The S&P Global Composite PMI for the United States stood at 55.1 in July, surpassing expectations of 54.6. This data suggests a robust economic performance within the country for that month.
The EUR/USD experienced an upward movement, trading near the 1.1600 mark, influenced by a decrease in US Dollar traction. Similarly, GBP/USD reached daily highs beyond 1.3300, attributing this climb to changes in market dynamics.
Gold Market Movement
Gold maintained its upward trend, reaching approximately $3,380 per troy ounce. The commodity’s performance was linked to unclear movements in the US Dollar and varied US Treasury yields.
The DeFi market is gaining traction again, driven by increased Total Value Locked (TVL) and a growing user base. This interest is spurred by a shift in capital from Bitcoin to top layer-1 cryptocurrencies like Ethereum and Solana.
In the euro area, the economy showed unexpected resilience due to an EU-US agreement and Germany’s spending plans. Nevertheless, further softening in wage indicators may prompt a final rate cut by the ECB either later this year or early next year.
US Dollar and Inflation Outlook
The US economy is showing strong momentum with the July Composite PMI coming in at a hot 55.1. This was reinforced by last Friday’s jobs report, which added 215,000 jobs, beating expectations and pointing to continued economic strength. We believe this makes a near-term interest rate cut from the Federal Reserve very unlikely, which traders should factor into any US index positions.
Despite this strong data, we see the dollar losing ground, with the Euro pushing towards the 1.1600 level, a high not seen since late 2021. This suggests traders are pricing in other factors, perhaps looking ahead to next week’s crucial inflation data which will give a clearer picture. For now, options that bet on continued dollar weakness against the Euro and Pound, like long call spreads, could be attractive.
Gold is benefiting from this dollar softness and uncertainty, now trading around $3,380 an ounce. This continues the major rally that we saw beginning back in 2024, driven by persistent inflation and geopolitical instability. We think holding long positions or buying call options on gold miners makes sense in this environment.
Within digital assets, we’re seeing a clear risk-on shift as capital flows from Bitcoin into Ethereum and Solana. Total Value Locked in DeFi has surged past $250 billion, reflecting renewed confidence that began building late last year. This trend suggests that strategies favoring long positions on these top layer-1s over Bitcoin could outperform in the coming weeks.
Across the Atlantic, the Eurozone has been surprisingly resilient, but signs of cooling are emerging. Wage growth reportedly slowed in the second quarter, which strengthens the case for the European Central Bank to cut rates later this year. We see this as an opportunity to structure trades that would profit from a weaker Euro in the medium term, perhaps using put options for late 2025.
