indicate concern, even if recent numbers appear stable. We must stay agile. A mismatch between employment trends and inflation developments can quickly affect curve steepness. While long-end yields are stable, the middle section of the curve might present opportunities, depending on data and timing. Create your live VT Markets account and start trading now.BBH analysts say weak wage data keeps USD/JPY below the key 145.00 resistance level.
The USD/JPY exchange rate is currently below the resistance level of 145.00. Analysts note this stability as Japan’s economic conditions evolve.
Japan’s largest labor union, Rengo, secured a 5.25% average pay increase for 2025, the highest seen since 1991. This follows increases of 5.10% in 2024 and 3.58% in 2023, but it still falls short of the expected 6.09%.
Bank of Japan Interest Rates
The Bank of Japan remains cautious about raising interest rates, which limits the yen’s potential for gains. The swaps market indicates a 60% chance of a 25 basis point rate hike by the end of the year, with a possibility of further increases totaling 50 basis points to reach 1.00% over the next three years. This information serves only for informational purposes and is not investment advice. Careful research is crucial before making financial decisions, as investing in the market involves various risks, including the possibility of losing capital and emotional stress. The information provided does not guarantee accuracy and may not reflect official positions. Errors and omissions may occur; the author and source are not responsible for any outcomes from using this content. The dollar-yen pair staying below the 145.00 level indicates that upward movement in this currency pair may encounter challenges. Recent Japanese wage negotiations are already reflected in much of the pricing. While there isn’t a significant decline, we’re also not seeing a strong upward push. This reflects a temporary pause, where speculation fills the time between data releases. Recent wage figures from Rengo show a notable rise. The 5.25% increase is the fastest in over thirty years and meets the kind of inflation-linked wage growth that policymakers have hoped for. However, it still falls below earlier expectations that predicted more aggressive hikes.Market Reaction to Wage Growth
This presents a subtle clash between perception and positioning. Rising wages suggest a domestic economy trending towards sustained demand-driven inflation. However, market participants had anticipated such increases, and even a slight miss in expectations can lead to quiet market reactions initially, which may escalate over time. Thus, we should expect short-term volatility to spike around upcoming inflation reports or comments from the central bank. Ueda and the Bank of Japan have not yet aligned their rate path with this stronger wage growth. This implies that any tightening in Japan will likely be slow and conditional. Market probabilities suggest a roughly 60% chance of a 25 basis point hike before December. In the longer term, options pricing and forward swaps imply gradual increases up to a total of 1.00% by 2027. Though slow, these adjustments are now factored into the pricing. For those trading rate-sensitive assets in the derivatives market, the current pricing and trends require regular reevaluation. Although option premiums may appear low now due to falling implied volatility in spot rates, the underlying wage inflation may increase interest in longer contracts. There is also limited room for one-sided positioning. With cautious forward guidance and data yielding marginal surprises, any reversals will likely be sharp when they occur. For the short term, a defensive strategy may be wise. For example, short straddles could struggle if volatility unexpectedly rises, especially around Bank of Japan policy announcements. Additionally, speculative short yen positions might unwind if Ueda hints at tightening sooner. In this context, monitoring the 145.00 technical ceiling may provide confirmation rather than prediction. If the level is broken with volume, it could indicate market acceptance that the yen might not recover for some time. If the level is rejected again—especially after weak US data or stronger Japanese indicators—then this resistance level becomes crucial for mean-reversion strategies. Ultimately, in weekly trading scenarios, maintaining discipline in implied volatility forecasting and scenario planning is vital. This currency pair isn’t stagnant; it responds quickly to changes in inflation language and labor trends. Decisions made slowly now by policymakers could lead to sharp adjustments when positions become crowded. It’s best to anticipate adjustments in exposure when expectations shift, rather than after. Create your live VT Markets account and start trading now.Low-impact releases during the European session include construction PMI and Italian retail sales, which have minimal market influence. The American session features the Canadian services PMI, but it is unlikely to affect trading, as markets typically slow down due to a US holiday.
During the European trading session, a few low-impact reports are expected, such as the construction PMI, Italian retail sales, and Eurozone PPI. These reports likely won’t affect market trends or the European Central Bank’s decisions.
In North America, the Canadian services PMI is also scheduled for release, but it’s not expected to create market fluctuations. Since today is a public holiday in the US, market activity will probably be slow.
With a quiet European calendar and no significant data expected, focus will shift elsewhere. The construction PMI and Eurozone producer prices might offer insights into specific trends or cost pressures, but they are unlikely to cause any major market movements. Italian retail sales typically don’t have a lasting impact on asset prices unless the results are far from expectations, which isn’t anticipated this time.
Across the Atlantic, the Canadian services PMI may provide some information on how the Canadian economy is reacting to tighter financial conditions. However, it is unlikely to significantly change market forecasts. The US market closure means fewer key players are involved, leading to narrow trading and lower liquidity. In our experience, these situations often result in inactive stretches followed by sudden, disconnected price changes.
On low-engagement days, there’s less volume to absorb unexpected orders, which can lead to big but short-lived price shifts. We generally avoid making new positions during these times. It’s harder to rely on typical indicators when fewer participants are active. Instead, this period is a good time to check our positions and ensure we’re ready for when liquidity returns.
As a result, the current session has limited directional movement. No new factors are changing that. Attention will likely shift to upcoming decisions by monetary authorities and whether market pricing for inflation and growth expectations aligns with their strategies.
What we’re focusing on instead are rate expectations. While today’s events won’t directly change those, it’s important to stay alert to small shifts in fixed income instruments or currency futures. Quiet moments often lead to preparatory positioning before larger volumes come into play. The implied volatility of short-dated options has decreased, indicating cautious market positioning.
Thin trading sessions can hide deeper trends, especially with major markets like the US closed. We prefer to keep risk low and approach sudden moves with caution unless broader market flows support them. For now, it’s wise to monitor the situation rather than take action. When liquidity returns, trends can emerge quickly—it’s better to watch the buildup now than rush in later when conditions tighten.
Finally, since today’s calendar has little to alter expectations for future monetary policy, we’ll look ahead. Examining order book depth, open interest around key expiry dates, and observing yield curves can help clarify the situation. Let’s take advantage of this information.
Indian Rupee stays stable against the US Dollar while awaiting trade agreement confirmation
The Indian Rupee is stabilizing against the US Dollar, with the USD/INR exchange rate around 85.55. Traders are hopeful for a trade agreement between India and the US before the tariff deadline on July 9. Meanwhile, the US Dollar Index has eased a bit below 97.00, and US markets are closed for Independence Day.
A report indicates that India and the US might announce a trade agreement within 48 hours. Both nations are working to lower tariffs to enhance competition, while India seeks to protect its agriculture and labor sectors from US firms. The US President mentioned that the agreement would allow US companies to enter India with reduced tariffs.
