Global markets were led by a sharp retreat in oil after three nights without US-Iran strikes, with September WTI down nearly 7.8% on the day after finishing a little more than 8.5% higher last week; it hit $93.50 on 23 July, eased to about $87.70 before the weekend and traded to slightly above $82, with the mid-point of the month\u2019s rally near $80.30. Lower crude helped pull bond yields down: the 10-year US Treasury yield fell four basis points to almost 4.63% and the two-year slipped three to 4.30%, while European benchmarks were mostly 4\u20137 bp lower and the UK 10-year gilt was down seven. Risk appetite improved as Europe\u2019s Stoxx 600 rose about 0.7% and US futures gained 1.0%\u20131.6%, while CXMT surged by more than 450% on its Shanghai debut; gold held above its 20-day moving average near $4070 after a 1.4% weekly rise, and silver followed last week\u2019s roughly 5% gain, briefly topping $60 before slipping to around $59. <\/p>\n\n
In FX, the euro traded within about $1.1365\u2013$1.1435, with option expiries of 1.3 bln euros at $1.1375 and nearly 1.5 bln euros at $1.1400; sterling rebounded from almost $1.3300 to near $1.3365, while USD\/CAD ranged around CAD1.4070\u20131.4115 and the Australian dollar tried to regain $0.7000 as options worth almost A$600 mln clustered near $0.7030. USD\/JPY eased through JPY163.35 but stayed close to last week\u2019s near-JPY164 40-year high as one-month implied volatility rose from about 5.9% to around 6.3%; USD\/CNH fell to around 6.7650 as the PBOC set CNY6.7911 versus 6.7939. Emerging markets were led last week by the Colombian peso (+1.3%), then the Brazilian real (almost +1%), rouble (+0.60%) and Mexican peso (nearly +0.4%); the rupee rose a little more than 0.7% to around INR95.7840, testing the 20-day average near 95.81, after inflows of around $32 bln cited from subsidised-rate measures. Data focus includes US durable goods after May\u2019s 4.5% drop, with Boeing orders 121 versus 27 and deliveries 64 versus 60; core orders are seen up 0.9% after 1.4%, while June\u2019s 1.5% monthly average in H1 2025 would slow to about 0.9% in H1 2026. US Q2 GDP is seen at 2.3% annualised versus 2.1% in Q1 and GDPNow at 1.7%; Mexico\u2019s trade surplus widened from almost $920 mln in Jan\u2013May 2025 to $5.77 bln in Jan\u2013May 2026 and Q2 GDP is forecast at 0.6% q\/q after -0.6% in Q1. Elsewhere, eurozone M3 grew 3.3% y\/y versus 3.0% in May, Germany\u2019s IFO business climate rose to 86.6, Japan\u2019s producer service prices eased to 3.2% from a revised 3.4%, and China\u2019s industrial profits rose 15.1% y\/y versus 21.1%.<\/p>\n\n
We should take advantage of the sharp drop in oil prices, which have fallen nearly 8% to around $82 a barrel, by positioning for further cooling in inflation expectations. Historically, a sudden weekly drop in crude of this magnitude tends to drag down ten-year Treasury yields by another 10 to 15 basis points in the subsequent weeks. We suggest buying short-term call options on US Treasury proxies to capture this yield decline, especially with the 10-year yield already slipping to 4.63%.<\/p>\n\n
With giant tech earnings like Microsoft, Meta, Apple, and AMD coming up this week, we expect heightened volatility in the equity options space. These four tech giants represent over 15% of the total S&P 500 market capitalization, and historical data shows their earnings weeks can swing the Nasdaq by an average of 2.5% in either direction. Implied volatility for tech-heavy indexes is currently underpricing this event risk, making long straddles or strangles on the QQQ attractive plays for us before Wednesday.<\/p>\n\n
In the currency markets, we should focus on the heavy option expiries pinning the euro near $1.1400. Today alone, nearly 2.8 billion euros in options expire between $1.1375 and $1.1400, which is keeping price action tightly contained. We recommend selling short-term straddles around the $1.1400 strike to collect premium, as the spot price is highly likely to remain anchored by these massive open-interest blocks.<\/p>\n\n
For the Japanese yen, we must prepare for potential central bank action as the currency hovers near JPY163.35, just below its 40-year low. Although the Bank of Japan is widely expected to stay on hold, historical interventions have triggered sudden 300-to-500 pip rallies in the yen within hours. With one-month implied volatility sitting at a relatively low 6.3%, buying out-of-the-money USD\/JPY put options offers us a cheap hedge against a sudden, aggressive rate hike or currency intervention. <\/p>\n\n
Finally, we should look at trading the Australian dollar as it struggles to hold the $0.7000 level. With A$600 million in options expiring at $0.7030 today, any breakout attempt is facing stiff technical resistance. We favor entering short-term limit orders to sell the Aussie near $0.7030, targeting a retracement back toward the $0.6960 support level.<\/p>\n\n\n\n