GBP/USD is currently at 1.3570, recovering losses from earlier trading on Monday. The pair might reach 1.3632, the highest level since February 2022, as the 14-day Relative Strength Index remains above 50, indicating a bullish trend. The pair has bounced back above the nine-day Exponential Moving Average (EMA), boosting short-term positive momentum. If it continues to rise, GBP/USD could hit the resistance at 1.3632 and may even approach the upper boundary of the rising channel at 1.4250.

Primary Support Levels

On the downside, key support is found at the nine-day EMA at 1.3552, followed by the 50-day EMA at 1.3346. If these levels are broken, GBP/USD might test the ten-week low of 1.3063 set on April 14. In other currency movements, the British Pound showed mixed performance against major currencies, being strongest against the Canadian Dollar. A heat map shows that GBP gained 0.07% against USD and remained stable against EUR. Caution is advised in the currency markets, and thorough research is recommended before making financial decisions. The recent rise in GBP/USD to the 1.3570 level followed a stronger session in Asia, recovering earlier losses and re-establishing control above short-term averages. This puts the pound in a position to challenge the highs from early 2022, specifically around 1.3632. The Relative Strength Index, consistently above 50, confirms a stronger bullish trend. Price movement has climbed back above the nine-day EMA, a level often used for indicating short-term shifts. While this doesn’t guarantee further gains, it is one of several indicators we use to assess continuation chances. A strong move beyond 1.3632 could bring the upper line of the rising channel into view, near 1.4250. While calling that the next target may be premature, its potential adds structure to a rally that has been gaining consistency since early April.

Support and Resistance Dynamics

Support levels are closely spaced. The first key level is the nine-day EMA around 1.3552, which may hold if current momentum continues. A drop below this could trigger further tests toward the 50-day EMA at 1.3346. Although not far off, this would represent a clearer trend reversal, especially if accompanied by lower liquidity or negative macro news. Should selling increase below that range, the previous low at 1.3063 could come back into play — not the most likely scenario now, but still a consideration. In the broader currency market, the pound had a mixed performance against major pairs. It performed best against the Canadian dollar but remained stable against the euro. This disparity reflects uneven economic data quality across countries and possible shifts in central bank expectations. We’ve seen this before when one market segment reacts strongly, only to later adjust. For those trading derivatives tied to the pound, these reference levels are crucial for short-term strategies. Tests towards the 1.3630-1.3650 range may attract momentum traders, particularly when spot levels and implied volatility diverge in favor of the underlying trend. Nonetheless, respecting the support levels around the nine- and 50-day EMAs can serve as a hedge against this outlook. We’ll be monitoring shifts in positioning data or notable volume changes at key price areas. These can point to activity by larger market players. Even slight changes in sentiment can be observed through pricing movements around these mid-level supports and whether pullbacks create buying interest or hesitation. Macro factors are still important — interest rate expectations will continue to influence market sentiments. However, in the short term, price action is providing clearer signals, especially when viewed against recent consolidations and strength comparisons. Upcoming data will provide more insights, but for now, price leads the way. Create your live VT Markets account and start trading now.

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Discussions in Geneva are helping improve trade ties between China and the US. In May, China saw a rise in retail sales, fueled by online sales promotions and trade programs. The global environment is still uncertain, creating challenges for China’s economic recovery. The government is ready to adjust economic policies as needed.

Challenges in the Labour Market

Even though prices are low overall, this is affecting businesses, jobs, and incomes. Some sectors are struggling to find workers, and certain groups are facing job pressures. The tricky external environment is impacting China’s labour market. Uncertain trade policies have made it tough for China to keep steady economic growth since the second quarter. In May 2025, China’s industrial output grew by 5.8% compared to last year, which is slightly below the expected 5.9% and down from 6.1% previously. However, retail sales in May saw the fastest growth since December 2023. This summary shows a mixed but revealing view of China’s current economy. On one side, new data indicates stronger retail sales, likely boosted by online discount campaigns, showing there’s still consumer interest. But, the increase in retail sales isn’t seen equally in other key areas. Industrial production rose by 5.8% year-on-year, falling short of predictions and signaling a slight slowdown. Although this difference seems small, it suggests the economy is not moving forward uniformly across sectors. Divergence between manufacturing and services can lead to volatility in capital flows.

External and Internal Pressures

Consumer demand seems stable, but low prices and weak inflation hint at underlying issues: producers are struggling. If companies are lowering prices just to sell their goods or meet weak demand, this can hurt wages, hiring, and long-term profits. Recruitment challenges in key sectors reflect a broader slowdown in job growth. We cannot overlook the external uncertainties—much of this stems from unclear global trade guidelines and geopolitical tensions. Changes in demand from other countries and shifts in global sourcing have complicated growth planning. This mix of persistent and temporary challenges has required ongoing action from policymakers. Officials have already shown they are ready to adjust fiscal support and monetary policies. This proactive approach is common in times of uneven growth. However, just because these tools are available doesn’t mean they will work effectively—especially when confidence is fragile and financial markets react more to news than fundamentals. Looking ahead, we should prepare for more fluctuations in manufacturing output, shipping, and domestic demand metrics. Any plans depending heavily on industrial growth to boost the short-term economy need to consider new disruptions—especially in sectors sensitive to commodity prices or slim profit margins. By keeping an eye on monetary policies and public spending shifts, we can identify where the next round of support might emerge. Typically, there’s a delay between policy changes and their effects on the economy—this lag creates vulnerable moments when volatility can increase. Limited liquidity—often seen in Asian markets during summer—can make things worse. When momentum seems broad but data tells a different story, it may be safer to limit short-term risks. Focusing on steady but selective demand—especially where consumer reliance is on imports rather than local sources—may offer more reliable guidance. While opportunities will not vanish, they might be less noticeable due to differences in data timing and policy responses. In the end, retail figures may capture attention, but issues in employment and capital formation will have a greater impact on medium-term stability. Investors should pay closer attention to labour market indicators than to broad headline indices. As Li’s team continues to enhance stimulus efforts, it’s not just the scale of policy that matters, but also how quickly it’s implemented that will shape reactions. Short-term optimism should not overshadow the areas of deceleration that have already emerged. Economic indicators can be like streams under ice: calm on the surface, but deeper movements can reveal the true direction. Create your live VT Markets account and start trading now.

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The USD/TWD currency pair is under pressure and trading below 29.50 during the Asian session. This trend follows a recent dip to a one-month low, even as the US Dollar remains appealing. The Taiwan Dollar is gaining from positive news about easing US-China trade tensions and strong performances from US tech stocks. This situation is putting downward pressure on the USD/TWD pair, which counters the USD’s recent stabilization.

Fed Meeting Outlook

Investors are cautious ahead of the Federal Open Market Committee’s two-day meeting. Any rate cuts by the Fed in September could lead to further losses for the USD/TWD pair. The Federal Reserve directs US monetary policy, adjusting interest rates to respond to the economy. It holds eight meetings a year to make these decisions. The Fed uses quantitative easing to boost credit during downturns and quantitative tightening to restrict it, which generally strengthens the USD. This information carries risks and uncertainties and is for informational use only. Investors should do thorough research before making decisions. The authors are not responsible for any investment results stemming from this information. Despite trading below the 29.50 mark, traders are observing downward movements, even with a slight increase in Dollar demand. Although this seems contradictory, the broader market sentiment around trade relations and tech momentum provides clarity.

Trade Sentiment and Tech Sector Influence

Optimism about easing trade tensions between major economies supports regional currencies, particularly the Taiwan Dollar. Recent gains in prominent US tech stocks also affect currency flow, leading to shifts that don’t reflect short-term Dollar strength. Many expected a stronger Dollar, but underlying market forces are changing quickly. Looking ahead, traders are adjusting to the upcoming Fed discussions. These meeting often cause quick changes in expectations, especially when new policies differ from previous views. Current positioning suggests that traders expect possible rate changes as early as September, depending on upcoming labor data and inflation. While current rates may hold, soft signals from the Fed could lean the bias against the Dollar, especially for this pair. The Federal Reserve employs several key policy tools, the most obvious being the benchmark interest rate. However, its balance sheet actions are also important. When the Fed expands its balance sheet to support liquidity, it often loosens financial conditions, which usually eases upward pressure on the Dollar. Reducing the balance sheet generally tightens capital in the system, strengthening the Dollar. Right now, it looks like markets are anticipating a more dovish stance from the Fed, driven by external positivity rather than internal weakness. If the upcoming statements reflect a softer tone, this bias could deepen, especially if inflation numbers stay stable. This would indicate a gradual return to normal policy. It’s crucial to monitor not just formal policy decisions but also the tone of recent Fed speeches. Any indications of patience or a focus on data could weigh more heavily than forecasts imply. Therefore, adjustments should consider changes in timing for future rate decisions. Additionally, volatility in the derivatives market may start to reveal a more asymmetric risk profile if these trends continue influencing rate expectations. These evolving factors are already being priced in, meaning current levels may not fully capture anticipated outcomes. Staying flexible with positions, especially in shorter-term instruments, could be more beneficial than relying solely on Dollar sentiment. Create your live VT Markets account and start trading now.

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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”.

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China’s industrial output for May 2025 grew by 5.8% compared to last year. This growth was slightly below the expected 5.9% and lower than April’s 6.1%. Retail sales in China increased by 6.4% year-over-year, representing the fastest growth since December 2023. This suggests strong spending by households during this time. The growth in industrial production was the slowest since November 2024. The unemployment rate at the end of May was 5.0%, which was slightly better than the expected 5.1% and the same as the previous month. The data shows a mixed economic situation. While consumer spending is strong, industrial growth seems to be slowing down. Although a 5.8% rise in industrial output is strong by historical standards, the slight miss against predictions and the decrease from April indicate some challenges for manufacturing and heavy industry. This is the weakest growth since late 2024, suggesting that factory activity may be down due to reduced export demand or supply chain issues. On the positive side, retail sales exceeded expectations. The 6.4% annual growth reflects strong consumer confidence, possibly boosted by seasonal discounts or government support. This resilience in household spending, especially on durable goods and services, typically benefits the service sectors and can lead to inflationary pressures in the future, depending on how long this trend lasts. Unemployment remains stable at 5.0%, just below the projected figure and unchanged from April. Steady job numbers suggest that there is no immediate job loss stress in the services or manufacturing sectors. However, the tight labor market may lead policymakers to maintain careful financial support rather than increasing stimulus. It’s important to look beyond the monthly figures and focus on the differences between demand and supply trends. This disparity could lead to short-term changes in pricing and inventory behavior. Our attention is on how local authorities will respond with monetary policies and future guidance, especially regarding infrastructure and credit incentives. During times like these, when one part of the economy is thriving while another is slowing, opportunities can arise in futures and options, but they may also be sensitive to changing expectations. Commodity-linked assets are likely to feel this impact soon. As demand remains strong, production-heavy industries will need to catch up, or market positions may need adjustments. We are closely monitoring how prices for materials like copper and iron ore, as well as indices related to industrial exports, respond after this release. If future purchasing or production data shows continued slowing, market focus may shift towards differences between downstream and upstream sectors. Those invested in industrial-linked derivatives should evaluate their hedges and positions linked to consumer trends, as these may not remain aligned for long. Additionally, implied volatility in key Asian equity and commodity markets may rise slightly, especially if upcoming figures confirm recent trends. Observing how large institutional investors react in the coming sessions will provide further insight. We favor short-duration and data-driven strategies, especially in areas that haven’t yet adjusted to domestic differences in performance.

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NZD/USD is holding steady above 0.6000 after mixed economic updates from China. Retail sales in China rose 6.4% year-over-year in May, which was better than expected. However, Industrial Production grew by 5.8% YoY, falling short of forecasts. In New Zealand, the Business NZ Performance of Services Index dropped to 44.0 in May, the lowest since June 2024, marking four months of contraction. Tensions in the Middle East, specifically between Israel and Iran, may limit any upward momentum for the NZD/USD pair.

Impact Of China’s Economy On New Zealand Dollar

The New Zealand Dollar (NZD) is influenced by both the country’s economic situation and its central bank policies. As China is New Zealand’s largest trading partner, its economy plays a significant role in the value of the Kiwi. Additionally, dairy prices, which are crucial to New Zealand’s exports, also impact the currency. The Reserve Bank of New Zealand adjusts interest rates to manage inflation, which in turn affects the NZD. When the economy is strong, the NZD tends to rise; weak economic news can lead to a decline. The Kiwi generally performs well during periods of risk-taking but may weaken during times of uncertainty when investors prefer safer assets. NZD/USD has remained above the 0.6000 mark, which is notable considering the recent mixed data from China. The rise in retail sales suggests consumer spending is not slowing as much as expected. However, the industrial production numbers falling short of expectations, despite a 5.8% increase, indicate challenges in manufacturing. This mixed performance can lead to volatility, especially for currencies linked closely to commodities and China. On the New Zealand side, the services sector is contracting. The latest Business NZ survey shows a continued decline, with May’s reading at 44.0, marking the lowest level in nearly a year. A reading below 50 indicates contraction, and this trend may lead to job losses and declining economic momentum, lasting longer than anticipated.

Broader Economic Concerns And Market Reactions

These developments are happening against a backdrop of global tension. Ongoing conflicts involving Israel and Iran have created a cautious sentiment in the markets, reducing interest in higher-risk currencies like the NZD. Instability in the Middle East often drives investment toward safe havens, such as US Treasuries or the Japanese Yen, putting pressure on currencies tied to global growth. Traders are adjusting their positions given this uncertainty. When risks are high, many pull back on exposure to the Kiwi, especially considering New Zealand’s tight connections with China. Mixed signals from China’s data can create hesitance among investors. Currently, all eyes are on the Reserve Bank of New Zealand (RBNZ). Their decisions on interest rates are becoming increasingly important. With some parts of the economy still facing inflation, the RBNZ hasn’t ruled out tighter policies. However, weak domestic data, like the services index, raises questions about whether tightening is appropriate. Traders are pricing in a delicate balance, where small changes could significantly shift expectations. Dairy prices also play a crucial role here. Being New Zealand’s largest export, any shifts in prices have far-reaching effects on the current account and rural incomes. A decline in dairy auction prices could add more downside risks to the NZD, especially alongside the struggling services sector. In the coming weeks, traders may need to be more adaptable. Those involved in derivatives related to NZD/USD are likely monitoring various factors—China’s economic recovery, Middle East tensions, RBNZ updates, and commodity price shifts. Reactions have been mixed, with momentum remaining shaky. With risks on both sides, short-term carry trades might be particularly susceptible to sudden market changes. Create your live VT Markets account and start trading now.

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South Korea’s money supply grew by 5.8% in April, up from 4.9% in March. This increase signals more cash circulating in the economy. The EUR/USD exchange rate climbed above 1.1550 as the US Dollar fell, triggered by geopolitical issues in the Middle East. Meanwhile, GBP/USD moved closer to 1.3600 as the Dollar weakened, with traders getting ready for upcoming announcements from central banks.

Gold Prices As A Defensive Play

Gold prices hit their highest level since April but faced challenges from a slight rise in the US Dollar. Despite this, ongoing geopolitical tensions and trade uncertainties may help support gold prices before the FOMC meeting. Dogecoin is currently under pressure as profit-taking peaks, warning of a potential drop after reaching a monthly high. Looking ahead, financial markets are preparing for actions from central banks, especially the Fed and BoE, amid rising economic uncertainty. With April’s M2 growth in South Korea at 5.8%, up from 4.9% in March, there is a clear increase in local liquidity. This faster money supply often indicates more borrowing and spending, which could boost asset prices in the short term. Market participants may view this as a signal from monetary authorities that easing trends are still in play.

Foreign Exchange Market Movements

In the foreign exchange market, the euro’s rise above 1.1550 against the dollar coincided with a general weakness of the USD, largely due to renewed geopolitical concerns in the Middle East. The weakening of the US Dollar also helped the GBP, which moved closer to 1.3600. These trends suggest that markets are adjusting to expectations for forthcoming announcements from the Federal Reserve and the Bank of England, especially regarding any changes in forward guidance. Gold continues to attract interest as a safe investment. Although it reached levels not seen since April, even slight recoveries in the US Dollar have created some resistance. Nevertheless, global uncertainty and trade-related news seem to provide enough support to limit any significant declines. The tension remains between dollar dynamics and demand for hedging, both sensitive to changes in central bank policy and international events. In the digital asset space, Dogecoin’s sharp decline serves as a warning. After reaching a monthly high, the asset quickly fell due to heavy profit-taking. Speculation has cooled, and further drops may occur if market sentiment weakens or liquidity decreases. These shifts suggest that overly ambitious trades could struggle in the face of upcoming volatility. As central banks clarify their strategies in the coming weeks, we can expect sharper reactions in rates, currencies, and risk assets. Right now, volatility shows no signs of easing. In this environment, it may be wise to reassess spread strategies and positions based on implied volatility. Keeping a close eye on the upcoming communications from the Fed and BoE—beyond just the headline numbers—could be crucial for making successful trades. Create your live VT Markets account and start trading now.

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In May, new home prices in China dropped 3.5% compared to the same month last year, an improvement from the 4.0% decline in April. Month-to-month, prices decreased slightly by 0.2%, having been stable the previous month. Guangzhou has introduced new measures to boost its housing market. These include completely lifting restrictions on property purchases, resales, and pricing. However, the overall property troubles in China continue, and no clear solution is in sight. We expect additional data from China soon, but the results might vary. These new figures could offer more insight into China’s economic condition. The latest figures show that while the rate of decline has slowed, the market is still under significant pressure. A 3.5% drop in new home prices over the past year, although less severe than April’s decline, highlights the seriousness of the situation. The monthly decline of 0.2% may seem small, but it’s notable against a backdrop where prices had already ceased to rise. Even brief stability did not last. In major cities like Guangzhou, authorities are now taking actions that would have seemed unimaginable a few years ago. The decision to completely lift restrictions on home purchases and resales signals a change in policy and urgency. This step indicates that previous efforts to boost demand either fell short or didn’t work quickly enough. Now, the housing market might not respond dependably to mild stimulus or light regulations. This policy shift suggests that deeper changes are needed—it shows that the landscape has shifted. These developments also mean we must re-evaluate expectations about long-standing property values. The confidence that supported pricing over the last decade is no longer certain. The market is slowly processing this change, which affects pricing models, particularly for investors reliant on loans or synthetic positions. Zhao has stated that more economic data will be released soon. Expectations vary, meaning the data could be both positive and negative. This uncertainty can lead to misinterpretations, especially if the results impact current predictions on interest rates or expected support measures. We should prepare for increased two-way risks. Caution in positioning is warranted—the housing indicators reflect broader trends in lending, buyer and developer confidence, and household spending intentions. Whether or not these stabilize could shape expectations for industrial activity and overall policy direction. The likelihood of further easing measures has risen. If stronger support is announced, it might pressure short positions. On the other hand, if the National Bureau’s data appears even weaker, then hedges tied to financial or real estate risks could retain their value longer than expected. Recently, derivative volumes have risen, reflecting shifts in response to this uncertainty. Options skew remains sensitive, with activity focused on shorter time frames, which often indicates bets on significant moves following unexpected data rather than a clear directional belief. Traders with macro exposure related to these themes might benefit by focusing on strategies that reward volatility rather than trying to predict direction. The recent widening of rangebound strategies suggests this mindset—flows have shifted towards straddles and strangles instead of straightforward calls or puts. Participants should keep an eye on valuation changes in response to unofficial policy signals—Beijing frequently tests the waters with proposed ideas. Prices often adjust before official announcements are made. Overall, we see the policy easing in Guangzhou not just as a local step, but as a sign that more actions might be accepted or encouraged in other major cities. Markets typically anticipate these trends, and historically, they begin factoring in changes weeks in advance. This pattern is likely to continue. Han’s team believes that the more significant impacts of property market adjustments will be reflected in lending trends, especially within shadow financing. Keep an eye on those indicators in the upcoming credit report, as they often precede signs of stress or relief in non-bank lending. As we await more data, positioning for unpredictable outcomes remains wise. It’s not about forecasting a recovery; rather, it’s recognizing that the willingness to implement one may be increasing. This alone makes pricing less stable and more responsive to subtle changes.

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West Texas Intermediate (WTI) is currently trading at about $72.15 during Asian hours on Monday. This rise follows Israel’s military actions against Iran’s natural gas facilities, which have sparked fears of supply disruptions in the area. Iran is considering closing the Strait of Hormuz, a key route for transporting around 20% of the world’s oil. If this route is blocked, oil prices could rise due to supply issues.

Impact Of Potential US Tariffs

US President Donald Trump is thinking about reintroducing tariffs on trade partners, which could affect WTI prices. This uncertainty increases the risk of oil prices dropping amid geopolitical worries. Later, we will see China’s retail sales and industrial production data for May. If the results are weaker than expected, oil demand may fall, impacting WTI prices since China is a major oil consumer. WTI oil, or West Texas Intermediate, is a high-quality crude oil traded worldwide. It is described as “light” and “sweet” due to its low gravity and sulfur content, making it a benchmark for oil prices. Prices of WTI oil are influenced by supply and demand, global economic growth, political factors, and OPEC decisions. Inventory data from the API and EIA also plays a role, with the EIA data generally being more reliable. OPEC can influence prices by adjusting production quotas during its biannual meetings.

Geopolitical And Economic Tensions

The rise in WTI prices to just above $72 shows a strong reaction to increased worries about oil supply, especially because of recent military actions in the Middle East. Israeli airstrikes on Iranian gas infrastructure have heightened fears about the security of supply. Iran’s suggestion to potentially close the Strait of Hormuz—a critical maritime route for global oil—indicates that the threat to supply is real. This strait handles about 20% of oil trade worldwide, so any disruption would quickly impact the markets. In addition to geopolitical risks, the US trade policy is also creating questions about pricing. As Trump considers reintroducing tariffs, there may be a strain on demand. Historically, such policies have slowed cross-border trade and manufacturing. If these sectors decline, energy demand—particularly oil, which is closely linked to industrial activity—may also decrease. Meanwhile, traders are closely monitoring China. Upcoming May data on retail sales and factory output will reveal much about domestic demand in the world’s largest oil consumer. Weaker figures could signal a sluggish economy and put downward pressure on oil prices, raising concerns about over-supply. The extent of the effect will depend on how far the data falls short of expectations. On the technical side, WTI’s high quality continues to support its role as a pricing benchmark. Its light and sweet characteristics require less processing and typically command a premium price. However, long-term pricing depends more on who is buying and how much, rather than the oil itself. OPEC’s production quotas still serve as a price control mechanism. Changes in these limits can either tighten or loosen supply, although market reactions can vary based on inventory levels and the speed of these adjustments. As traders, it’s essential to anticipate market reactions rather than just chase headlines. We need to consider whether current prices already reflect geopolitical tensions or if there’s potential for continued movement. Inventory data—especially from the EIA—provides a clearer picture of whether supply is tightening or if sentiment is outpacing reality. Strategically reacting to these releases can help navigate the noise in the market. Finally, macroeconomic indicators should not be taken in isolation. A disappointing report from Asia wouldn’t just affect demand; it might also lead other markets into a risk-off stance, strengthening the dollar. A stronger dollar can press further on oil prices, as it makes dollar-priced commodities less appealing to foreign buyers. Therefore, we must assess all these factors simultaneously when making price decisions, focusing on strategy over impulse and being ready to adjust when there isn’t clear confirmation. Create your live VT Markets account and start trading now.

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China’s house price index fell by 3.5% in May, which is a smaller drop than last month’s 4%. This shows some trends in China’s housing market. The EUR/USD pair is slightly down, trading below the mid-1.1500s as the US Dollar rises. Traders are waiting for the FOMC policy decision for further direction.

GBP Recovery and Market Trends

The GBP/USD pair has started to recover, sitting around 1.3570 during Asian trading. This movement appears within an upward channel, influencing market expectations. Gold prices are holding near two-month highs but are facing resistance due to a slight increase in the USD. Ongoing geopolitical risks are balancing gains and losses in the precious metals market. Bitcoin, Ethereum, and Ripple are stabilizing after a recent drop. These cryptocurrencies are near significant support levels, which may affect their future prices. As markets prepare for central bank meetings, expectations vary regarding rate hike timelines. Key economic indicators and central bank positions continue to shape market sentiment and trading strategies. Markets are showing signs of impatience, especially since macro data raises more questions than it answers. The recent 3.5% drop in Chinese house prices, while less severe than last month’s 4%, indicates that the property sector is still under pressure. However, we may now see a slowdown in the rate of decline. It’s too soon to call a recovery, but this trend may lead to adjustments in some Asia-influenced investments, particularly short-term holdings related to construction materials or regional debt. In Europe, the Euro is lagging behind the US Dollar. The EUR/USD pair is under pressure, staying below 1.1500s, primarily due to a stronger Dollar. This aligns with rising US yields and the Dollar’s appeal as a safe haven. With the FOMC decision approaching, traders seem to be adjusting for potential volatility rather than simply reacting to it. We are focusing not just on the rate outcome but also on discussions around balance sheets and pricing stability. Meanwhile, the Pound shows resilience, sitting at 1.3570 during quiet Asian trading. The pair remains in a broader upward trend, held within a technical channel established since late March. This rebound might encourage short-term positioning, especially as the Bank of England’s rate path may diverge from its peers. Bailey’s earlier comments suggested that inflation may be more stubborn than expected, leading to conversations about tightening. During our morning call, we discussed whether the pricing of short-term gilts is underestimating this situation.

Gold and Cryptocurrency Developments

Gold is stabilizing near multi-week highs, holding onto much of its recent gains but facing some challenges from the rising Dollar. It is being influenced by multiple factors: ongoing geopolitical concerns have generated defensive bids, while a stronger Dollar is limiting upward momentum. In the options market, the demand for calls indicates ongoing interest in upside risk, although this interest has decreased since last Thursday. Digital assets have entered a phase of lower volatility. Major cryptocurrencies like Bitcoin, Ethereum, and Ripple are showing less directional movement, sticking close to crucial support levels identified by market participants. For those involved in derivatives, implied volatilities are tapering off from their peaks—this is easing enough for short gamma strategies to seem more appealing. However, from a risk management perspective, testing these levels a couple more times could require adjustments to models. Attention is now focused on upcoming meetings from major central banks. What’s crucial is less about the process of rate increases and more about when policymakers will show confidence in their inflation strategies. In our positioning strategy, we emphasize forward guidance over fixed rate forecasts. A significant change in expectations could quickly affect cross-assets following any unexpected news. For option traders, particularly in rate-sensitive sectors, maintaining short-term flexibility is now more important than having a specific directional bias. Create your live VT Markets account and start trading now.

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