USD/CNH is currently trading between 7.1990 and 7.2190. If it moves past 7.2330, it may indicate that the likelihood of the USD falling to 7.1700 is reduced. The USD is moving sideways, and the recent price actions have not provided fresh insights. Today’s trading range remains set between 7.1990 and 7.2190. On the last trading day, the USD edged up 0.07% to close at 7.2099, fluctuating between 7.1954 and 7.2130. This shows a lack of strong upward or downward movement.

Negative Outlook for USD

In the next 1-3 weeks, the outlook for USD is negative, with no significant movement either way. If USD goes above 7.2330, the chances of a decline to 7.1700 diminish. Before making investment choices, it’s essential to do your research, as all risks and costs fall on the individual. The views shared here are the authors’ and do not represent any organizations. The authors received no financial incentives for this content and are not registered investment advisors, so please do not interpret this information as financial advice. The US dollar is stuck in a tight range against the Chinese yuan, with traders showing little interest in taking strong positions. Recently, trading has mostly stayed between 7.1990 and 7.2190, a range that remains stable without encouraging traders to adopt either a bullish or bearish stance. There was a brief increase above 7.2130 during the last session, but this move lacked strength and quickly reversed. Overall, the daily performance only showed a slight gain of 0.07%, reflecting the general stall we are experiencing.

Monitoring Key Levels

The crucial level to watch is 7.2330. If this level is surpassed, it could signal that the expected downward pressure is easing or being postponed. Should spot rates hold above 7.2330, the previously noted target of 7.1700 becomes less likely. As it stands, there is no new confirmation regarding control from either bulls or bears, leading to caution among traders and in implied volatility. Looking at the medium term, the dollar displays a slightly negative bias against the yuan, influenced by broader market sentiments around US policy. However, this bias seems to be weakening due to the lack of decisive movements in spot pricing. For those trading derivatives, especially options or futures related to this pair, implied volatility has stayed low, reflecting the current narrow range and traders’ reluctance to anticipate large price swings. Consequently, hedging strategies with defined ranges are more relevant here, particularly those designed to capitalize on the ongoing stagnation in spot movements. Near-term straddles or strangles may struggle without an increase in volatility, while traders aiming for breakouts around 7.2190 need to reevaluate their entry points if 7.2330 is tested or rejected. No strong catalysts have appeared to shift price direction sharply, and market sentiment is stable, indicating a potential continuation of this ‘wait and see’ phase. If this inertia continues into the next two weeks, expectations regarding premiums and strike prices may need adjustment. If the price breaks out of this range, tradeable opportunities may arise; until then, the existing ranges seem reliable for short-term strategies. Create your live VT Markets account and start trading now.

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The US Dollar (USD) may drop below 144.90 against the Japanese Yen (JPY), but it’s unlikely to breach the major support level of 144.50. Analysts believe the USD is in a consolidation phase, typically staying within a range of 144.50 to 147.30. In the past 24 hours, it was expected that the USD would test 144.95, but a significant drop below that wasn’t predicted. After hitting a low of 144.90, it bounced back to 145.62. While momentum suggests a possible drop below 144.90, it’s not expected to threaten the 144.50 support. Resistance levels are noted at 145.80 and 146.30.

USD Consolidation Phase

Over the next one to three weeks, the USD is likely to stay in a consolidation phase. The expected range has been adjusted to 144.50 to 147.30, down from an earlier range of 144.50 to 148.50. A clear close below 144.50 could lead to a further decline. Recent economic data shows mixed trends, with Moody’s downgrade of US sovereign credit affecting both currency and gold markets. The downgrade weakened the USD while boosting EUR/USD and GBP/USD. Gold and stock futures reacted cautiously, considering uncertainty in the US and China. Recently, the Dollar-Yen pairing showed a slight retracement that didn’t indicate a major change in direction. After briefly dropping below 144.95, the Dollar quickly recovered from 144.90. This bounce confirms that the Dollar is moving within a tight range. Right now, its price behavior suggests consolidation rather than a significant shift. The important level to watch remains 144.50. This level hasn’t been thoroughly tested, and unless we see a strong close below it with momentum, it will likely act as support. Approaching this level may cause temporary spikes in daily volatility, but without sustained pressure, the overall trend is unlikely to change.

Revised Range Outlook

The updated range, set between 144.50 and 147.30, indicates a narrower outlook than previously predicted. Lowering the upper boundary suggests less confidence in a significant upside or increased caution around resistance near 147.00. This clearer framework helps in monitoring price movements in the coming days. The downgrade from Moody’s has affected multiple asset classes. The Dollar has lost some strength, impacting various currency pairs. Both the Euro and Pound have gained against it, and gold has seen increased demand as a safe haven. Meanwhile, stock futures have shown some uncertainty, reflecting how sensitive markets are to financial stability concerns, especially related to credit risk. From a positioning perspective, if the USD attempts to drop below 144.90, it’s important to consider the broader context. If this happens alongside decreased confidence in US financial instruments, such as more downgrades or disappointing economic data, the Dollar may not show the same resilience as earlier this month. However, if the USD holds above 145.00 and the Yen weakens, it could rise to around 146.00 or even higher, but not convincingly break out of the consolidation phase. Resistance levels are now more firmly set around 145.80 and 146.30. These levels will likely limit upward movements unless market sentiment shifts or unexpected economic news changes expectations for interest rates. Traders dealing with options or futures expiries should pay close attention to these levels, as they often act as magnets if implied volatility stays consistent. As we approach upcoming economic updates, especially those related to inflation and employment, shifts between risk-on and risk-off sentiments may affect Yen crosses more broadly. This may push the USD/JPY toward the extremes of its current range, but there’s no strong indication yet of a significant breakout above 147.30 or below 144.50 unless external factors become more pressing. Create your live VT Markets account and start trading now.

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China’s April data reflects the impact of the ongoing US-China trade war. Industrial production growth slowed to 6.1% compared to last year, which is slightly above expectations, with a monthly increase of 0.2%. Retail sales growth fell to 5.1% year-on-year, lower than expected, and monthly growth also slowed. This suggests challenges with domestic demand, influenced by a struggling property sector and low consumer confidence.

Fixed Investment Trends

From January to April, fixed investment growth fell to 4.0%. In the property sector, investment and residential sales decreased. However, the urban unemployment rate showed a slight improvement, dropping to 5.1%. Future growth might recover due to a recent truce between the US and China, which could lower tariffs. It’s anticipated that China will soon cut loan prime rates by 10 basis points, following previous reductions. While growth risks are rising, uncertainties related to trade remain. The latest figures from April illustrate how rising tensions between Beijing and Washington have strained domestic output and consumer spending. Industrial production increased by only 0.2% for the month, at a year-on-year rate of 6.1%—just above estimates but without signs of significant improvement. This gain likely came from a few specific sectors, possibly supported by government-driven demand rather than widespread industrial recovery. Retail performance was concerning, with annual growth falling sharply to 5.1%, missing projections, and monthly gains also declined. Weaker consumer sentiment, partly due to the struggling property market, appears to be dampening consumer activity. April’s disappointing retail figures reflect that domestic demand is still hindered—not only by structural issues in the property market but also by lingering effects of shaken confidence. Fixed asset investment slowed to 4.0% in the first four months of the year, dropping further from earlier results. The ongoing issues in real estate—declining development and sales volumes—continue to pressure business activity. Policymakers are now stuck between trying to stabilize the situation and limited options for stimulus. Residential construction and broader real estate metrics are clearly underperforming. Decreases in land sales and weaker project starts indicate the capital expenditure cycle may weaken further unless new credit options are introduced.

Urban Employment Context

Job data appears stable at first glance, with the registered unemployment rate falling to 5.1%, suggesting some resilience in urban employment. However, concerns about underemployment and stagnant wages could hinder consumer-led recovery. Given these challenges, market observers are closely watching upcoming interest rate decisions. A cut to the loan prime rate—expected to be 10 basis points—would show continued monetary support from Beijing. We have already seen cautious moves in that direction. But with fiscal constraints tightening and rising debt concerns, it’s uncertain how long these measures can sustain the economy. Although recent tariff pauses indicate reduced friction in trade, volatility surrounding export policies remains high. We cannot assume that easing trade tensions will lead to immediate improvements. Instead, we need to recognize that there may be a delay between policy changes and their economic effects. This means that near-term data could remain unpredictable, even if future conditions look slightly better. This environment is not ideal for aggressive investment. Traders may become more sensitive to interest rate movements as they evaluate stimulus and policy shifts. If credit easing turns out to be stronger than expected, we could see a temporary increase in risk appetite. However, ongoing weakness in demand and investment means that any market rally might be brief and limited. It’s wise to keep investment exposure flexible, especially around key data releases and central bank announcements. Monitoring capital flows and interest rate trends together will be essential. So far, changes have been moderate. However, with export conditions still unstable and domestic factors under stress, fixed income might start reacting more to expectations than to current evidence. It’s too soon to make directional bets based solely on this month’s data. Instead, the timing and communication of any future easing will be more important than the actual size of the cuts. Create your live VT Markets account and start trading now.

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AUD/USD’s price movements have caught the attention of FX analysts, highlighting the significant level at 0.6370. If the rate goes below this mark, it indicates that the currency pair is simply trading within a range. For the AUD to gain more momentum, it needs to break and maintain a position above 0.6515. In the last session, the rate stayed within a narrow band of 0.6388/0.6436, closing at 0.6404 with little change.

Short Term Expectations

Recent analyses predict that the AUD will likely fluctuate between 0.6390 and 0.6440. The upward momentum has been slowing down over the past week. Other currencies, such as EUR/USD and GBP/USD, are also affected by a weaker USD. Moody’s downgrade of the US credit rating adds further pressure to the markets. Gold has gained from a cautious market, rising to $3,250. US stocks reacted negatively to Moody’s downgrade, starting the day lower. China’s economic slowdown is linked to uncertainties from the trade war. Retail sales and fixed-asset investments are taking a hit, although manufacturing remains somewhat steady.

Volatility and Risks

Trading foreign exchange carries significant risks, including the possibility of losing your entire investment. Personal views may not reflect the overall consensus. Currently, AUD/USD is experiencing limited movement, with the level of 0.6370 acting as a temporary support. If this level doesn’t hold, it suggests we are not in a trending market but rather in a sideways phase, where no strong direction is taking shape. To gain upward momentum, the pair needs to convincingly break above 0.6515. This hasn’t occurred lately, given the tight range of 0.6388 to 0.6436 and a modest close at 0.6404, leaving little momentum in either direction. The current pattern shows no surprises. Analysts have revised their short-term expectations accordingly, now suggesting a trading range between 0.6390 and 0.6440. Due to a lack of upward momentum over the past week, this outlook seems reasonable. Momentum indicators are weak, making it difficult for trend-followers to make strong bets until outside influences push the market out of this narrow range. It’s also important to look at broader influences affecting current prices. A softer US dollar has created some opportunities for the euro and sterling, partly due to Moody’s recent downgrade of the US’s credit rating. This change sent shockwaves through bond and stock markets, with the Dow and S&P 500 opening lower. Risk sentiment took a hit, leading to a surge in gold prices, which rose to $3,250. Alongside currency factors, disappointing Chinese data continues to raise concerns. Weak retail spending and fixed investment indicate underlying pressure in the second-largest economy. While manufacturing has shown some resilience, consumer-driven metrics are not as stable. The ongoing trade uncertainties further complicate recovery prospects. For traders managing currency risks, volatility linked to macroeconomic news remains a major consideration. When market direction tightens, like it has with AUD/USD, option premiums generally decrease, but the risks linger. Timing shifts from a directional strategy to one that relies on news and reaction triggers. At this time, it makes sense to stay near stop-loss levels and be alert for unexpected data releases or policy announcements. The markets have not yet made strong commitments, and they may be waiting for stronger signals to restore confidence. Create your live VT Markets account and start trading now.

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The Euro is expected to show an upward tendency, but it may struggle to exceed 1.1225. FX analysts Quek Ser Leang and Peter Chia predict that, over a longer period, the Euro will likely trade between 1.1100 and 1.1290. In the 24-hour outlook, the Euro was last seen at 1.1190 and is expected to range between 1.1145 and 1.1235. However, it fell from 1.1219 to 1.1129 and then bounced back to close at 1.1163, down by 0.21%. Although there is a slight recovery, it is unlikely to push past 1.1225 due to weak momentum. Support is currently at 1.1160, and if it drops below 1.1135, upward movement may weaken. In the next one to three weeks, the Euro might enter a consolidation phase, trading within the 1.1100 to 1.1290 range. This expectation remains unchanged and should be approached carefully for financial decisions. We are witnessing a fragile recovery in the Euro after its recent decline, which erased earlier gains. The currency reached 1.1219, then quickly dropped to 1.1129 before stabilizing at 1.1163—down nearly a quarter of a percentage point. Although there has been a slight rebound, there isn’t enough momentum to confidently push past 1.1225. Short-term indicators suggest some upward potential, but it seems limited by broader market conditions. Chia and Quek’s short-term range of 1.1145 to 1.1235 has been tested rapidly, with the lower end already breached during the pullback. Still, their broader forecast of 1.1100 to 1.1290 for the coming weeks remains intact. Current weakness is likely to persist temporarily, but it may not be severe enough to disrupt the medium-term trend. A sustained drop below 1.1100 would change this outlook, but that seems unlikely without further pressure from interest rates or risk sentiment. Given the fragile momentum, it’s important to monitor key levels closely. Support at 1.1160 is being challenged, and falling under 1.1135 could negatively impact market sentiment. Conversely, breaking above 1.1225 would signal strengthening momentum, potentially leading to further gains toward the top of the three-week range. Currently, such a move lacks strong backing. Right now, caution is advised. As this consolidation continues, traders may tighten their trading ranges and adjust volatility forecasts. This could influence option premiums and pricing for short-term derivatives. In such range-bound conditions, delta-neutral strategies often provide better risk-reward opportunities. FX options markets have not shown strong directional trends, in line with the current technical setup. Sentiment appears more focused on patience rather than chasing quick moves. While not all opportunities are absent, they are more likely at the edges of this range rather than in the middle, where confidence is lower. In the upcoming sessions, use discretion with momentum-based signals. The Euro has proven sensitive to abrupt reversals due to thin order books, even within expected ranges. Until we see consistent tightening of spreads and stable price action above 1.1200, aiming for targets above 1.1290 may be premature. It’s wise to manage risk closely around these reaction levels. Current trends are not extended, favoring strategies that anticipate rotation rather than breakouts. The de-risking seen in related asset classes suggests that participants are more prepared for sideways movements than new rallies. For now, stick to clear levels—risk arises from assuming breakouts that do not materialize.

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China’s economy showed strength in April, even with US tariffs in place. Industrial production remained stable, backed by early shipments to other markets after a brief pause in tariffs. Retail sales and the property market faced challenges in April, with lower-than-expected retail sales and urban fixed asset investment (FAI). However, there were some positive month-on-month trends, and the surveyed unemployment rate fell slightly. Property indicators, such as home prices and sales, declined.

Revised 2025 GDP Growth Forecast

Due to the short-term effects of the US-China trade agreement, China’s GDP growth forecast for 2025 has been raised from 4.3% to 4.6%. Predictions for the second quarter of 2025 indicate a growth rate of 4.9% year-on-year, while the latter half is expected to be 4.2%. This outlook relies on a stable trade agreement between the US and China. An interest rate cut of 0.1% is anticipated in the fourth quarter of 2025. By the end of Q4 2025, projections suggest that the 7-day reverse repo rate will be 1.30%, the 1-year loan prime rate (LPR) at 2.90%, and the 5-year LPR at 3.40%. In April, industrial production held steady, helped by increased exports to markets outside the US. This activity followed a brief pause in tariffs and affected key export sectors. While overall production was stable, focus shifted from US markets to those unaffected by tariffs, providing some cushioning against a potential slowdown. Traders dealing in sensitive macro instruments should take note of this trade flow shift and its implications for manufacturing contracts. In contrast, retail sales fell more than expected and were weaker than the monthly trend suggested. The property market also faced challenges. Prices decreased, and transaction activity slowed, particularly in tier-two and tier-three cities. Urban fixed asset investment fell short of expectations, showing that private developers and local governments are still hesitant. Despite these issues, the national unemployment rate showed a slight improvement—a modest but positive sign. This increase in confidence may not completely counteract the slowdown in property demand, but it helps prevent further decline for now.

Policy Expectations and Impact

The GDP growth target for next year has been raised from 4.3% to 4.6%, based on the expectation of a stable trade deal with the United States. We anticipate a stronger rate in the second quarter—around 4.9% year-on-year—before activity is expected to slow again in the latter half of 2025. However, risks still exist due to potential changes in trade policy or renewed weakness in the property sector. Therefore, pricing for contracts linked to growth indicators should be watchful of upcoming data releases in the following weeks. On the policy side, the anticipated interest rate cut at the end of 2025 reflects cautious optimism and targeted support. Projections for the 7-day reverse repo rate and the main 1-year and 5-year loan prime rates indicate a deliberate easing approach. These expected rates—1.30%, 2.90%, and 3.40%, respectively—represent the funding environment for traders through the end of the year. As we examine the yield curve and pricing for short-term liquidity instruments, these rates define the parameters for short-dated swaps and repo-linked strategies. Create your live VT Markets account and start trading now.

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Alibaba announced non-GAAP earnings of $1.73 per ADS for the fourth quarter of fiscal 2025, exceeding estimates by 16.89%. In local currency, earnings reached RMB 12.52, showing a 23% increase compared to last year. Total revenues were $32.6 billion, falling just short of expectations by 1.49%. However, in RMB, revenues grew 7% year-over-year to RMB 236.5 billion.

Key Drivers

The revenue boost primarily came from the core domestic e-commerce section, including Taobao and Tmall Group, as well as growth in Cloud Intelligence and International Digital Commerce. After the earnings announcement, Alibaba’s stock rose 1.65% in pre-market trading and has gained 46.2% year-to-date. Taobao and Tmall Group reported revenues of RMB 101.37 billion, contributing 42.9% of total earnings and marking a 9% increase from the previous year. The 88VIP membership program grew to 50 million members, a significant rise. The Retail and Wholesale segments in China achieved revenues of RMB 95.6 billion and RMB 5.8 billion, respectively. Revenue for the International Digital Commerce Group grew by 22% to RMB 33.6 billion, driven by successful cross-border operations. Operating income reached RMB 28.5 billion, a remarkable 92.8% increase from last year. By the end of Q4, cash and cash equivalents totaled $20 billion, with short-term investments at $31.5 billion.

Mixed Signals

Alibaba’s latest earnings report offers a mixed view, but there are clear factors that require attention, especially in the current economic climate. Profit exceeded expectations significantly, but revenue fell just short of analyst forecasts. This divergence must be considered in future investment strategies, particularly for those using leverage. Starting with earnings, the adjusted figure of $1.73 per ADS, or RMB 12.52, indicates a 23% rise from the previous year. The market often rewards efficiency, and in this case, we saw operating income more than double, rising 92.8% to RMB 28.5 billion. This suggests improved cost management and effective monetization—crucial when facing rising interest rates or currency fluctuations. On the downside, revenue was a slight letdown at $32.6 billion, or approximately RMB 236.5 billion, which was 1.49% below what analysts expected. The 7% increase in local currency indicates moderate growth, but those expectations put pressure on further revenue acceleration. The domestic e-commerce sector remains the key driver, with Taobao and Tmall together bringing in over RMB 101 billion, a 9% increase from last year. With 50 million 88VIP members rapidly growing, it shows strong customer loyalty and retention among high-value users. This encourages pricing power over time. The China Commerce Retail segment contributed positively, while the smaller Wholesale segment remained steady. Additionally, international growth is on the rise, reflected in a 22% increase in revenue from cross-border commerce. The company’s liquidity is strong, with $20 billion in cash and $31.5 billion in short-term assets, supporting future investments or buybacks. This solid balance sheet is valuable, especially in volatile markets. Markets reacted modestly, with shares up 1.65% in early trading. However, shares have risen 46.2% this year, which raises questions about possible overextension or momentum-based positions. As we witness volatility surrounding key events—such as regulatory changes or economic reports—investors with leveraged positions should reassess their options and stress-test their strategies. Gross risk exposure should be adjusted based on earnings cycles and cash generation capabilities. The underlying fundamentals allow for selective long positions, but hedging is wise unless market sentiment shifts substantially. We’re taking cues from revenue consistency and fiscal discipline to navigate the nuances of summer liquidity with sharper strategies. Create your live VT Markets account and start trading now.

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USD/CHF is pulling back from earlier gains and is currently around 0.8360. This movement is linked to the downgrade of the US credit rating. Moody’s has lowered the US rating from Aaa to Aa1, following similar actions by Fitch and S&P. ## US Dollar Resilience and Trade Optimism The US Dollar has shown strength due to hope for a 90-day truce in US-China trade discussions and expectations for new trade agreements. However, worries emerge as President Trump plans tariffs on trade partners that are not cooperating. Recent economic data shows inflation easing, leading to speculation about potential Federal Reserve interest rate cuts in 2025. Weak US Retail Sales data adds to concerns about a slow economic recovery. The losses in USD/CHF may be limited by potential weakness in the Swiss Franc, as the Swiss National Bank (SNB) might consider cutting rates, which could further pressure the Franc. The Swiss Franc is significantly impacted by Switzerland’s economic health and its relationship with the Eurozone. It is viewed as a safe-haven asset, gaining value during times of market stress due to the stability of Switzerland’s economy. ## Swiss Franc and Eurozone Relations The value of the Swiss Franc depends on Swiss economic performance and the Eurozone’s stability. Strong economic growth and stable finances in Switzerland bolster the Franc, while weak economic data could lead to depreciation. The earlier sections highlight changing dynamics in the USD/CHF pair, driven by developments in the US and Europe. The downgrade from Moody’s has put pressure on the US Dollar, similar to past adjustments made by Fitch and S&P. Such downgrades can lead to doubts about long-term debt sustainability and the government’s ability to handle increasing spending pressures. Despite the downgrade, the Dollar hasn’t fallen as much as expected. Optimism about trade relations between the US and China provides support. The idea of a 90-day truce has restored some confidence, and hopes of new trade deals have boosted demand for the Dollar. However, news about potential tariffs on certain allies has reintroduced uncertainty. The situation remains fragile. Adding to this uncertainty, US inflation data is trending down, raising speculation that the Federal Reserve might begin easing by 2025. While this is not immediate, it influences future expectations. Weak retail data reinforces the view that soft economic conditions will dominate the narrative. Traders may need to adjust their views, assuming that the current pause in rate changes could extend into the latter half of next year. On the Swiss Franc side, the situation is complex. While the Franc generally performs well during downturns due to Switzerland’s stable economic reputation, this edge might be diminishing. The Swiss National Bank appears to be leaning toward looser policies as inflation stays controlled and regional pressures affect sentiment. If the SNB cuts rates, it could remove some yield support, which is increasingly important in a low-rate environment. Traders must also consider the Franc’s sensitivity to Eurozone developments. Close economic ties mean that volatility from Germany or France can impact Swiss assets. If European growth slows or inflation remains low, demand for the Franc may not lead to strength as it has before. With USD/CHF trading around 0.8360, any additional declines may not be immediate or severe. Weakness in the US Dollar could potentially lower the pair, but this largely relies on whether the SNB’s upcoming decisions align with market expectations. Increased chances of rate cuts could offset some downward pressure on the Dollar, especially if US yields continue to decrease and traders temper their recovery expectations. We’re entering a period where upcoming economic data from both the US and Switzerland could lead to quick market shifts. Key attention should be paid to inflation figures, consumer trends, and central bank communications. Reactions to policy discussions and speeches will likely become more influential than the economic data itself, as they may provide clearer insights on the timing and pace of any easing. In conclusion, this environment calls for adaptability. Any fading rallies or strengths may warrant reevaluation of positions, particularly as global financial conditions adjust. It’s important to watch not only yields and economic surprises but also how these shifts align with market expectations. A significant gap between actual data and market assumptions could lead to sharp changes in valuations. Focus should remain on shifts in policy tone and any signs of divergence between data and market expectations. Create your live VT Markets account and start trading now.

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FX option expiries for May 19 at 10:00 Eastern Time include the following: – **EUR/USD**: EUR 375 million at 1.1150. – **GBP/USD**: GBP 559 million at 1.3300. – **USD/JPY**: USD 1.2 billion at 146.50 and USD 1.5 billion at 147.00. – **USD/CHF**: USD 159 million at 0.8420. – **AUD/USD**: AUD 563 million at 0.6525 and AUD 595 million at 0.6355.

USD/CAD Expiry Levels

– **USD/CAD**: USD 529 million at 1.3675 and USD 587 million at 1.3985. – **NZD/USD**: NZD 1 billion at 0.5915. Recent market trends show EUR/USD nearing 1.1300 as the US Dollar weakens. GBP/USD is approaching 1.3400 after a downgrade of US credit ratings. Gold prices have increased, trading around $3,250 per ounce after the downgrade and amid concerns over economic indicators and trade talks. China’s economy showed slower growth in April, particularly in retail sales and fixed-asset investment, though manufacturing impacts were milder than expected.

USD/CHF Movements and Implications

The May 19 expiry list includes key levels that might influence pricing, especially where large amounts are clustered. For instance, the 1.1150 level in EUR/USD, supported by EUR 375 million, may start to lose relevance as the price moves towards 1.1300 due to ongoing USD selling. This means that any attempts at recovery will face resistance from traders unwinding previous USD positions. GBP/USD has found support after the US credit downgrade and is climbing towards 1.3400, creating pressure on the 1.3300 expiry level (GBP 559 million). This level may lose significance unless we see a significant shift in market risk sentiment. Traders should watch for quick price movements that could pull the pair back to lower levels, although this seems unlikely without broader changes in market mood. The Dollar-Yen pair looks different, with USD 1.2 billion at 146.50 and another USD 1.5 billion at 147.00 close enough to current levels to influence pricing through hedging. If US Treasury yields rise again this week, these levels may act as boundaries, keeping the pair within that range. The volumes indicate a two-sided risk in this area. USD/CHF has USD 159 million at 0.8420, which is small and unlikely to affect intraday prices, especially with market focus elsewhere. Movement in the Swiss Franc has been limited without broader USD trends or local surprises, so volatility from this expiry is expected to be minimal unless unexpected news arises. In AUD/USD, there are AUD 563 million at 0.6525 and AUD 595 million at 0.6355. While these expiry levels are far from the current spot price, they could serve as psychological anchors. With slower data from China in April impacting retail and fixed asset investment, the Australian Dollar may remain under pressure, making the lower expiry levels more significant. USD/CAD has expiries at 1.3675 and 1.3985, both over half a billion USD. Reactions in the Canadian Dollar might be more sensitive ahead of these levels if oil prices fluctuate or changes occur in North American bond markets. When expiry strikes are this far apart and of moderate size, attention often shifts to how close the spot price gets to them. If movement builds as options maturity approaches, these levels will be more impactful; otherwise, their influence weakens. Finally, for NZD/USD, there is NZD 1 billion at 0.5915. This is noteworthy as it is close to where prices have paused. Given the weak Chinese data, the Kiwi, sensitive to Asia-Pacific events, might continue to face downward pressure, potentially making this expiry a short-term draw, especially if risk sentiment worsens around global trade. Gold trading near $3,250 suggests a softer appeal for the Dollar and ongoing refuge-seeking behaviors. Economic indicators and trade negotiations create additional uncertainty, making precious metals attractive. We expect derivative positioning to be influenced by the broader tone from the Fed and global risk appetite for the rest of the month. Create your live VT Markets account and start trading now.

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Gold prices in Saudi Arabia rose on Monday. The price per gram is now 388.28 Saudi Riyals (SAR), up from 386.20 SAR on Friday. The price per tola is now 4,528.49 SAR, an increase from 4,504.51 SAR. Central banks are the biggest holders of gold, adding 1,136 tonnes, valued at around $70 billion, to their reserves in 2022. Countries like China, India, and Turkey are actively increasing their gold reserves.

Gold And The US Dollar

Gold often moves opposite to the US Dollar and US Treasuries. As a safe-haven asset, its price is affected by geopolitical instability and changes in interest rates. When the US Dollar falls, gold prices usually rise because gold is priced in dollars (XAU/USD). Fluctuations in interest rates and geopolitical tensions also affect gold prices. The recent increase in gold prices at the beginning of the week, now at 388.28 SAR per gram from 386.20 SAR last Friday, indicates a steady demand. Similarly, the price per tola increased to 4,528.49 SAR. Even these small hikes suggest that traders are reassessing their positions based on macroeconomic changes and reserve strategies. More revealing is the behavior of central banks. In 2022, they purchased over a thousand tonnes of gold, spending nearly $70 billion. This was not random; it was led by countries like China, India, and Turkey, which are dealing with their own economic and geopolitical challenges. This shows that gold remains important in monetary strategies, especially when risks related to the US Dollar are considered. As markets evaluate value, historical trends matter. Gold has typically moved in the opposite direction of the Dollar and US Treasury yields. When the Dollar weakens, gold becomes more attractive to buyers using different currencies. This trend can lead to rising gold prices. Traders dealing in derivatives should keep an eye on the Dollar Index’s strength and interest rate policies.

Interest Rates And Geopolitical Factors

Interest rates are another important factor. When rates rise, investments that yield returns can seem more attractive, which may make gold less appealing. However, when risk-averse sentiments arise, whether from near-ending monetary tightening or increasing geopolitical tensions, gold often sees renewed interest. In these situations, we typically notice a shift back to protective investments. The geopolitical situation is also significant. Recent price changes suggest shifts in positioning caused by regional conflicts and diplomatic uncertainties. These moments often spark interest in metals, not just for production but for their symbolic value and stability. In this context, paying close attention to central banks’ future guidance, the shape of the yield curve, and currency market volatility is crucial. Each of these elements can signal where capital might shift. For those trading derivatives, range-bound behavior in gold could create opportunities through volatility strategies, especially as trading volumes increase and expectations adjust. Short-term trades should be selective, while longer-term options still account for potential surprises. Recent reductions in implied volatility should be approached cautiously. The expansion or contraction of central bank balance sheets can also signal potential changes in gold exposure. When these institutions change their reserve strategies or hint at adjustments, market reactions often happen before official data is released. Tracking these developments early is beneficial, especially for those using synthetic exposures or rolling futures. In summary, the figures we see in the Saudi market reflect more than just local interest. They connect to broader market flows, informed by technical trends and real-world hedging needs. Create your live VT Markets account and start trading now.

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