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Crude oil prices rise today but stay below recent highs due to ongoing geopolitical concerns.
The price of crude oil ended at $62.26, which is an increase of $0.39 or 0.63%. Although prices rose today, they’re still below higher levels seen previously. Last week, OPEC+ announced it would increase output by 137,000 barrels per day in October, a move expected after last week’s price drop. This slight increase shows a commitment to keeping prices steady.
Economists believe that this cautious approach eases worries about oversupply. At the same time, ongoing geopolitical issues, such as the Russia-Ukraine conflict and the possibility of new U.S. sanctions, continue to support the market. Prices hit a peak of $63.34 before falling, approaching a low of $61.85.
Chris Kempczinski discusses economic pressures on lower-income consumers versus thriving upper-income groups
McDonald’s CEO Chris Kempczinski recently talked about how economic challenges are affecting different income groups. He pointed out a gap in experiences: those making over $100,000 are doing well, while middle- and lower-income consumers are struggling.
Kempczinski noticed that lower-income customers are visiting McDonald’s less often. Many are skipping meals or eating at home, while wealthier customers continue to spend as usual, without choosing cheaper options.
Franchise Revenue Insights
He reported that franchisees are earning 10% less than their usual cash flow peaks. This trend suggests a shift towards luxury markets and brands that can maintain high prices instead of focusing on middle- and lower-income consumers. This could lead to two areas for investment: luxury markets and budget-friendly options, like dollar stores. However, budget stores may suffer if social assistance programs are cut. It’s clear that lower-income consumers are struggling while wealthier individuals spend freely. Reports show double-digit drops in foot traffic for certain groups, indicating a growing weakness where budget-conscious customers are concerned. This is supported by the August 2025 jobs report, which revealed strong wage growth in professional services, but little change in leisure and hospitality jobs. Retail sales data also showed a 4% drop in mid-tier department store sales, while luxury car sales surprisingly increased by 6%. This shows that the spending gap is not just a feeling; it’s backed by data.Investment Strategy Adaptations
Given this situation, it may be wise to buy put options on companies and ETFs that depend heavily on middle-income consumers. Sectors like casual dining, mass-market apparel, and big-box retailers not focused on essentials could face challenges. This pattern is similar to what we saw in late 2023 before a wider market slowdown. On the other hand, there is potential for investment in high-end brands with strong pricing power. We should consider buying call options on luxury goods companies, premium travel services, and high-end home improvement retailers. These businesses cater to customers who seem unaffected by current economic issues. A more advanced strategy could involve pairs trades that take advantage of this widening gap. For instance, we might buy call options on a luxury retail index and put options on a broad consumer discretionary ETF like the XLY. This approach aims to benefit from the luxury sector’s performance while avoiding overall market risks. This economic divide also suggests small-cap stocks may underperform, as they are more sensitive to the health of U.S. consumers. The Russell 2000 has already trailed behind the S&P 500 this past quarter. We could use options on the IWM ETF to bet on this trend of ongoing small-cap weakness. Create your live VT Markets account and start trading now.Market pricing currently reflects a 10% probability of a 50 basis point reduction.
The Fed funds market shows a 10% chance of a 50 basis point rate cut. As the Fed enters its blackout period, many wonder how the timing of meetings impacts decision-making.
Economic data released before each meeting can complicate predictions and market movements. The non-farm payrolls report, released just before the blackout, leaves investors uncertain about future rate decisions.
Effect of Upcoming CPI Report
There is growing speculation about how the upcoming CPI report will affect the Fed’s decisions. A 10% market expectation for a 50 basis point cut indicates possible instability, especially if the CPI report is soft or other economic indicators are weak before the FOMC meeting. This uncertainty goes against the Fed’s goal of maintaining stable markets. Now that the Fed is in its quiet period ahead of the mid-September meeting, we must interpret the data ourselves. The latest jobs report for August 2025 shows hiring slowing to 150,000, while the unemployment rate rose to 4.1%. This makes the upcoming Consumer Price Index (CPI) report crucial for the Fed’s next move. The 10% chance of a 50 basis point cut suggests that options to protect against a sharp economic downturn are relatively cheap. Traders should consider buying options that benefit from increased market volatility, such as VIX calls or out-of-the-money puts on equity indices. If the CPI reading surprises on the low side, like below a 3.0% annual rate, it could lead to rapid price changes and these positions could become very profitable.Response in the Rates Market
In the rates market, traders can prepare for a surprise cut using futures contracts linked to the Secured Overnight Financing Rate (SOFR). We saw similar situations in 2023, where unexpected dovish moves resulted in strong rallies in Treasury bond prices. Traders might take a long position in 2-year Treasury note futures, which are very sensitive to short-term Fed policy changes. On the other hand, those expecting no cut or just a 25 basis point move should be careful. The risk is not balanced; a weak data point could create much bigger market shifts than one that meets expectations. To manage potential downsides until the Fed’s meeting wraps up, it makes sense to hedge long-equity portfolios by selling S&P 500 futures or buying puts. Create your live VT Markets account and start trading now.French stock futures stay steady after a confidence vote loss, and the euro sees a slight increase.
Gold Prices and Geopolitical Tensions
France’s stock futures have stayed steady after a confidence vote resulted in the dismissal of the Prime Minister. Even with this political change, the euro’s value rose slightly. Recent political shifts in both Japan and France haven’t made much difference to the yen or the euro. With global instability on the rise, safe options in currency markets are limited. Gold prices are reaching new highs due to ongoing uncertainties. This trend highlights how global geopolitical tensions and U.S. tariff policies continue to have an influence. The situation in France, with the Prime Minister losing a confidence vote, isn’t our main concern. The market’s calm response—CAC 40 futures remain stable and the euro has only slightly moved—indicates that traders are looking elsewhere. This hints that selling short-term volatility through options on the French index could be a smart strategy since this kind of instability has become the norm. Over the past few years, we’ve seen that markets tend to ignore leadership changes that don’t quickly affect economic policy. With the UK and US facing their own political issues, there’s no clear “safe haven” from governance problems. This widespread uncertainty has already been reflected in pricing, making individual events like this less significant.Focus on Washington and Trade Policy
The key focus is on Washington and the ongoing tariff situation. Recent threats of a potential 15% tariff on European car parts pose a greater risk to the European economy than a new Prime Minister in Paris. This issue is what will likely drive market movements in the upcoming weeks, not the internal politics of an EU country. Therefore, our strategy should focus on volatility coming from U.S. trade policy, rather than French politics. We should consider long-dated put options on European car manufacturer stocks or on indices with high industrial exposure, like Germany’s DAX. Currency traders might explore options strategies on EUR/USD that benefit from possible volatility spikes, as this currency pair is sensitive to any tariff announcements. At the same time, gold prices keep climbing, recently surpassing $2,600 per ounce for the first time. This reflects a strong desire for assets outside the political system. Using call options on gold futures or related ETFs is an easy way to gain from this trend while also limiting our risk. Create your live VT Markets account and start trading now.Villeroy from the ECB noted that Europe’s inflation situation is currently favorable and stable.
The European Central Bank (ECB) is expected to keep interest rates steady this Thursday, maintaining the main refinancing rate at 2.15%. This decision follows a series of significant cuts that began in mid-2024.
Right now, inflation is close to 2%, and economic growth is more stable than anticipated. Because of this, policymakers are taking a step back to assess the impact of previous rate cuts.
Market Interest
Market focus will be on new staff projections and any comments about political risks in France or global trade tensions. Overall, the belief is that the policy will stay the same until the year’s end, with any changes possibly happening in 2026. We expect the European Central Bank to hold steady this week, which should help reduce interest rate fluctuations. With inflation now under control, the period of aggressive rate cuts that started in mid-2024 seems to be ending for now. This stability suggests we should rethink our strategies regarding large, sudden rate changes. Recent Eurostat data backs this up, showing an August 2025 inflation estimate of 2.1% and second-quarter GDP growth at a modest 0.3%. These numbers are ideal for the central bank, supporting a wait-and-see strategy through the end of the year. This reinforces our belief that the ECB has met its immediate goals.Strategies and Risks
This situation is good for strategies that benefit from low volatility and the passage of time. We should think about selling short-dated options on Euribor futures, as implied volatility is likely to drop after Thursday’s meeting confirms the steady policy. The market currently predicts less than a 10% chance of any rate change before 2026. However, we need to be aware of potential risks, such as ongoing trade talks with the US and political uncertainty in France. Reviewing past market movements during the French election cycle of 2024 shows that political news can quickly create volatility. Therefore, holding some inexpensive long-dated options as a safeguard against unexpected events is a wise strategy. Create your live VT Markets account and start trading now.AUDUSD struggles to maintain momentum despite initial gains, facing resistance and downside risks
The AUDUSD pair rose by 0.50% today due to stronger commodity prices and a weaker U.S. dollar. Gold increased by $54, or 1.52%, and silver grew by 0.86%, helping the Australian dollar.
Technically, the AUDUSD briefly broke through a swing area between 0.65889 and 0.65946, reaching a peak of 0.65981. However, momentum weakened, causing it to fall back below 0.65889. This swing area also capped Friday’s rally, with sellers coming in again. This pattern shakes buyer confidence and gives sellers a chance to challenge any breakout attempts.
Key Support Levels
The main support level to watch is the swing high from August 14 at 0.6567. If it dips below this level, it might target the September 1 swing high at 0.6559. Breaking below both levels could lead to more selling as buyers could change their strategy. If buyers can push above the swing area at 0.65946, they may target the July high at 0.66247, which is this year’s peak last reached in November 2024. Today, September 8, 2025, the AUDUSD shows signs of weariness after failing to hold above the crucial resistance at 0.6595. This marks the second time sellers have intervened at this level recently, disappointing buyers and opening the door for a potential drop. The support from rising gold prices isn’t strong enough to overcome this resistance.Trading Opportunities
Considering the repeated struggles at resistance, we might look at buying put options with strike prices set below the initial support level of 0.6567. This view is supported by China’s industrial production data for August 2025, which came in at 4.1%, slightly below expectations and raising concerns about demand for Australian exports. We saw a similar trading pattern in late 2024 where stalls near the 0.6600 level led to a significant decline. On the other hand, if the AUDUSD breaks firmly above 0.6595, this would negate the bearish outlook and could spark a strong rally towards the July high of 0.66247. This upward movement may stem from continued weakness in the U.S. dollar, especially after last week’s inflation report showed core CPI falling to a three-year low of 2.8%. Traders expecting this breakout could consider buying call options with a strike near 0.6600 to benefit from the possible rise. This standoff at a key technical point suggests an increase in volatility could be on the horizon. The RBA’s meeting minutes from August 19, 2025, revealed differing views on future interest rate hikes, indicating their upcoming policy decision could be a significant catalyst. Therefore, setting up option strategies like straddles could be an effective way to trade a potential big price swing without committing to a specific direction. Create your live VT Markets account and start trading now.USDCAD rebounds from key moving averages as buyers hold control despite previous price declines.
The USDCAD pair fell due to a weak U.S. dollar but found support at a familiar level. It tested the 200-bar moving average on the 4-hour chart, around 1.37844, before bouncing back. Earlier, after the U.S. jobs report, the price dropped below this level but regained strength near the 100-day moving average at 1.37626.
Key Moving Averages
After bouncing off this support, the USDCAD rose above the 100-bar moving average on the 4-hour chart at 1.3814. The key levels to watch are the 100-day MA (1.37626), the 200-bar MA on the 4-hour chart (1.37844), and the 100-bar MA on the 4-hour chart (1.3814). Staying above these levels suggests a bullish outlook for the pair. If the price drops below the 100-day moving average at 1.37626, we could see further declines. Despite declines from Friday’s close, support levels have held, keeping buyers interested and in control. The USDCAD pair is finding solid support at a critical zone created by several moving averages. The price bounced off 1.3784 and is now above 1.3814. This indicates that buyers are defending this area, keeping the immediate outlook positive. The overall market situation also supports this view, especially with the U.S. August 2025 inflation (CPI) data coming next week. Current forecasts suggest a slight increase to 3.2% year-over-year, which may pressure the Federal Reserve to stick to its aggressive policy. This uncertainty about future interest rates is a key reason why the U.S. dollar finds support during dips. On the Canadian side, the recent drop in WTI crude oil prices—from over $95 in July 2025 to around $88—is affecting the loonie. The Bank of Canada hinted at a pause in its rates during its last meeting, contrasting with the Fed’s stance. This weakness in the Canadian dollar supports a stronger USDCAD.Opportunities and Risks for Traders
For derivative traders, the bounce from support creates a clear chance to position for a rise. We suggest buying near-term call options with strike prices around 1.3850 or 1.3900 for late September 2025 expirations. This allows traders to profit from a potential upward movement as long as the 1.3762 support level holds. However, it’s essential to plan for the opposite scenario. A decisive drop below the 100-day moving average at 1.3762 signals that support has failed, and sellers regain control. In this case, traders should be ready to pivot by buying put options to target lower levels. This price action is familiar and reminds us of the range-bound trading typical in 2023. During that time, the pair was caught between fluctuating central bank expectations and volatile energy markets. The current setup indicates a similar dynamic, making these technical levels crucial to watch in the coming weeks. Create your live VT Markets account and start trading now.European stock markets rebound today, with Italy showing the strongest performance despite recent declines.
European Markets Rebound
Italy’s FTSE MIB rose by 0.3%. Even though it dipped over the last two weeks, Italy’s stock market is still performing well globally this year. Today, European markets are bouncing back, with Germany’s DAX up 1.0% after a slow start to the month. This increase follows last week’s decline, which was due to concerns about high inflation. Now, we need to see if this is just a temporary rise or the start of a longer upward trend. Last week, the Eurozone’s manufacturing PMI data showed a decline for the fourth straight month. This makes things tricky for the European Central Bank. While inflation is still a worry, slow economic growth might stop any more interest rate hikes. This uncertainty can create opportunities for options traders who want to take advantage of the increase in volatility. Historically, September has been the worst month for stocks. The S&P 500 has dropped in September about 55% of the time since 1950. This trend suggests that selling call options or buying puts on indices like the Euro Stoxx 50 could be a smart way to protect against a possible downturn.Hedging Strategies For European Markets
Today, the Euro STOXX 50 Volatility Index (VSTOXX) has slightly dropped to 18.2 but is still above its summer lows, which means traders are not completely confident in this rally. This could be a great opportunity to buy protection at a low cost before volatility possibly spikes. If economic data doesn’t improve, we might see the index return to the 20-22 range in the coming weeks. Italy’s FTSE MIB has performed well this year but has shown some weakness in the past two weeks. With gains of over 20% in 2025, it might be at risk for profit-taking. We’re thinking about using futures to hedge our long positions in Italian stocks as we head into autumn. Create your live VT Markets account and start trading now.NASDAQ sets new intraday record but experiences pullback while keeping overall gains.
**Failed Breakdowns Suggest Ongoing Buyer Strength**
Today, several companies made notable gains. Robinhood Markets rose by 13.94%, Broadcom by 3.81%, and Alibaba by 3.07%. Other significant increases included Palantir at 2.89% and Lam Research at 2.74%.
Synopsys climbed by 2.70%, while Cadence Design Systems increased by 2.67%. GameStop went up by 2.63%, and Uber Technologies added 2.48%. Live Nation Entertainment and Amazon.com grew by 2.30% and 2.07%, respectively, with Tencent and NVIDIA each rising by 1.84%.
The NASDAQ briefly reached a new high at 21,885.62 but quickly pulled back. This shows hesitation among buyers. For traders, this failed breakout serves as a warning. It might be risky to chase the market with long call options right now; instead, consider short-term bearish positions if the index drops further.
**Market Sentiment and Strategy**
The market is adjusting to a challenging economic environment. Recent Consumer Price Index data for August 2025 shows inflation cooling at 2.9%, which has boosted optimism. However, with the Federal Reserve meeting coming up soon, the market is showing signs of uncertainty about future interest rates. This is happening even though the August jobs report showed a solid increase of 175,000 jobs.
Keep an eye on the 200-hour moving average. It has often served as a support level for buyers throughout August 2025. Just like the rally patterns seen in 2024, dips to this level have been great buying opportunities. A smart strategy would be to sell out-of-the-money puts or try bull put spreads as the index nears this moving average, betting that support will hold strong again.
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Consumer inflation expectations rise slightly as job market outlook worsens, highlighting economic concerns about employment prospects
**Consumers Downgrade Labour Market Outlook**
Consumers’ views on the job market have worsened. Many expect unemployment to rise within a year. More people feel they might lose their jobs, and finding a new one seems harder than it has been since June 2013.
Inflation expectations remain steady, with consumers projecting three-year inflation at 3% and five-year inflation at 2.9%. They also expect home prices to increase by 2.9%.
Pessimism is growing in the job market, which could reduce spending and slow down economic activity, especially regarding job transitions.
With the highest level of doubt about finding new jobs since 2013, this serves as a warning for the economy. Such concerns usually precede a drop in consumer spending, which could affect major market indices. Strategies that go against the S&P 500, like buying put options, are becoming more appealing.
**Government Data Signals Weakening**
This pessimistic outlook matches the latest government data, particularly the August 2025 jobs report, which revealed hiring slowed to just 150,000 jobs. The unemployment rate also rose to 4.1%. This trend suggests that the job market’s strength—something we saw in 2023 and 2024—is finally weakening. We should expect trouble in sectors that rely heavily on a strong job market, like consumer discretionary retail.
While the job market faces challenges, consumer inflation expectations are still around 3%. The latest Consumer Price Index (CPI) for August 2025 showed a stubborn rate of 3.4%. This puts the Federal Reserve in a tough spot, as they must balance a weakening job market with persistent inflation. This situation raises the likelihood of market swings in the coming weeks.
This uncertainty suggests that we should view volatility as an investment opportunity. The VIX index has risen from the low teens to about 18 in the past month, and this trend is expected to continue. Investing in call options on the VIX or related ETFs could be a smart way to hedge or profit amid anticipated market upheaval.
Given the threat to spending, we are bracing for underperformance in the consumer discretionary sector (XLY). Strategies like buying puts or establishing put debit spreads on this ETF seem wise. On the other hand, we expect a shift toward safer investments. Defensive sectors like consumer staples (XLP) and utilities (XLU) could be more attractive for bullish call options.
This weakening job market significantly alters the outlook for future interest rates, even if the Federal Reserve maintains a tough public stance for now. The tight monetary policy we saw in 2023 and 2024 seems to be affecting the economy, increasing the chances of rate cuts in early 2026. Traders should consider options on interest rate futures to prepare for a more dovish policy direction.
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