In May, Canada’s retail sales decreased by 1.1% month-on-month, meeting expectations. This decline reflects a pattern consistent with market predictions.<\/p>\n
Elsewhere, the European Central Bank (ECB) kept its Deposit Facility Rate steady at 2.00%. Following this decision, the euro remains weak against the US dollar, while gold prices fell towards the $3,360 mark amid a stronger dollar and rising US Treasury yields.<\/p>\n
In the UK, the GBP\/USD pair dropped to the mid-1.3500s after advancing over three consecutive days, influenced by a stronger dollar. Simultaneously, the S&P Global PMIs for July suggest continued strength in the US private-sector economy, with expectations of stable Federal Reserve interest rates at the month’s end.<\/p>\n
President Trump’s second term has been marked by radical policy changes and a focus on \u201cAmerica First\u201d priorities. Despite these shifts, markets have demonstrated resilience in response to his administration’s actions.<\/p>\n
Given the strength in the US private sector, we believe traders should focus on strategies that benefit from American economic outperformance. The latest S&P Global Flash US Composite PMI, which recently hit a 25-month high of 54.4, supports this view. We see value in using call options on major US indices to participate in this upward trend.<\/p>\n
The decline in Canadian retail sales, combined with recent data showing Canada’s annual inflation has cooled to 2.7%, suggests a growing policy divergence with the United States. This situation makes a compelling case for using derivatives that favor the US dollar against its Canadian counterpart. We are therefore considering put options on the Canadian dollar or long positions in USD\/CAD futures.<\/p>\n
With the European Central Bank holding rates steady and markets pricing in a high probability of a rate cut later this year, the euro should remain under pressure. The drop in the British pound further highlights broad-based dollar strength. Consequently, we feel that buying put options on the EUR\/USD and GBP\/USD pairs is a logical approach for the coming weeks.<\/p>\n
Gold\u2019s weakness is a direct result of the strong dollar and rising bond yields, with the US 10-year Treasury yield holding firmly above 4.3%. This environment is likely to continue suppressing prices for non-yielding assets. We see this as an opportunity to purchase put options on gold futures or related ETFs.<\/p>\n
During his previous term, Mr. Trump\u2019s policy announcements often caused sharp, short-term spikes in market volatility, as measured by the VIX index. Historical data shows these spikes created profitable opportunities for those positioned correctly. To guard against similar policy-driven turbulence, we recommend allocating a small portion of a portfolio to long volatility instruments.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canada’s retail sales fell, ECB held rates steady, dollar strengthened, gold dipped, and markets stayed resilient.<\/p>\n","protected":false},"author":62,"featured_media":17026,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-27210","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t