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During the World Economic Forum in Tianjin, Premier Li Qiang discusses China’s economic recovery.
China’s Premier Li Qiang announced at the World Economic Forum that the country’s economy has improved steadily in the second quarter. He shared his vision for China to transition from a major manufacturing hub to a large consumer market that welcomes global business investment.
The Premier highlighted the importance of sharing original technologies and innovative ideas while encouraging collaboration that avoids politicizing economic matters. He opposed economic decoupling and urged a focus on long-term goals and technological progress.
The UK job market is experiencing slow growth, with wage increases falling behind inflation and a decrease in job vacancies.
Recent surveys from Brightmine and Indeed show a slowdown in the UK job market. The UK is currently the only major economy with job openings below pre-pandemic levels.
In the private sector, pay raises mostly averaged 3% in the three months leading to May. This is below the 3.4% inflation rate. About 15% of firms offered smaller raises of 2.5%, indicating caution from employers.
Job Vacancies and Graduate-Level Positions
Job vacancies in the UK dropped by 5% from late March to mid-June and are now 21% lower than before COVID-19. The number of graduate-level job ads has reached its lowest since at least 2018, with significant declines in HR, accounting, and marketing sectors. The demand for some roles may be decreasing, partly due to the impact of AI. Despite worries over rising social security costs, there are no signs of a significant drop in employment. This article describes the ongoing softness in the UK job market, with various signs of reduced hiring in white-collar jobs. Data from Brightmine and Indeed shows the UK’s decline is more pronounced compared to other developed economies. While job postings have slowed globally, the UK stands out as the only major market where vacancies have fallen below pre-pandemic levels, indicating weaker demand across various industries. In the private sector, pay raises have largely stalled at 3% through May. Since this is below inflation, real earnings are effectively decreasing. About 15% of firms even provided smaller raises of 2.5%, suggesting employers are tightening their budgets, which may signal a broader trend rather than just cautiousness.Employment Trends and Future Outlook
Vacancies decreased by 5% from late March to mid-June, now sitting 21% below pre-COVID levels. This represents a notable gap, especially in industries that offer many entry-level professional jobs. Graduate job listings have dropped to their weakest point since at least 2018, particularly in human resources, accounting, and marketing—fields at high risk for automation. Artificial intelligence may be influencing these hiring trends, reducing the need for certain job functions, especially where decisions can be automated. Despite concerns about rising labor costs, including higher National Insurance contributions, there are currently no signs of significant job losses. Companies seem to be choosing not to hire more staff. For those trading in volatile markets or betting on changes in rates and inflation expectations, the message is clear: pay close attention to future employment data, especially at the sector level, since overall figures may overlook significant contractions. Market trends regarding interest rate changes in the coming months will closely follow new developments in wage growth or hiring. From a technical standpoint, the decline in vacancies and slowing wage growth suggests a downward pressure on short-term inflation figures, potentially leading to mild disinflation in the second half of the year. We should keep an eye on how wage data impacts unit labor costs in Q3. If wage growth remains weak, inflation swaps might start falling short of short-term CPI forecasts, allowing for favorable steepening positions under the right circumstances. The forward curve seems to underestimate the impact of lower job openings if this trend continues over the summer. Any future hawkish statements will need to be viewed within this context. In particular, shorter-term rate volatility may present unique opportunities as wage data is assessed. Stay tuned to sector-specific indicators, such as the ONS Vacancy Survey by industry and real-time private job board postings. These timely releases may signal upcoming changes in official data. We will continue to monitor movements in job-sensitive assets and trade accordingly. Create your live VT Markets account and start trading now.The Swiss Franc strengthens against the US Dollar as geopolitical tensions ease following a ceasefire.
The Swiss Franc has gained strength against the US Dollar, trading close to multi-year lows in the USD/CHF pair. This shift is driven by safe-haven flows and a weaker US Dollar. Recently, a fragile ceasefire between Iran and Israel has eased geopolitical tensions, even as both countries remain suspicious and accuse each other of ceasefire violations.
**Economic Context**
Currently, the USD/CHF is just above its 2011 low, around 0.8052 during US trading hours. The Swiss National Bank (SNB) has maintained a zero-rate policy, which has not stopped the Franc from gaining strength. This is despite the SNB’s efforts to fight deflation risks with its sixth consecutive rate cut.
Federal Reserve Chair Jerome Powell highlighted the cautious approach of US monetary policy, suggesting a possible rate cut in July if inflation improves. Vice Chair Michelle Bowman and Governor Christopher Waller indicated a similar dovish stance, recognizing progress in inflation while hinting at potential policy changes.
Switzerland’s economy is the ninth-largest in Europe, known for its strong services sector and close trade ties with the EU. Economically stable conditions generally support the Swiss Franc, though its responses to commodity prices like Gold and Oil are limited.
Even with a conservative rate policy from the SNB, the Franc continues to rise. This isn’t solely due to domestic strength; it reflects external weaknesses and global caution. The USD/CHF pair around 0.8050 shows how strong the demand for safe-haven currencies remains when geopolitical risks are present. The ongoing fragility of the Iran-Israel truce makes investors reluctant to shift toward riskier currencies while the situation is unstable.
Powell’s measured comments reveal that the Federal Reserve is closely monitoring price data but remains skeptical that inflation is back on track. Waller and Bowman shared similar views, recognizing improvements while not committing fully to changes. This indicates that the Federal Reserve is maintaining its flexibility. Though the July meeting isn’t guaranteed, a rate cut could become likely if consumer prices stabilize. Traders should remember that future easing hints are conditional, which is important for managing expectations around interest rates.
**Swiss Franc Resilience**
The SNB’s ongoing rate cuts—now at six—have surprisingly not weakened the Franc. Typically, such actions from a central bank would decrease demand for its currency, but the opposite is happening here. Why? Investors prefer currencies linked to economies with stable politics, low debt, and predictable prices, which describes Switzerland well.
Switzerland’s strong ties to the EU help buffer it from economic isolation, while its minimal reliance on volatile commodities adds extra stability. This predictability is appealing to traders. With the Franc nearing record highs and the Dollar facing downward pressure from potential Fed adjustments, traders should consider short-term options and futures with respect to this momentum—neither chasing after it nor countering it.
As we look at short-term contracts into early Q3, it’s reasonable to view the Franc as resilient rather than overbought. For the Dollar to recover, it needs to see not only surprises in CPI data but also alignment between real wage growth and employment statistics with the Fed’s soft stance. It’s crucial to monitor how these factors interact before adjusting expectations for September or later.
Currently, maintaining defensive strategies regarding USD exposure is wise. Momentum signals suggest a continuation trend rather than reversal for now. It’s also important to watch for any changes in guidance from the ECB or BOE, as shifts in Europe can impact USD/CHF through the Euro channel. While coordinated moves may be rare, overall sentiment often overlaps.
Volatility pricing appears disconnected from actual movements, particularly in short-term USD/CHF options. This mismatch might quickly align if new geopolitical tensions arise or if FOMC minutes provide clearer direction. Rolling hedges can offer cost savings and flexibility during uncertain weeks, especially near multi-year extremes.
At this moment, both charts and macro signals present a clear picture. A structured exposure approach, paired with adaptable hedging, will likely yield better results than trying to guess bottoms in the Dollar. This is an important time to observe rather than rush.
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New Zealand’s May trade figures show slight decrease in exports and increase in imports
In May 2025, New Zealand’s exports totaled $NZ 7.68 billion, a slight drop from $NZ 7.84 billion in April. Imports increased slightly to $NZ 6.44 billion, up from $NZ 6.42 billion in the previous month.
The trade balance for May was $NZ 1.24 billion. This was lower than April’s $NZ 1.426 billion but higher than the expected $NZ 1.06 billion. Over the year, the trade balance shows a deficit of $NZ -3.79 billion.
Currency Stability
Despite these trade shifts, the New Zealand dollar remained stable, following global political developments closely. Overall, we see a smaller trade surplus compared to April, yet it remains above market predictions. Exports decreased slightly while imports rose, which lowered the monthly balance but kept it positive. This indicates that demand for New Zealand’s goods is still strong, even as internal consumption grows with increased imports. However, the annual trade deficit is significant, indicating ongoing structural issues rather than just short-term changes. This could lead to pressure on interest rates or policy decisions later this year, depending on inflation trends and commodity prices. Interestingly, the smaller surplus did not significantly impact the local currency. Its stability reflects larger global issues, especially international tensions and shifts in expectations for major central bank actions abroad, which are influencing the market more than local trade data.Market Implications
For us, the short-term focus is less about the main figures and more about how markets will react to future price data. The muted currency response suggests that derivative markets—particularly those sensitive to interest rates or foreign exchange—should stay alert but cautious. Bond and rate traders should avoid making hasty decisions. The current figures do not provide strong directional signals on their own. However, the positive surprise in the trade balance indicates that any short-term weakness in the Kiwi dollar is unlikely to stem from trade activity. Volatility expectations are currently low, but this could change quickly. If upcoming CPI or retail sales data affects Reserve Bank of New Zealand expectations, then the futures and swaps markets may need to adjust positions rapidly. We remain flexible, especially concerning shifts in forecasts for rate cuts later this year. Moving forward, we prioritize monthly momentum over annual comparisons, particularly when analyzing triggers in short-term derivatives. With ongoing geopolitical tensions and no major currency changes yet, there’s little need to alter existing strategies significantly. However, we continue to monitor changes in commodity-driven export sectors, as these have historically led to quick price adjustments when trends shift. Create your live VT Markets account and start trading now.US Dollar Index trends down near 97.65 following Israel-Iran ceasefire
Federal Reserve Chair Jerome Powell addressed Congress, reaffirming that the Fed’s decisions rely on data. As tensions in the Middle East eased with a ceasefire between Israel and Iran, the US Dollar weakened, and the Dollar Index dipped below 98.00.
The US Dollar Index fell as the ceasefire diminished demand for safe-haven assets. Currently, the Dollar Index is around 97.65, lingering just above its June low of 97.61 due to reduced geopolitical worries.
Geopolitical Impact
Powell’s strong statements did not sway markets regarding a rate cut in July, leading investors to focus on the ceasefire and adopt a risk-on attitude. This shift put pressure on the Dollar as the need for safe-haven assets declined. After Monday’s optimism about the ceasefire, the Dollar Index could not retest the 100.00 mark. Following confirmation of the ceasefire, the Dollar Index continued to decline. Now sitting below 98.00, the Dollar Index faces resistance at this point and is at risk of further losses. The Relative Strength Index (RSI) indicates that short-term momentum is weakening, nearing oversold levels around 38.0.Market Sentiment
Powell’s testimony and recent moves in the Dollar Index show that the market is now more focused on changing geopolitical situations rather than just monetary policy. His emphasis on data dependency implies that rate changes will depend on clear inflation or employment signals. However, despite this, the market’s focus has shifted toward geopolitical stability. With the ceasefire established, safe-haven demand has dropped, affecting the Dollar’s appeal. We see former support levels now acting as resistance, particularly the key level of 98.00. If the Dollar Index stays below this threshold, it faces greater risks. This situation is driven not just by sentiment but also by technical factors, as the RSI dips below 40, indicating potential price weakness. Investors should note that the retreat from safe-haven positions might push the USD further down, particularly against higher-risk currencies. Although Powell’s tone remains hawkish, expectations have not shifted significantly. This suggests that the market is reacting more to geopolitical events in the short term. The inability to maintain earlier Dollar strength, especially the failure to reach 100.00, indicates fading confidence in further gains. Currently, downside risks are rooted not only in technical issues but also in diminishing geopolitical fears that had previously supported the Dollar. Looking ahead, any upcoming economic data—such as CPI readings or the next jobs report—will serve as important indicators. However, we shouldn’t expect a strong return for the Dollar without new catalysts. The market has clearly shifted towards a risk-on mindset. For future positioning, it’s wise to rethink assumptions about asset direction, considering the reduced geopolitical risk and the market’s limited interest in the Dollar. We can see that previously trusted support levels are now becoming areas of uncertainty. Until the RSI shows signs of recovery or stabilizes above 40, traders should view rallies as corrections rather than clear upward trends. The market landscape has changed, and strategies must adapt accordingly. Create your live VT Markets account and start trading now.Gold prices fall as investors move away from safe assets amid de-escalation in Middle East conflict and Powell’s comments.
**Gold Price Influences**
The US Dollar plays a major role in the global economy, with its value affected by the Federal Reserve’s monetary policy. The Fed can use tools like quantitative easing and tightening during economic changes. The information provided is for your knowledge, but it’s essential to do your own research before making any trading decisions due to the risks involved.
Powell’s testimony raised concerns for policymakers: inflation could rise again if interest rates are cut too quickly. He emphasized the need to control price increases, suggesting a cautious approach. Despite some positive data, there’s no hurry to ease monetary policy. However, small changes in economic risks have already led traders to adjust their expectations. We can see this shift in interest rate futures, where the chance of a July cut rose notably after Powell’s comments.
**Geopolitical Cooling Effects**
Many factors have contributed to gold’s decline, especially the cooling geopolitical tensions. The ceasefire between Israel and Iran has reduced fears of disruptions in important shipping routes. The Strait of Hormuz, a major path for global oil flow, had previously been a point of concern. Disruptions there often lead to higher oil prices, which can raise inflation expectations. With tensions easing, the need to hold gold as a safeguard has decreased. Additionally, crude oil prices dropped after the de-escalation, supporting this view.
As XAU/USD stays around $3,300, traders are focusing on technical aspects. The support at the 23.6% Fibonacci level is holding, but the 50-day exponential moving average is flattening, indicating a slowing momentum. Traders are adjusting their positions, preferring shorter-duration contracts while keeping hedged deals around this crucial price level. Intraday volatility has decreased, signaling that the markets are in a wait-and-see period.
This situation highlights the importance of the upcoming inflation data. With CPI figures due soon, market volatility could rise again. If core inflation remains high or unexpectedly increases, it will be tougher for Fed officials to support easing policies without losing credibility. In that case, interest rate-sensitive assets—like gold and USD-linked derivatives—could experience sharper movements.
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Credible journalist Charles Gasparino suggests that the White House may announce trade deals soon.
The information reportedly comes from Charles Gasparino, a journalist at Fox. He indicates that interesting events might be on the horizon.
The timeline has stretched over several months, making it more likely that we will see at least one significant development. However, there are no specific details about the deal or its implications.
From what Gasparino has reported, it looks like discussions happening behind closed doors could soon lead to public announcements. The long duration of these talks suggests that the involved parties have had plenty of time to plan their next steps. The outcomes now seem closer and more certain than many expected.
When developments take this long to unfold, it usually means key players are getting ready for action. This is often seen before announcements that could impact short-term markets, especially for those handling time-sensitive investments.
In terms of actual impact, this feels more substantial than just noise. It mirrors past situations where a series of quiet but strategic actions led to price adjustments. There’s a pattern: positioning often clusters just before clear news is revealed, which hasn’t happened yet but seems imminent. This can cause brief bursts of market volatility, sometimes catching traders off guard—not because they weren’t paying attention, but because they didn’t believe a change was coming.
What we’re experiencing is an extended wait, filled with increasing chatter but few details. This tends to slightly raise implied volatility without solid follow-through, possibly leading to a minor demand for protection that hasn’t yet been released. Traders shouldn’t overlook this prolonged silence. Markets generally respond more to the timing of events than to whether something will happen. If this trend continues, that timing window might be closing soon.
Finally, now isn’t the time for risky contrarian strategies. Any potential shift might not lead to a large selloff or rally by itself, but it could stir liquidity, especially as we approach expiry dates. We will remain cautious and keep our risk in check while maintaining balanced exposure, even if the market stays stable for a while longer.
Deputy Governor Ramsden states that quicker rate cuts may happen if inflation evidence shows weakness.
Bank of England Deputy Governor Dave Ramsden shared that interest rates could be lowered quickly if inflation continues to miss targets. He highlighted significant uncertainty about how the UK economy will handle various challenges.
Ramsden is concentrating on the UK’s economy, especially given the tough financial situation. Recent changes in the UK gilt markets have been stable and mainly influenced by the US, particularly the 30-year gilt yields since April.
Less Worry About Disinflation
Ramsden is less concerned than some of his colleagues about disinflation slowing down. Meanwhile, the GBP/USD showed strong daily increases, reaching its highest point since February 2022, trading above 1.3630. His comments suggest that the Bank’s policy may shift soon. If inflation continues to fall below expectations, we might see earlier rate cuts. Markets should view this as a real signal, not just talk. While headline numbers show softer price pressures, we still need to watch underlying core inflation closely. If these weaker trends continue throughout the summer, policy changes could happen sooner than expected. He pointed out the ongoing uncertainty surrounding the UK’s economic recovery, especially considering past supply shocks and weak consumer spending. For those of us observing the rates market, this highlights the need to prepare for a variety of outcomes. Simply expecting a smooth path toward target inflation may overlook the risk of sudden central bank changes.Interest Rates Outlook and Market Response
In fixed income, long-term gilts have followed trends primarily influenced by the US. Since April, 30-year yields have risen, largely based on changes in US Treasury expectations, not necessarily due to local inflation changes. This calls for caution. If UK factors start to diverge from US influences, these instruments may react more to domestic data surprises. Thus, it’s crucial to closely monitor any differences between UK and US rate trends. Ramsden’s stance, which is more relaxed about disinflation risks than some peers, could gain support if CPI reports continue on this path. This isn’t a push for aggressive changes, but the direction is becoming clearer. What was once speculative is taking shape—though volatility is still a near-term concern. The currency markets show increasing confidence in the UK’s fundamentals, with GBP/USD rising to levels not seen since early 2022. While partly due to USD weakness, the pound’s upward momentum indicates that investors are reassessing sterling based on the changing rate outlook. Therefore, currency-sensitive positions may benefit from tighter hedging in the near term, especially if further unwinding of dollar positions leads to more pound appreciation. For those involved in derivatives trading, the shifting rate outlook creates significant turning points. Forward curves, which had been predicting a slow easing, may need to steepen if data continues to come in lower than expected. Implied volatility could rise as the market adjusts its timing expectations. It’s a changing environment, and our strategy must consider both incoming data and shifts in policymakers’ tone. It is crucial to base our strategies on scenario planning. Expecting a smooth path is no longer sufficient. Surprises will continue to present both opportunities and risks in uneven ways, so a more flexible approach may be necessary in the coming weeks. Create your live VT Markets account and start trading now.Jerome Powell discusses the Semi-Annual Monetary Policy Report with the House Financial Services Committee
Federal Reserve Chairman Jerome Powell spoke to the House Financial Services Committee about how tariffs might affect inflation and the economy. He clarified that the US is not in a recession and mentioned that if inflation or the job market weakens, the Fed might cut interest rates earlier than expected.
The Federal Reserve is ready to change its policies based on economic conditions. While most Fed members expect rate cuts this year, the forecasts are still uncertain. The Fed’s goal is to keep prices stable while also maintaining a strong job market. Powell emphasized that economic forecasts are constantly changing, and the effects of geopolitical issues in the Middle East are still unclear.
Market Reaction to Powell’s Testimony
The market reacted noticeably to Powell’s testimony, with the US Dollar Index falling by 0.3%. The dollar weakened against major currencies, especially the New Zealand Dollar. Investors are closely watching economic factors like tariff impacts and job market conditions, which are influencing market sentiment and currency values. After Powell spoke, we noticed an immediate shift in currency pairs, particularly a slight but significant drop in the dollar. His hint at possible earlier rate cuts—if the data shows it’s necessary—likely drove this response. Although there’s no sign of a recession now, the suggestion that rates may drop sooner is important and suggests that policymakers are poised to act more quickly than before. Currently, the Federal Reserve hasn’t set a specific timeline for rate adjustments. However, Powell’s comment about inflation softening and a possible downturn in labor metrics offers a clearer view of what could trigger a policy change. This makes upcoming employment reports, core PCE numbers, and CPI data even more important. If these indicators show significant deviations from trends, especially a downturn, it could shift expectations towards a quicker policy change.Impact of Tariffs and Geopolitical Tensions
Powell also discussed tariffs and geopolitical tensions, especially regarding the Middle East. While the outcomes are currently unclear, they could greatly impact future pricing pressures. These factors are no longer background issues but critical elements that can significantly alter expectations. It’s essential to analyze how changes in risk pricing reflect market sensitivity to these factors. From a trading perspective, we’ve already seen movements in G10 currencies, especially the Kiwi, which rose as the dollar declined. This isn’t just speculation; it shows how comments about flexible policy can change market positioning. Traders should now adapt based on what current trends suggest rather than relying on past data. Keep an eye on the short end of the rates market. It’s not just about whether cuts will happen, but how fast and decisively they will come. Derivative traders should monitor implied volatility in short-dated options, especially in foreign exchange and interest rates, since any changes in Fed officials’ tones or data could lead to short-term price movements. It’s clear that pricing pressures aren’t only affected by domestic factors. External events, particularly geopolitical developments, can either strengthen or weaken domestic labor and consumption data. We are closely observing changes in Treasury yields, especially the 2-year yield, as early signs of market repositioning are likely to show up there first. In conclusion, policies are reactive rather than preemptive. Any shifts in incoming data from previous patterns could quickly affect the policy outlook, and the market is ready to respond. The message is clear: stay alert to upcoming data, keep an eye on rate futures markets, and adjust positions regularly based on changing inflation forecasts and global trade expectations. Create your live VT Markets account and start trading now.RBC analysts see a positive outlook for Japan’s equity market, expecting a possible Japan-US trade agreement.
RBC Wealth Management analysts are optimistic about the Japanese stock market. They expect a trade deal between Japan and the US, possibly after the upper house elections on July 20.
However, they are cautious because the market may have already priced in lower tariffs. The auto sector, in particular, shows signs of being overly optimistic. They believe a stable 2% inflation rate is achievable.
Several factors support this positive view. Increased investment through friendshoring and onshoring, better returns for shareholders, higher dividends, and steady domestic demand all play a role. High savings, rising wages, and a strong flow of retail investments help drive this demand.
Inbound tourism and updated savings accounts also help the economy. Together, these factors create a strong environment for Japan.
RBC’s perspective shows careful optimism about Japan’s equity market in the near future. Their key point relies on a possible Japan-US trade agreement, likely to occur after the July elections. Timing is crucial, as it could clear the way for potential trade adjustments.
Still, markets can react quickly. The price increases in the auto sector suggest that investors expect tariff reductions before they are confirmed. This creates a risk—if expectations outpace reality, corrections in valuations may occur. Analysts warn that there isn’t much room for error in current sector valuations.
Regarding inflation, it seems stable at around 2%. This is a reassuring figure that helps create a predictable market environment, especially important for long-term investments in a country that has faced deflation issues in the past. Rising wages and high savings contribute to strong internal consumption, differing from many developed markets that rely more on business investment or exports.
Shifts toward friendshoring and onshoring boost Japan’s industrial spending. These are not just short-term trends; they represent long-term changes in manufacturing and supply chains fueled by lessons from the pandemic. Because geopolitical risks are still high in certain areas, investors are more inclined to back stable and reliable economies. Companies that return value to shareholders through improved dividends and smart balance sheets enhance this credibility.
Inbound tourism should not be overlooked. As travel returns to normal and consumer interest stays strong, tourism directly benefits Japan’s service and retail sectors. The updated Nippon Individual Savings Account encourages more domestic investors to participate in the markets, signaling a growing appetite for riskier assets.
In the weeks ahead, monitoring the pace and progression of trade-related legislation will be important. Any verbal agreements followed by concrete actions could support current investments in exporter-focused stocks. If progress stalls, adjustments in strategy may be necessary. Investors should pay close attention to inflation rates, retail spending, and transportation activity, as these indicators often reveal deeper economic trends beyond the initial headlines.
