The economic calendar is empty for Asia on Monday, 28 July 2025. No major economic data releases are scheduled for the session.
Earlier developments include the opening levels for the day, with the Euro rising due to a new US/EU ‘framework’ trade deal. The agreement entails a 15% tariff rate and the EU agreeing to purchase energy from the US.
Us and China Meeting
The US and China are set to meet in Stockholm on Monday, with a 90-day extension anticipated. This meeting might influence future economic agreements between the two nations.
The FX market update indicates that, as typical on a Monday morning, market liquidity is low. Prices may fluctuate significantly until more Asian markets begin their trading day.
Based on the new framework deal, we anticipate a decrease in overall market volatility. The resolution of a key trade uncertainty should pressure instruments like the VIX index, which historically has fallen over 15% in the months following major international agreements. This suggests selling volatility through strategies like short straddles on major indices could be profitable.
The specific terms of the deal, particularly the European Union’s commitment to purchase American energy, should provide sustained support for the euro. This is reminiscent of the post-2022 period when U.S. LNG exports to Europe surged by over 140%, fundamentally altering energy flows and currency valuations. We see value in positioning for further EUR/USD strength, possibly using call options to limit downside risk while capturing potential gains.
Stockholm Meeting Implications
Regarding the Stockholm meeting, an expected 90-day extension in U.S.-China talks is merely a delay, not a solution. This creates an opportunity for calendar spread trades, as we saw repeatedly during the 2018-2019 trade disputes where short-term volatility would collapse on truce news, only to spike as the new deadline approached. We believe selling front-month volatility on China-sensitive assets while buying deferred contracts is a prudent approach.
With a bare economic calendar this session, market direction will be dictated purely by sentiment flowing from this news. The thin liquidity conditions noted earlier amplify the risk of exaggerated price swings on any follow-up headlines. We advise entering positions with caution until trading volumes build as more global centers come online.
