Insights 
VT 
The Asia-Pacific session was largely uneventful, with little movement in major asset classes. China and Kazakhstan aim to enhance trade ties, while EURUSD may hit 1.20 following USD weakness.
The Russian central bank is open to adjusting rates due to inflation. GBP and EUR pairs might see volatility ahead of PMI data, and gold futures are down as of August 21, 2025. The UN calls for a Gaza ceasefire, and Meta has paused AI hiring after restructuring.
Current Financial Partnerships
The PBOC set a stronger USD/CNY mid-point today at 7.1287, beating estimates. CME and FanDuel are partnering to offer event contracts on financial markets. Nomura is short on USD as the Jackson Hole event approaches, and Japan’s flash manufacturing PMI rose to 49.9. PBOC is expected to set the USD/CNY rate at 7.1748. Nordea predicts USDNOK to fall and EURNOK to rise.
The session remained steady with limited market drivers, as past Fed events didn’t impact markets strongly. AUD is the weakest in the session, with EUR leading. ASX200 rose 0.68%, while Nikkei dipped 0.49%. Oil increased by 0.35%, and gold fell by 0.26%.
Focus will shift to EU, UK, and US flash PMI data and US claims data, before the Jackson Hole symposium where Powell’s speech is awaited.
Market Uncertainty Before Jackson Hole
The market is quiet now, but we are holding our breath for the Jackson Hole symposium. The last Fed minutes are stale, as they don’t account for the big revisions we saw in the labor market data. This uncertainty means we should consider buying volatility, as Powell’s speech could easily trigger a large market move.
We’ve seen this play out before, like in August 2022 when Powell’s short, hawkish speech sent the S&P 500 tumbling over 3% in a single day. Buying straddles on major indices like the SPX or currency pairs like USD/JPY could be a smart way to position for a similar sharp reaction. This strategy profits from a big move, regardless of the direction.
There’s a strong belief that the US dollar is set to weaken, with some analysts targeting 1.20 for the EUR/USD pair. This view is supported by recent Eurozone CPI data for July 2025 showing core inflation holding firm at 2.8%, suggesting the ECB may need to stay hawkish longer than the Fed. We could look at buying EUR/USD call options to capitalize on this potential upward trend.
We are watching China closely after the PBOC set a much stronger-than-expected reference rate for the yuan today. This move comes after China’s official manufacturing PMI for July 2025 registered at 49.5, indicating a persistent slowdown that authorities are trying to manage. The Australian dollar is already the weakest performer today, so we could use put options on the AUD/USD as a way to trade this regional uncertainty.
In the immediate term, all eyes are on the flash PMI data from the UK and Europe. We expect implied volatility to climb heading into these releases, just as it did before the sharp drop in sterling after the disappointing PMI figures back in late 2024. Buying short-dated options on GBP/USD offers a way to play the immediate price swing following the announcement.
