Risk appetite has strengthened after comments from US Treasury Secretary Scott Bessent suggested a new US–Iran agreement could be near, a development markets read as lowering the chance of Middle East supply disruptions. Oil prices have fallen in response, while global equities have extended their advance as sentiment improved. The S&P 500 pushed to a new all-time high, trading comfortably above 7,600, and other major indices have also firmed. The Japanese Yen remains weak, with USD/JPY still at levels where market participants stay alert to potential action by Japanese authorities.
Cryptocurrencies have lagged the broader risk-on move, with Bitcoin and other major altcoins under pressure even as equities set records, implying flows are favouring traditional markets. The calendar includes the New Zealand unemployment rate on Wednesday, 05th Aug at 00:45 CET, followed by the US NFP report on Friday, 07th Aug at 14:30 CET alongside Canada’s unemployment rate at the same time. Current tendencies point to equities higher, the USD softer, oil weaker, and both gold and silver firmer, while crypto remains sideways.
Derivative Strategies in a Risk-On Market
We recommend that derivative traders lean heavily into the current risk-on momentum as global equities surge to historic heights. With the S&P 500 recently breaking past the historic 7,600 mark—representing a massive gain from its 2024 and 2025 levels—the bullish trend is firmly established. For those holding long equity derivatives, we suggest trailing stop-losses upward to lock in profits while keeping exposure open to further gains.
The drop in oil prices, driven by hopes of a US-Iran deal mentioned by Treasury Secretary Scott Bessent, offers active trading opportunities. We advise derivative traders to look at short positions or put options on crude oil as Brent crude tests lower support levels near $70. However, we must remain vigilant because any sudden breakdown in these diplomatic talks could trigger a sharp, volatile spike in energy commodities.
In the currency markets, the weakening US Dollar and a fragile Japanese Yen demand cautious positioning. We believe traders should watch the USD/JPY pair closely, as it trades near critical levels where Japanese authorities have historically stepped in with massive multi-billion dollar interventions. Utilizing tight stop-losses or knock-out options can help manage the extreme volatility that typically follows official currency interventions.
The upcoming macroeconomic calendar is packed with high-impact data, starting with New Zealand’s unemployment rate today and the US Non-Farm Payrolls on Friday. Historically, US payroll releases create massive swings, with market consensus expecting around 150,000 to 180,000 new jobs this month. We suggest reducing leverage or hedging dollar exposure ahead of Friday’s 14:30 CET release to avoid getting caught in sudden spread expansions.
Divergences in Crypto and Precious Metals
Surprisingly, we are seeing cryptocurrencies trade sideways, showing that capital is currently favoring traditional assets over digital ones. Meanwhile, gold and silver are maintaining positive momentum, acting as steady hedges despite the broader risk-on environment. Traders can look to exploit this divergence by long-positioning precious metals while staying neutral on Bitcoin until it breaks out of its current range.
