Mary Daly, President of the Federal Reserve Bank of San Francisco, is set to address an audience, having recently expressed openness to a rate cut. Daly mentioned that two Federal Open Market Committee (FOMC) rate cuts could be suitable for 2025.

High priority data items are on today’s agenda, though the Australian trade balance holds less current relevance. More attention is on the Reserve Bank of New Zealand (RBNZ) inflation expectations data; a rate cut from them is anticipated on 20 August. This expectation is supported by recent New Zealand labour market data.

Economic Calendar Overview

Today’s economic calendar outlines several key data points. Times are mentioned in GMT, and the figures include both prior results and, where available, the median expected consensus.

Given the current date of August 6, 2025, the recent comments from the Federal Reserve are a major signal for us. When a key official like Mary Daly, who often reflects the Fed chair’s thinking, explicitly flags two potential rate cuts this year, we must take notice. This represents a significant dovish pivot from the central bank’s previous stance.

This shift is supported by recent economic figures, which show a clear trend of disinflation without a severe downturn. Core PCE, the Fed’s preferred inflation gauge, cooled to 2.5% in the latest reading for June 2025, moving closer to the 2% target. Furthermore, the July 2025 jobs report indicated a softening labor market, with payrolls growing by a modest 150,000 and unemployment ticking up to 4.1%.

Opportunities in Derivatives Trading

For derivatives traders, the path forward in the coming weeks involves positioning for lower interest rates in the U.S. This means looking at options and futures contracts that will gain value as the likelihood of a Fed rate cut increases. We should consider long positions in short-term interest rate futures, like those based on SOFR, as their prices will rise when yields fall.

This environment is also highly supportive of equity markets, as lower borrowing costs tend to boost corporate earnings and stock valuations. We can look to S&P 500 and Nasdaq 100 index call options to capitalize on potential upside. This setup is reminiscent of the market reaction in 2019 when the Fed pivoted from hiking to cutting rates, which ignited a significant rally in risk assets.

Separately, the situation in New Zealand presents an even more immediate opportunity ahead of the Reserve Bank of New Zealand’s meeting on August 20. The recent weak labor market data has cemented expectations for a rate cut. It’s now viewed as a near certainty.

The data backs this up, with New Zealand’s unemployment rate for the second quarter of 2025 jumping to 4.5% and quarterly CPI inflation falling to 3.8%. These figures give the RBNZ a clear runway to begin easing policy to support the slowing economy. The upcoming inflation expectations data is unlikely to change this trajectory.

This makes shorting the New Zealand dollar an attractive trade, especially as its central bank appears set to cut rates before many others. We can use FX options to position for a decline in the NZD against other currencies. For instance, buying NZD/USD puts could be an effective strategy to profit from this expected policy divergence.

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