The Asian trading session displayed limited activity, with confusion over last week’s private oil inventory survey. The initial API report indicated a 19 million barrel build, later corrected to an 839K increase. Official data will be released Wednesday morning U.S. time, while crude oil prices traded within a narrow range.

Tariffs on pharmaceuticals and semiconductors are set to initiate around August 1. Trump announced a trade deal with Vietnam and ongoing work on five to six trade agreements, expecting completion of two to three by August 1. Other tariffs will affect smaller countries with duties over 10%. Trump also critiqued Fed Chair Powell’s leadership as potentially dismissible.

Fed’s Wait And See Stance

Dallas Fed President Lorie Logan reaffirmed the “wait and see” stance on interest rates. Although holding rates steady, she mentioned possible rate cuts if inflation drops and the labour market weakens. Businesses are cautious about passing on tariff costs, and the Fed will monitor data into autumn.

Major FX pairs saw limited range activity, while U.S. Treasury yields remained elevated. ETH/USD reached a 5-month high before Trump secured votes for the GENIUS Act, bolstering optimism and demand in the Ethereum ecosystem.

Based on the recent news, we see the impending August 1 tariff deadline as a clear signal to anticipate rising market volatility. Historically, the 2018-2019 trade disputes saw the VIX, a key measure of stock market fear, spike by over 40% following similar tariff announcements. We believe buying options that profit from increased price swings in major indices is a prudent strategy for the coming weeks.

Market Opportunities And Strategies

The commentary from Logan suggests the central bank is on hold, creating a window of opportunity in interest rate derivatives. With the CME FedWatch Tool currently showing a 35% chance of a rate cut by November, we find value in options on Treasury futures that expire in the late autumn. This allows us to position for a potential policy shift once the Fed has more data on inflation and the labor market.

The former president’s focus on specific trade deals and sectors provides targeted opportunities. With Vietnam’s exports to the U.S. already up 14% year-over-year, options on currency ETFs sensitive to Asian trade flows could be attractive. Furthermore, given that the U.S. imported over $60 billion in semiconductors last year, we are looking at puts and calls on semiconductor ETFs to trade the expected turbulence from new duties.

In the energy market, the confusion around oil inventories creates a short-term trading setup. The official government report on Wednesday is now a major catalyst that will likely resolve the conflicting private survey data and cause a significant price move. We view this as an ideal scenario for a straddle option strategy on crude, which profits from a large move in either direction.

The positive legislative momentum for digital assets is a powerful tailwind for the Ethereum ecosystem. With ETH/USD hitting a new high, we are looking to use call options to capitalize on further upside potential driven by growing regulatory clarity. This mirrors the rally in Bitcoin that followed the approval of spot ETFs, where prices surged over 60% in the subsequent months.

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