Australia’s manufacturing sector grew quickly in August. The S&P Global Manufacturing PMI rose to 53.0, its highest level since September 2022. Production increased at its fastest rate since April 2022, and new orders grew at the quickest pace in almost three years. The PMI improved from 51.3 in July, marking the best performance since September 2022. Both production and new orders showed strong growth, and exports also grew for the first time since May. Employment increased for the sixth consecutive month as manufacturers hired more workers to handle rising workloads.

Inventory Levels and Business Confidence

Companies increased their inventory levels at the fastest rate in over three years to prepare for supply delays. Business confidence reached its highest point since February 2022, fueled by optimism about new products and economic conditions. Price increases were modest, with only slight changes in costs for inputs and outputs. The PMI data doesn’t usually affect markets much, and the AUD/USD exchange rate has remained steady at about 0.6543. The strong manufacturing data, with the PMI now at its highest since September 2022, suggests a strong domestic economy. However, the Australian dollar remains slow, hovering around 0.6543, because this positive local news is being overshadowed. This indicates that external factors are currently more influential on the currency. Even as production and new orders rise, the report highlights low price pressures, which is important for our outlook. With Australia’s latest quarterly CPI showing a manageable 3.2% in July 2025, the Reserve Bank of Australia has little reason to raise interest rates from their current level of 4.35%. This lack of pressure from the RBA is likely to limit any significant gains for the Aussie dollar in the short term.

Global Factors and Currency Implications

We need to consider the strength of the US dollar, which remains strong. Recent US jobs data showed a solid increase of over 215,000 positions, while US core inflation remains high at around 3.4%, pushing the Federal Reserve towards a more aggressive stance. This interest rate difference between the US and Australia continues to drag the AUD/USD exchange rate down. Additionally, we are noticing signs of weakness in China’s economy, an important market for Australian exports. China’s manufacturing PMI barely remained in growth territory at 50.2 last month, contributing to a drop in iron ore prices to about $105 per tonne. This reduced demand for key commodities is putting pressure on the Australian dollar, countering some of the positive domestic news. For derivative traders, the clash between strong local data and tough global challenges suggests that the AUD/USD pair may stay within a certain range. Implied volatility on options might present a selling opportunity since the currency may struggle to break out of its recent 0.6450-0.6600 channel. Selling strangles could be a useful strategy if this sideways movement continues. Historically, from 2023 and 2024, the 0.6650 level has acted as a significant barrier for the AUD/USD. We might consider buying longer-dated, out-of-the-money call options as a cost-effective way to prepare for a potential breakout. This strategy would be beneficial if US economic data suddenly weakens, allowing Australia’s solid fundamentals to finally lift the currency. Create your live VT Markets account and start trading now.

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New Zealand Building Permits Overview

In July 2025, New Zealand’s building permits rose by 5.4% compared to the previous month, bouncing back from a 6.0% decline in June. Compared to last year, building consents saw a small decrease of 0.1%. These numbers can change often because multi-unit approvals impact monthly totals. Meanwhile, the NZD/USD exchange rate remains steady at about 0.5895. Prime Minister Luxon is set to announce a new Governor for the Reserve Bank of New Zealand soon, and he mentioned there are several candidates in the running. The building permits in July increased by 5.4%, recovering from a 6.0% drop in June. The year-over-year change is nearly flat at -0.1%, indicating a lack of real growth in the construction sector. This kind of fluctuation is common in these reports and does not alter our broader view of a soft economy.

New Zealand Economic Context

This weak construction data aligns with the overall economic situation. New Zealand entered a technical recession earlier in 2025, experiencing two consecutive quarters of negative GDP growth. The Reserve Bank of New Zealand has kept the official cash rate high at 5.50% for over a year to combat inflation, impacting economic activity across the board. A key event to watch in the coming weeks is the Prime Minister’s announcement of a new RBNZ Governor. This could create significant uncertainty, as a more aggressive or accommodating appointment could change future interest rate trends. Currently, the market anticipates rate cuts in early 2026, but a new governor could shift this expectation. Considering this uncertainty, it may be wise to focus on strategies that benefit from potential volatility, rather than trying to predict market direction. For instance, buying NZD/USD options like straddles that expire in October 2025 could be a smart way to prepare for significant market movement once the new governor’s identity and policy approach are known. Historically, we’ve seen implied volatility increase in the lead-up to major central bank announcements. Create your live VT Markets account and start trading now.

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U.S. futures trading is active through Globex, with Emini S&P and Nasdaq showing minor gains. However, trading will pause for Labor Day on Monday, September 1. U.S. stock exchanges and bond trading will be closed in line with SIFMA’s holiday guidelines. SIFMA’s recommendations impact U.S. dollar-denominated government securities and various financial instruments. FX desks may be closed or operating with limited activity. Canada will also observe the holiday, leading to a quiet North American market.

CME Futures Schedule

CME futures follow a Central Time schedule. Equity products opened at 5:00 PM on Sunday, August 31, and will stop trading at 12:00 PM on Monday, then resume at 5:00 PM. Cryptocurrency trades similarly, closing at 4:00 PM and reopening at 5:00 PM. Interest rate products will also stop at 12:00 PM and resume at 5:00 PM on Monday. All products will return to normal hours on Tuesday, September 2. With the U.S. Labor Day holiday on Monday, September 1, trading conditions are expected to be very light. The session will be brief, with Globex halting for equities and interest rates at 12:00 PM CT. This low liquidity can lead to unusual price swings, so caution is advised with new trades. When traders return on Tuesday, we expect trading volume to rise as the summer trading period ends. This uptick in market activity often sets the tone for the remainder of the year, signaling a shift away from the lower-volume trends of August. Historically, September is the weakest month for the S&P 500. Data shows an average decline of about 0.7% for the index during this month since 1950. Given this trend, it might be smart to adopt a more defensive stance in our equity derivative strategies.

Market Volatility and Economic Indicators

This historical weakness often coincides with increased market volatility. The CBOE Volatility Index, or VIX, tends to rise in September and October after reaching summer lows. As of late August 2025, the VIX has been around the 14 mark, but that could change quickly. Key economic data will shape the market narrative in the upcoming weeks. The August jobs report, released just before the holiday, showed an unexpected gain of 210,000 jobs, which keeps inflation concerns in play. Upcoming events like the Consumer Price Index (CPI) report and the Federal Reserve’s meeting on September 17th are critical for the market. Given this context, we should review strategies to safeguard against potential downturns or benefit from rising volatility. This might involve purchasing put options on major indices as a hedge against market drops or buying VIX call options to speculate on increased market uncertainty. Create your live VT Markets account and start trading now.

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Swiss gold refiners are against moving refining operations to the United States, believing that the current export surpluses driven by tariffs are only temporary. The Swiss government is trying to persuade President Donald Trump to lower the 39% tariff on Swiss goods, as it has negatively affected businesses and the economy. Christoph Wild, president of the Swiss Association of Precious Metals Producers and Traders, warns against making hasty choices. The recent increases in gold exports to the US in late 2024 and early 2025 are seen as unusual. Traders have been shipping in advance due to possible tariffs.

The Role of Switzerland in Gold Refining

Switzerland plays a vital role in gold refining, which is essential to its trade. When exporting gold to the US, 400-ounce London bars must be changed into smaller 1-kilo or 100-ounce bars for the Comex exchange. Christoph Wild believes that expanding refining in the US offers limited benefits. The ongoing issue with US tariffs and Swiss refining capacity could lead to price fluctuations and trading opportunities in gold derivatives. If Swiss refiners do not set up facilities in the US, there might be a supply bottleneck for deliverable gold bars. This could cause the prices of futures contracts in New York to disconnect from gold’s spot price in London. Traders should keep a close eye on the difference between COMEX futures and the London spot price, as this gap widened significantly earlier this year. In the first quarter of 2025, CME Group data showed the spread, known as the Exchange for Physical (EFP), briefly went over $60. This mirrored the supply disruptions of 2020. Renewed tensions or logistical challenges could make it profitable to hold long futures positions against short spot positions.

Gold Volatility and Trade Strategies

The political nature of tariff discussions means gold volatility is likely to remain high in the coming weeks. The CBOE Gold Volatility Index (GVZ) has averaged around 17 this year, notably higher than the sub-14 average throughout much of 2023. This environment makes options strategies like straddles, which profit from significant price changes, especially relevant. Data from the Swiss Federal Customs Administration backs up refiners’ claims that the late 2024 export surge was temporary. After peaking at over 80 tonnes in December 2024, Swiss gold exports to the US dropped to an average of only 25 tonnes per month through summer 2025. This return to normal levels means that any new disruption could significantly affect the US market. For now, it’s crucial to stay alert, as the underlying issues in the supply chain persist. Traders should be prepared to respond to any updates regarding US-Swiss tariff negotiations, as the market may be underestimating the risk of a supply shortage. The physical conversion of 400-ounce bars continues to be a key point of vulnerability. Create your live VT Markets account and start trading now.

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**Economic Growth and Inflation Stability** Rehn highlights the complicated nature of economic challenges in the euro area and the uncertainty around inflation. This situation requires flexibility in economic decision-making. The Governing Council will not stick to a set interest rate plan and will adjust based on the latest data at each meeting. Economic growth in the euro area has remained steady, and inflation has stabilized, but it’s still essential to stay alert. The European Central Bank (ECB) is expected to keep interest rates steady at 2% during its meeting on September 10 and 11, after maintaining rates in July. With the ECB likely to hold the key interest rate at 2% in September, we anticipate that near-term fluctuations in interest rate derivatives will remain low. This environment is more favorable for setting up positions for future moves rather than seeking immediate profits. Traders should pay attention to any shifts in strategy, as the current stability may not continue. Concerns about potential downside risks to inflation are important for market trends. Recent data shows the August inflation flash estimate at 2.1%, slightly below expectations and lower than the previous month. As a result, we observe interest rate swaps for early 2026 starting to reflect a higher chance of a rate cut. **The Euro’s Impact on Inflation** The strengthening euro, now around 1.15 against the dollar, plays a significant role in controlling inflation. However, any indication from the ECB about possible future rate cuts could stop the euro’s rise. Thus, options traders might consider strategies that benefit from the euro trading within a range or potentially weakening in the coming months. This approach of evaluating rates “meeting-by-meeting” marks a clear shift from the predictable rate hikes seen in 2022 and 2023. The growing uncertainty about the ECB’s direction after September suggests that investing in longer-term volatility may be a wise strategy. Without a set route, new economic data will have a greater impact on market expectations. Lower energy prices are also supporting the trend of decreasing inflation, with Brent crude dropping to around $75 a barrel from over $85 earlier this year. This allows the central bank to keep rates steady or even consider easing monetary policy if growth slows down. Such trends make unexpected inflation rises less likely, supporting expectations for lower future rates. Create your live VT Markets account and start trading now.

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In August, China’s housing slump worsened as property sales fell for the sixth month in a row, with prices also dropping. This decline continues despite recent easing measures in Beijing and Shanghai. Analysts predict more policy changes, with new initiatives expected in September. Data from China Real Estate Information Corp. shows that new home sales among the top 100 developers hit 207 billion yuan ($29 billion), a 17.6% decline from last year. This marks a continuation of the downward trend, which saw sales drop by 24% in July.

The Ongoing Downturn

The housing market has been struggling for five years, and the downturn has intensified since the second quarter. Prices have fallen, reducing the impact of last year’s stimulus and raising concerns about deflation. While Beijing and Shanghai relaxed some home-buying rules in August, analysts noted the effects were only slightly positive. Media reports suggest that authorities might roll out more strategies in September, potentially including faster urban renewal projects. New home sales in China are down 17.6% compared to last year, signaling continued weakness in the industrial metals market. The property sector heavily consumes steel, and this extended slump, which we’ve tracked since early 2020, is diminishing demand. In the coming weeks, we plan to respond by looking at put options on major iron ore producers. Iron ore futures on the Singapore Exchange have already fallen nearly 10% in August 2025 due to weak demand. Historically, stimulus announcements from Beijing, such as those expected in September, can temporarily boost prices, but the fundamentals usually bring them back down. This presents an opportunity to short futures contracts or buy puts on related ETFs after any rally driven by policy changes.

Market Volatility

The Australian dollar, which serves as an indicator of Chinese economic health, has dropped over 2% against the U.S. dollar in the past month. We expect this trend to continue as long as China’s property situation remains poor. Therefore, we are considering short positions on the AUD/USD currency pair, as Australia’s export outlook weakens with declining demand for commodities. The uncertainty around when and how effective the next stimulus package will be is likely to increase market volatility. The Hang Seng China Enterprises Index, which is heavily invested in financial and property firms, will be particularly sensitive to this news. A practical strategy could be to buy straddles on China-focused ETFs, allowing us to benefit from expected price fluctuations without taking a specific directional bet. Create your live VT Markets account and start trading now.

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China published its Manufacturing PMI for August 2025 over the weekend, reporting a figure of 49.4, which is slightly lower than the expected 49.5. The Services PMI met expectations at 50.3. Today, attention turns to the private manufacturing PMI survey from S&P Global, which is expected to show further contraction.

US Tariffs and Economic Calendar

In other news, a US Federal Appeals court has ruled that most of Trump’s tariffs are illegal, although the legal battle is still ongoing. This coincides with today’s economic calendar in Asia, which features several important events and consensus expectations. Monday’s agenda includes updates from the investingLive economic data calendar, with all times shown in GMT. The calendar outlines past results and consensus expectations for economic indicators from the previous month or quarter. A general risk warning notes the high-risk nature of foreign exchange trading, highlighting the potential to lose more than the initial investment. Investors are encouraged to think about their investment goals and seek independent advice. investingLive clarifies it does not provide investment advice and is not responsible for any potential losses from reliance on its content. With China’s manufacturing data dipping into contraction at 49.4, we should expect ongoing weakness in commodity-linked assets. For derivative traders, this means considering buying put options on the Australian Dollar or selling copper futures. Historically, when China’s PMI stays below 50 for consecutive months, industrial metal prices often drop by 5-8% in the following quarter.

Impact of Tariff News

The US court ruling against Trump’s tariffs is a significant development that introduces uncertainty into the market. Although the legal battle isn’t over, the possibility of tariffs being lifted could lower inflation and increase corporate profits for importers. We recommend buying call options on retail sector ETFs, as these companies would benefit immediately from reduced import costs. This tariff news complicates the outlook for the US dollar and Fed policy. If tariffs are ultimately eliminated, it could alleviate inflation, granting the Fed more flexibility and potentially impacting the dollar negatively. Based on analysis from the early 2020s, these tariffs added about 0.5% to overall inflation, so their removal would be significant for bond markets and currency traders. The political pressure on Fed Chair Powell, combined with the critical tariff news, signals that volatility may rise in the coming weeks. We suggest buying protection through S&P 500 put options or purchasing VIX call options to hedge existing long positions. This strategy allows us to stay in the market while managing downside risks from sudden policy changes or legal outcomes. With the important US Non-Farm Payrolls report set for release this week, expect sharp movements, especially in currency pairs like USD/JPY. The mix of weak global manufacturing data from China and possible policy changes in the US creates a challenging environment for determining a clear direction. Therefore, using options strategies like straddles on major indices to trade the expected surge in volatility around the data release may be more effective than making a straightforward directional bet. Create your live VT Markets account and start trading now.

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Monday morning market conditions are marked by low trading volume as Asian centers open, which can cause price swings. The foreign exchange rates are mostly stable compared to Friday’s closing. Here are the latest rates: – EUR/USD: 1.1694 – USD/JPY: 147.09 – GBP/USD: 1.3503 – USD/CHF: 0.7993 – USD/CAD: 1.3737 – AUD/USD: 0.6545 – NZD/USD: 0.5897

Economic Agenda Highlights

Today’s economic highlights include China’s manufacturing PMI, reported at 49.4, slightly below the expected 49.5. The services PMI is in line with expectations at 50.3. Recently, a US Federal Appeals Court ruled that many tariffs imposed by Trump were unlawful. Additionally, Alibaba has announced plans to develop new AI chips. This week, market focus will also be on US non-farm payroll numbers, ISM PMIs, Eurozone’s Flash CPI, UK retail sales, and Canadian employment stats. As we enter the first week of September 2025, thin market liquidity increases the chance for larger price movements on minor news. The key events this week, especially US jobs data and manufacturing reports, will be crucial. Derivative traders should remain cautious with early week positions until trading volume increases. Fed Chair Powell is under intense pressure, especially with continued criticism from Trump. Recent core PCE inflation data was as expected, but the anticipated Non-Farm Payrolls (NFP) report has captured the market’s full attention. The last two NFP reports in mid-2025 fell short of expectations; if another weak report comes in, it could lead to changes in policy and increased volatility in interest rate futures. There’s clear evidence of a slowdown in China, with the official manufacturing PMI for August at 49.4, indicating contraction. The private Caixin Manufacturing PMI also dropped to 49.2, confirming official data and marking the weakest reading in seven months. This could negatively affect commodity-linked currencies, suggesting that short positions on the Australian dollar through options might be a worthwhile strategy.

The Impact of US Jobs Data

The US dollar is experiencing mixed pressures, making it tricky to trade. Weakness in China usually supports the dollar as a safe-haven currency. However, the recent court ruling about the illegality of most of Trump’s tariffs might weaken a key source of dollar strength from the late 2010s and early 2020s. With USD/JPY at 147.09, this currency pair is highly sensitive to the upcoming US jobs data and any changes in interest rate expectations. We’ve seen how quickly this pair can move during the Bank of Japan’s interventions in 2022 and 2023, so buying out-of-the-money puts could provide an inexpensive way to hedge against a sharp decline. Meanwhile, with EUR/USD at 1.1694, upcoming Eurozone inflation figures will be essential to determine if it can break above the major resistance level tested in late 2023. The political landscape introduces additional risks that are hard to predict. The tariff ruling and ongoing public criticism of the Fed increase headline risk. In this environment, using derivatives to manage risk is more sensible than relying solely on basic stop-loss orders, which could be easily triggered by a tweet or news flash. Create your live VT Markets account and start trading now.

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Next week, we will focus on important economic reports, mainly the US Non-Farm Payroll (NFP) report along with the ISM Services and Manufacturing PMI. We’ll also keep an eye on significant data from Canada about jobs, the Eurozone Flash CPI, UK Retail Sales, and Australian GDP. Monday is US Labor Day. We will watch the South Korean Trade Balance (August), the final Chinese Caixin Manufacturing PMI, and PMI data from the Eurozone, the UK, and the US. New Zealand will publish its Terms of Trade for Q2 as well.

Econometric Highlights

On Tuesday, we will see the South Korean CPI (August), the Eurozone Flash HICP (August), and the US ISM Manufacturing PMI (August). The Eurozone Flash HICP is expected to remain steady at 2.0% year-over-year, with minor changes expected in the services and headline numbers. Wednesday will feature announcements from the NBP, Australia’s GDP figures for Q2, US ADP National Employment for August, and PMI reports from China, the Eurozone, the UK, and the US. We’ll also get data on US Durable Goods orders for July. Thursday will bring updates on Swedish CPIF (August) and US ISM Services PMI (August). Sweden will look for policy decisions based on how the CPIF aligns with the Riksbank’s outlook. On Friday, we will focus on UK Retail Sales (August), Eurozone GDP (Q2), the US Jobs Report (August), and the Canadian Jobs Report (August). The US jobs report is expected to show an addition of 75,000 non-farm payrolls and a slight increase in unemployment, which could impact Fed policy decisions. The Canadian jobs data will inform the Bank of Canada’s rate plans.

Market Volatility Factors

With the US jobs report set for Friday, we expect notable volatility in Treasury futures and the dollar index. The market has already factored in an 85% likelihood of a Fed rate cut this September, especially after Powell’s recent comments about the job market. The latest jobless claims figure of 245,000 supports expectations for a weak jobs report, meaning any positive surprise could greatly impact interest rate markets. The ISM manufacturing and services reports on Tuesday and Thursday will be critical for measuring the US economy’s momentum. The S&P flash reading showed a strong rebound in manufacturing, a significant change from trends observed in 2024. If both ISM reports confirm this strength, it could lessen the market’s certainty about a September rate cut and prompt a reevaluation of Fed Funds futures. We are closely monitoring Tuesday’s Eurozone inflation data, as it could influence the European Central Bank’s decisions. While headline inflation is expected to remain around 2.0%, any weakness may intensify calls for a rate cut, especially with the Euro gaining strength. Options on Euro Stoxx 50 futures could serve as a hedge or a way to speculate on policy outcomes; a dovish signal would likely uplift equities. Wednesday’s Australian GDP report is expected to show an economy slowing down, consistent with the Reserve Bank of Australia’s cautious stance. Last month, retail sales only rose by 0.1%, setting a low expectation for this announcement. Thus, continued weakness in the Australian dollar is anticipated, but traders should be ready for a sharp recovery if the GDP figure exceeds expectations. Friday’s Canadian jobs report and UK retail sales data will be important for understanding domestic conditions but are likely to be overshadowed by the US NFP release. The current softness in Canada’s labor market, evident from a widening trade deficit, could limit the Canadian dollar’s potential. Similarly, declining UK consumer confidence poses risks for sterling, making pairs like EUR/GBP intriguing for relative value. Create your live VT Markets account and start trading now.

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The official PMIs for China in August 2025 show a manufacturing PMI of 49.4. This is slightly below the expected 49.5 and the previous month’s 49.3. This is the fifth month in a row that the manufacturing PMI has been below 50, indicating a continued contraction. Low domestic demand is a major factor in this ongoing trend. The non-manufacturing PMI, which covers services and construction, matched expectations at 50.3, up from July’s 50.1. The composite PMI improved to 50.5 from the previous 50.2. Unofficial Caixin/S&P manufacturing and non-manufacturing PMIs will be released on September 1st and 3rd, respectively.

Tariff Developments

In other news, a U.S. Federal Appeals Court ruled that many of Trump’s tariffs on China are illegal, although legal proceedings are still active. This could affect China’s approach to tariffs, but the outcome is still uncertain. The latest data shows a mixed picture of China’s economy, suggesting a cautious trading strategy. The manufacturing sector is still struggling, marking its fifth straight month of contraction. This slowdown has already caused iron ore futures in Singapore to fall below $100 a tonne, a level we last saw consistently in late 2023. Due to this industrial weakness, it may be wise to maintain or create short positions on commodity-linked currencies like the Australian dollar. The AUD/USD pair has had difficulty staying above 0.6500 during August, and this manufacturing miss offers little reason for change. Strategies like buying puts on AUD/USD could help hedge against more negative data from China’s industrial sector.

Economic Divergence

On the other hand, the services sector is showing some strength, remaining in expansion territory and even ticking up slightly. This suggests that targeted efforts, such as the People’s Bank of China’s recent 10-basis-point cut to the one-year loan prime rate, are helping boost domestic consumption. This divergence could benefit specific Chinese consumer-focused stocks, making long calls on ETFs like KWEB or CHIQ an interesting pairing against short industrial exposure. The yuan’s currency market is likely to remain volatile. Weak manufacturing data suggests a weaker CNH, but steady services data may cause authorities to hesitate before aggressively devaluing the currency. We observed a similar situation in 2024, which led to range-bound trading in USD/CNH, making strategies like selling strangles potentially effective if this pattern continues. The recent U.S. court ruling against Trump-era tariffs adds another layer of complexity. Although it’s not a final ruling, it removes a significant long-term challenge and could stabilize market sentiment. We will closely monitor the Caixin manufacturing PMI on Monday for insights from the private sector. A similar weak reading could overshadow the positive tariff news and lead to further declines in global risk assets. Create your live VT Markets account and start trading now.

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