Schnabel suggests the end of the monetary policy cycle as the growth outlook stays stable and supportive
ECB achieves neutral rate while evaluating possible future cuts amid inflation concerns
China issues export licenses for rare earths, but no further comments yet
China’s Calibrated Approach
Instead of seeing clear policy announcements, we are noticing practical signs of change—licenses granted quietly, focusing on actions rather than words. The issuance of export approvals to firms such as JL Mag suggests a careful strategy. Rather than imposing broad restrictions or outright bans, approvals are selective. This speaks volumes more than any official statement. It’s not an open-door policy; it’s controlled—carefully managed and enforced. Beijing is taking a measured approach. While maintaining a subtle tone in official communications, they are operating decisively behind the scenes, creating a sense of uncertainty. For those of us tracking price changes and assessing short-term risks, this strategy can be intentionally confusing. Zhou, the head of JL Mag, understands how complex the license approval process can be. If his company has successfully navigated it, that’s more than just a simple permit. It shows that the company has passed scrutiny—both in business and politics. Anyone involved in the rare earth sector—whether buying, hedging, or participating in the supply chain—should pay close attention. This does not signal a full return to normal; it’s a sign of ongoing oversight from the top.The Role of Traders in a Volatile Market
For traders, patience is more important than quick reactions. The news might prompt immediate activity, but understanding true price movement relies on actual data, not assumptions. If volatility increases, it may come from misinterpretations of government signals. However, this can be managed if we focus on real data rather than just headlines. Rare earths are not just at the beginning of the supply chain; they affect every related contract tied to growth industries. It’s crucial to distinguish between logistical increases and speculative jumps. As exports may resume slowly, firms caught without adequate coverage could rush to secure margins. Those who wait until official numbers confirm trends may miss opportunities. Chen, a senior analyst in the rare earth sector, pointed out a subtle yet important detail: the lack of sweeping announcements suggests an internal calculation that remains unstable. This situation isn’t stable; it’s a temporary pause. For traders, these brief periods of relative access can spark sudden but short-lived demand. Such shifts can quickly lead to reversals. Now is the time to narrow our focus. Monitor shipment data and follow customs records. Prepare for a pricing climate that rewards confirmed information over mere predictions. Cross-hedging is likely to occur in the next 10 to 14 days, especially if downstream industries adjust their procurement schedules. Those managing contracts with European companies in fields like defense, aerospace, or semiconductors must pay close attention to freight documents. The ripple effects won’t just be seen in China. They will be evident in shipping documents, import records, and customs data across various ports—if the materials actually move. Let’s remember that this industry often signals changes through administrative decisions. There is usually little warning, and the time from reports to market effects is often brief. This advantage favors traders acting on confirmed actions rather than mere interpretations. Create your live VT Markets account and start trading now.Disappointing UK GDP data affects GBP as focus shifts to US PPI and jobless claims
People are eager to see how China will respond to Trump’s claims about a favorable trade agreement on tariffs and exports.
The Benefactor And The Agreement
The US sees itself as the benefactor in this agreement, but the actual benefits are unclear. China’s strong position in the rare earth market gives it an advantage if problems arise later. This situation resembles earlier events, like the soybean talks in 2019. China tends to prioritize its interests and resist pressure. Expectations are that China’s response will mirror this attitude, avoiding any appearance of giving in. This preliminary agreement aims to stop rising tariffs and offers short-term relief for both countries. However, calling it a significant “deal” might be a stretch. It still needs approval from China’s President Xi, which will determine its final status. For those considering market strategies after this update, it’s crucial to focus on what’s actually happening. Despite official claims, this is more of a pause—an effort to buy time amidst uncertainty. There’s no permanent solution, only a reordering of priorities to provide both sides with some leeway. Superficially, the easing of certain export controls suggests cooperation. However, retaining AI chip restrictions is a clear signal that neither country is ready to back down where it counts the most. This is important because it keeps valuable technology off the negotiation table, leaving markets vulnerable to sudden changes if tensions flare again.Managing Market Responses
Returning to the tariffs, the 55% figure remains unchanged. The trade friction is still in place. This level of pressure on goods crossing borders won’t be ignored by companies assessing risk and pricing futures. When the other side implements a 10% tariff in retaliation, it’s not just about getting back at the US; it’s about upholding dignity without escalating matters. This approach is more about maintaining posture than having real impact, but markets often respond more to tone than to the facts. Looking at this back-and-forth, there’s a familiar pattern, reminiscent of late 2019 when export-driven goods like soybeans became part of a larger political game. The outcome back then involved tactical retreats rather than genuine solutions. One side believed they were steering the conversation, but the market adjusted its strategies once the actual power dynamics became clear. This current situation could develop similarly. The decisions still rest with high-level officials, and until there’s formal approval, what has happened so far is just a proposal—informally supported but not legally binding. This distinction is important. There’s still potential for reversal. From our perspective, these conditions may create temporary fluctuations in volatility spreads, allowing for selective investments. However, this calm isn’t built on solid ground. Spreads that widened due to speculation could narrow soon, while those in sectors related to extractive materials or advanced semiconductors may tighten more gradually if clarity doesn’t emerge on technology. Here’s a strategic point: don’t treat this as a resolution. Pricing models should reflect the risk of escalation. Instead of heavily investing, a more careful, line-by-line assessment is needed—especially for contracts connected to supply chain sensitivities. By keeping exposure flexible and watching for policy announcements—not just moods or talk—your positioning can remain strong. This approach makes more sense than relying on an uncertain claim of progress. Each time a situation like this arises, it becomes clear that what’s not said is often more revealing than official statements. The silence surrounding final approvals and ongoing high-grade chip controls shows where the real issues lie. It’s unwise to expect any long-term change until official channels confirm it—and that still hasn’t happened. Create your live VT Markets account and start trading now.EUR/USD expiries at 1.1500 and 1.1525 could impact market performance due to trade uncertainties and tariffs.
Geopolitical tensions affected markets as Australian inflation expectations rose sharply and business sentiment fell.
Australian Inflation And Currency Fluctuations
In Australia, consumer inflation expectations jumped sharply to 5.0% in June, up from 4.1% in May, the highest level since July 2023. Meanwhile, the U.S. dollar weakened, allowing the euro, yen, Swiss franc, and British pound to gain ground, while the Canadian dollar remained stable. The Australian and New Zealand dollars struggled, and gold prices hit $3,375, boosted by safe-haven investing. As geopolitical tensions rise, especially in the Middle East, we can see market jitters affecting global trading. Although no direct actions have been taken, the U.S. warning for its citizens shows how serious the perceived threat is. Market participants reacted quickly, driving temporary gains in oil and gold. Eventually, energy prices stabilized, indicating that while the threat is real, traders are not yet bracing for long-term supply issues. The rise in gold prices highlights how quickly investors move toward safer assets during uncertain times. Surpassing the $3,300 mark shows strong backing for this trend. The strength of precious metals and safe-haven currencies indicates a phase of reduced risk appetite. For those involved with commodity-related assets or currencies sensitive to risk, a cautious approach is advisable. This unease does not seem to be short-lived.Business Sentiment And Interest Rate Movements
Japan’s drop in business sentiment is important not only because of the negative figures but also because it occurs amidst stable economic data. The Ministry of Finance Index’s decline suggests growing fears about export demand and increasing costs, especially with a weaker yen making imports pricier. It’s crucial to separate overall growth from corporate confidence, as this gap often foreshadows reduced spending or changes in the labor market. Equities and interest rate futures reflect this divergence. Likewise, rising inflation expectations in Australia indicate potential adjustments in short-term rates. If households sense rising prices, it could prompt the central bank to act sooner than anticipated. Fixed income experts might need to realign yield curves to reflect a higher and longer-lasting inflation outlook. This shift could delay any easing of policies and challenge high-risk currencies in the area. In the currency markets, investors are leaning toward safer options. The U.S. dollar has fallen against most G10 currencies, signaling a lack of confidence in its protective role. Gains in the Swiss franc and yen are particularly noteworthy, as these currencies often gain traction during stressful times, not just due to interest rates. Weaker commodity-linked currencies show that the quest for yield is receding. While North American markets did not set the tone, they supported wider trends. The Canadian dollar’s steady performance serves as a reference point for evaluating regional shifts. It seems capital is flowing toward places where stability is seen as more valuable than yield. In the coming sessions, we can expect further reallocations, especially in short-term interest rate products and cross-currency pairs. We are spotting initial movements in volatility futures, signaling expectations of widening spreads. With current implied volatility still below historical norms in some areas, there’s room for change. Patience is reasonable, but it carries risks—strategies must remain adaptable. Be prepared for directional movements that may not align with recent trends, particularly as fund flows seem reactive. What we’re witnessing reflects not only responses to macroeconomic data but also adjustments driven by perceived political and economic risks. This requires careful monitoring of skew pricing and relative costs across various maturities. Create your live VT Markets account and start trading now.TD opens a tactical long position in gold, targeting $3,650 per ounce.
Attention AUD traders: RBA’s David Jacobs to discuss Australia’s bond market today in Tokyo
Australia Bond Market Volatility
Jacobs’ speech will cover “Australia’s Bond Market in a Volatile World.” This talk is part of the Australian Government Fixed Income Forum happening in Tokyo. It is also set to begin at 07:20 GMT and 03:20 US Eastern Time. Jacobs discussing global bond market volatility at an overseas forum is significant. It shows that monetary policymakers are alert to risk factors that can impact domestic funding and, in turn, affect currency values. Bond market behavior, especially during times of stress, can influence derivative pricing, hedging behavior, and overall market sentiment. Jacobs probably won’t provide direct advice on interest rate changes. His role suggests he will take a more operational and descriptive approach, possibly looking at funding patterns, liquidity issues, and market structure. While we may not get direct policy hints, we can gain operational insights into how the Reserve Bank views recent disruptions and the tools it might consider using in response.Impact On Trading Strategies
In the short term, this speech may impact funding spreads and the yield curve. Traders will likely pay attention to any comments regarding stress indicators, such as bid-ask spreads in short-term government debt or shifts in repo markets. These elements are important because changes can influence rates futures, options expiry, and strategies relying on mean-reversion. Those monitoring implied volatility in AUD pairs already see that recent global rate concerns have widened daily ranges. If Jacobs discusses market function—possibly addressing internal RBA liquidity tools or operations—this could further shape our views on swap spreads and carry costs. While Jacobs is unlikely to change expectations for policy direction, his remarks on the stability of domestic bond markets could lead us to reassess premium estimations in OIS markets. It’s also wise to keep an eye on commentary from Japanese institutional investors since the speech is taking place in Tokyo, putting Australian fixed income on their radar. Traders should consider how updates on issuance profiles or changes to sovereign debt management might alter short-term expectations for AUD demand. Those holding long gamma or short basis risk should think about adjusting their positions around the timing of his remarks. A sharp market move isn’t guaranteed, but market makers often adjust quotes before unpredictable RBA events, especially those discussing liquidity. Monitoring correlations between 10-year ACGBs and currency pairs has been helpful in recent weeks. If this correlation tightens after the speech, it could justify reallocating delta exposure in cross-currency swaps or adjusting duration hedges in regional portfolios. Create your live VT Markets account and start trading now.Notification of Server Upgrade – Jun 12 ,2025
Dear Client,
As part of our commitment to provide the most reliable service to our clients, there will be maintenance this weekend.
Please note that the following aspects might be affected during the maintenance:
1. During the maintenance hours, the Client Portal and VT Markets App will be unavailable, including managing trades, Deposit/Withdrawal and all the other functions will be limited.
2. The price quote and trading management will be temporarily disabled during the maintenance. You will not be able to open new positions, close open positions, or make any adjustments to the trades.
3. There might be a gap between the original price and the price after maintenance. The gaps between Pending Orders, Stop Loss, and Take Profit will be filled at the market price once the maintenance is completed. It is suggested that you manage the account properly.
The above data is for reference only. Please refer to the MT4 / MT5 / VT App for the specific maintenance completion and marketing opening time.
Thank you for your patience and understanding about this important initiative.
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