US Federal Reserve Governor Michelle Bowman recently suggested cutting interest rates for the rest of 2025, pointing to issues in the labor market as more urgent than inflation worries. In other news, China’s Consumer Price Index (CPI) and Producer Price Index (PPI) figures for July were released. Nvidia and AMD will give 15% of their chip sales revenue from China to the US for export licenses. Although Japan’s market was closed for a holiday, US equity index futures showed slight increases. In the US, military preparations were observed for a possible deployment in Washington, while Japanese markets remained shut, leading to lower trading activity. The US dollar weakened a bit, and currency pairs traded within tight ranges. In Asia, stocks saw small increases: Australia’s S&P/ASX 200 rose by 0.28%, Hong Kong’s Hang Seng climbed by 0.26%, and the Shanghai Composite increased by 0.5%.

Cryptocurrency and Market Movements

Bitcoin (BTC/USD) has gone past $121K, and Ethereum (ETH/USD) hit its highest level since December 2021, but US bond trading remained limited. The news about Nvidia and AMD’s export tax agreement with the US government has gained more attention. The market is closely watching developments in trade and interest rate policies. With Governor Bowman now pushing for rate cuts at all remaining meetings this year, the market’s focus has shifted from inflation to the weakening labor market. This change suggests traders should prepare for lower short-term interest rates, possibly using options on SOFR futures. This dovish signal supports equity indices, making call options on the Nasdaq 100 and S&P 500 appealing. It’s important to recall the Fed’s tough battle with inflation throughout 2023 and 2024, keeping rates at high levels. That struggle appears to be over, but it has negatively impacted the job market, which is the Fed’s new major concern. With the US unemployment rate recently rising from below 4%, Bowman’s comments indicate the central bank’s tolerance for job losses has been reached.

Impact of Nvidia and AMD Agreement

Initially, the news about Nvidia and AMD sharing 15% of their China sales revenue with the US was expected to hurt tech stocks, but it hasn’t. Instead, Nasdaq futures rose in response, showing that hopes for lower interest rates are more critical to the market at this moment. This implies that implied volatility for these specific tech stocks may decrease, as a major political risk has been addressed. China’s economic data remains concerning, with stagnant consumer prices and declining producer prices reflecting weak demand. The failure of another property developer, China South City, highlights that the housing crisis continues. Ongoing weakness in China, our largest trading partner, could put pressure on the Australian dollar, especially since the Reserve Bank of Australia is also predicted to cut rates this week. The ongoing issues in China’s property market are part of a longer trend that started with the defaults of major developers like Evergrande in 2023. These recent deflationary numbers and developer collapses lend support to a long-term bearish outlook on the region’s industrial demand. Therefore, traders might see it as a chance to buy puts on currencies and commodities linked to Chinese growth. In the midst of these significant economic changes, geopolitical tensions and specific market stories are adding volatility. The ongoing conflict in Ukraine and rising tensions with Iran suggest that having some portfolio protection, such as VIX calls, is a wise choice. Meanwhile, the strong rally of Bitcoin and Ether, particularly Ether reaching its highest price since late 2021, shows that a separate bull market is thriving in the crypto space, rewarding strategies based on momentum. Create your live VT Markets account and start trading now.

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Financial Markets and Trade Dynamics

Financial markets are shifting, with some Chinese property developers going out of business. There are also worries about trade relations, as seen in the US’s cautious approach to tariffs and New Zealand Prime Minister Luxon’s comments on the need for relief. Foreign exchange trading is risky and can lead to big losses. It’s important for people to know their risk level and only invest money they can afford to lose. InvestingLive offers information but does not give personalized investment advice. Readers should analyze their own situations and think about the risks before making any financial decisions. As of August 11, 2025, there are clear signs for derivative traders in the weeks ahead. There’s a strong push for China to increase soybean orders, which is boosting agricultural commodities. Soybean futures (ZS) have already risen over 8% in the past month, with prices now above $17 per bushel—levels we haven’t seen since mid-2024. China’s economy continues to struggle, with another property developer going under, so caution is advised for industrial metals. This follows the trends from the early 2020s, including issues with companies like Evergrande, pointing to a long-term problem affecting global demand. Copper prices have fallen to around $8,200 per tonne, making shorting industrial commodities or currencies like the Australian dollar a smart strategy.

Impact of Global Events on Energy and Technology

In technology, a proposed 15% export tax on chip sales to China poses a direct threat to revenue for major semiconductor companies. This situation is creating challenges for the Nasdaq 100, which is down nearly 3% this quarter. We recommend buying protective put options on the QQQ ETF to guard against a larger tech market downturn if these tariffs are implemented. Geopolitical tensions are also increasing, particularly involving Iran and the ongoing war in Ukraine. This environment is supporting energy prices, with WTI crude staying above $95 a barrel. Given the likelihood of unexpected supply news, we see value in long-dated call options on crude oil futures to take advantage of potential price increases. Create your live VT Markets account and start trading now.

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Major Crisis Deepens

The court-ordered liquidation of South City marks a serious escalation in the property crisis. This indicates that government support is lacking and creditors are losing patience. This situation casts a bleak view on Chinese markets for the near future. Looking back at the early 2024 Evergrande liquidation helps us predict the current market reaction. We expect increased volatility and a sell-off in Chinese stocks, especially those in the Hang Seng China Enterprises Index. Traders should think about buying protection through put options or preparing for a rise in implied volatility. This news comes during a time of already weak conditions. In July 2025, new home prices fell by 5.4% compared to the previous year, marking the 15th consecutive month of decline. This ongoing weakness indicates that the South City failure is not just a single incident, but a sign of a much greater issue. The property sector’s decline is heavily impacting the wider economy, with GDP growth for Q2 2025 falling to just 3.8%. Given these conditions, we recommend shorting broad market index futures like the FTSE China A50. This strategy bets on the continued negative effects from the real estate sector.

Economic Consequences

The stress on China’s economy will almost certainly affect its currency. We expect the offshore yuan (CNH) to weaken against the US dollar as investors look for safer options. This situation will likely also hurt the demand for commodities, especially industrial metals. Iron ore prices on the Singapore Exchange have already dropped below $100 per tonne this month due to poor construction forecasts. Policymakers have attempted to step in, with the People’s Bank of China lowering its key loan prime rate by 10 basis points last week. However, the severity of this crisis suggests these small changes will not restore confidence. We see these efforts as too minor and too late, meaning any short-lived market rally driven by policy changes is an opportunity to sell. The most immediate response should focus on the financial sector, which is heavily exposed to property developer debt. We are looking at put options on major Chinese banking stocks or ETFs that track this sector. The risk of a banking crisis has significantly increased. Create your live VT Markets account and start trading now.

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**US Tariff Relief Looking Unlikely** The New Zealand dollar is struggling due to unlikely US tariff relief. A 15% tariff is essentially a tax on a key part of our export economy, limiting the potential gains for the NZD/USD pair. Traders should be cautious about any rallies in the near future. Recent economic data supports this view. According to Stats NZ, export volumes to the United States dropped by 0.8% in the second quarter of 2025 due to these trade barriers. Additionally, the Reserve Bank of New Zealand noted “global trade friction” as a major risk to its growth forecasts in a statement last week. **US Dollar Stays Strong** On the other side, the US dollar remains strong. In its July 2025 meeting, the US Federal Reserve indicated it plans to keep interest rates “higher for longer,” as core PCE inflation continues at 2.8%, above the target level. This difference in interest rates between the US and New Zealand will likely keep supporting the dollar. We saw a similar situation from 2018 to 2019 when rising US-China trade tensions consistently put pressure on the Kiwi dollar, driving NZD/USD lower even when New Zealand’s economy looked solid. History shows that during trade protectionism, commodity currencies like the NZD often underperform. Given this outlook, traders might consider strategies that benefit from limited upside or a decline in the NZD/USD. Buying put options on the New Zealand dollar can offer downside risk with limited exposure. Another approach is selling out-of-the-money call options to collect premiums by betting that the pair won’t surpass key resistance levels in the coming weeks. The 0.6250 level, tested and rejected in late July 2025, is now an even stronger barrier for the currency pair. If the NZD/USD approaches this level, it could be a signal to initiate bearish positions. We expect the NZD/USD to remain within a range, with downward pressure as long as these tariffs stay in place. Create your live VT Markets account and start trading now.

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BTC/USD has climbed over US$121,000, showing strong growth in the cryptocurrency market. Bitcoin is on an upward trend, fueled by increased interest that is pushing its value higher. This momentum signals a positive shift in Bitcoin trading, with a noticeable rise in demand. The increase in Bitcoin’s value highlights growing market activity and possible opportunities in digital currencies. Bitcoin has moved back above the key US$121,000 mark, which is a strong indicator for the market. This rise represents nearly a 15% increase since late July 2025. The entire cryptocurrency space is experiencing positive momentum, pointing to broad market strength. For those trading futures, this trend suggests keeping or starting long positions. We are noticing that perpetual futures funding rates have consistently turned positive, now averaging around 0.02% across major exchanges. This shows traders are confident that prices will keep rising. Options traders may find it appealing to buy call options to take advantage of further gains. The data shows that open interest for September 2025 US$130,000 and US$140,000 strike prices has jumped over 40% in just a week. While implied volatility is high, it hasn’t reached the extreme levels of the 2024 bull market, indicating there might still be room for growth. A more cautious strategy is to sell out-of-the-money put options to earn premiums. With solid support near the US$115,000 level, selling puts below this price could be a smart way to generate income. This strategy benefits from rising prices and time decay, but traders should be aware of the risk of a sudden drop. Looking back at the market after the 2024 halving can provide insights. After a period of consolidation lasting several months, we saw a surge in late 2024 that led to new all-time highs. This historical pattern suggests that the current movement may be the beginning of a stronger upward trend.

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Ethereum’s price is rising due to a mix of clear regulations, growing institutional interest, and technical improvements. Its role in stablecoins and decentralized finance (DeFi) is also boosting its value. Almost half of all stablecoins are based on Ethereum’s technology, and new stablecoin regulations in the U.S. are increasing trust in Ethereum. Major companies, including banks and asset managers, are exploring Ethereum as part of their cryptocurrency strategies. Since May 2024, nine spot Ethereum ETFs have launched, attracting both attention and investment. These ETFs let everyday investors buy Ethereum without needing to hold it directly. Recent upgrades like Pectra and Dencun have enhanced Ethereum’s scalability, reduced transaction costs, and improved staking efficiency. These upgrades make Ethereum more appealing and useful. Ethereum supports DeFi and staking, giving users a way to earn yields, making it attractive beyond just speculation. This variety of uses is leading more people to engage with the Ethereum ecosystem. With Ether recently reaching its highest price since December 2021, the bullish trend looks strong. Spot Ether ETFs have attracted over $1.2 billion in net investments since their launch in May 2024. This ongoing institutional buying suggests we should prepare for more price increases in the coming weeks. For those trading derivatives, now is a good time for long-call strategies or bull-call spreads to take advantage of expected price rises while managing risk. Recent options data shows a clear trend: September and December call options are trading at a much higher price than puts. This indicates the market expects prices to keep rising, so we should act quickly before that premium increases further. We’re closely monitoring the upcoming Pectra upgrade, expected later this quarter. The earlier Dencun upgrade successfully lowered transaction fees, and Pectra is predicted to further enhance scalability and staking efficiency. These improvements increase the network’s value and attractiveness to users and large investors alike. Additionally, Ethereum is becoming more dominant in the stablecoin space, vital for much of the DeFi market. As of August 2025, Ethereum supports over 52% of the entire stablecoin market cap, a significant rise from earlier this year. This strong liquidity and utility provide a solid foundation for ETH’s price. Historically, a similar pattern happened during the 2021 cycle, where Ethereum’s price surged following Bitcoin’s initial moves. With established structures like ETFs for both assets, we could be at the start of a similar rally. Thus, any short-term dips should be seen as chances to buy. The rising demand for yield through staking is also important and wasn’t as developed in past cycles. Big investors are not only buying ETH for potential price increases but also to earn returns, which limits the available supply on the open market. This supply squeeze could lead to significant upward price movements.

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Deutsche Bank is focused on tariff developments as the August 12 deadline for US-China tariffs approaches. This date is crucial for trade relations and could impact market sentiment significantly, depending on whether the tariffs are paused or lifted. The bank is also watching the US Consumer Price Index (CPI) report for July, set to be released on Tuesday. Economists anticipate a +0.1% increase in the headline CPI from June, which experienced a +0.3% rise. They also expect a slowdown in the year-over-year inflation rate.

July CPI Expectations

Core CPI is predicted to rise by +0.21% month-on-month, matching June’s increase of +0.2%. Analysts will closely examine these numbers for hints about future inflation and the Federal Reserve’s possible policy adjustments. The US CPI report will be published on Tuesday at 12:30 GMT, or 08:30 US Eastern time. As we approach two key events tomorrow, August 12, 2025, traders should be prepared. The deadline for the US-China tariff pause and the release of July’s inflation data could lead to major market movements. Derivative traders should brace for possible spikes in volatility. We are monitoring the US CPI report for signs of slowing inflation. Expectations are for a modest 0.1% monthly increase, with core inflation forecasted at 0.21%. After core inflation hovered around 3.1% in the second quarter of 2025, a lower number could indicate that the Federal Reserve’s policies are having an effect.

Potential Market Reactions

With these two significant events happening close together, traders may prepare for large price changes in either direction. The VIX, a key indicator of market fear, recently rose to 18.5, showing increased nervousness ahead of these developments. Strategies that benefit from volatility, like straddles on the SPX, are gaining popularity. The outcome of the tariff discussions remains uncertain and could overshadow the inflation data. We recall how market volatility surged during the 2018-2019 trade disputes, where unexpected tariff announcements led to sharp declines in equity futures. If the current pause is not extended, we may see a similar risk-averse reaction. As a result, traders might consider buying put options in trade-sensitive sectors like semiconductors or industrials as a way to hedge their positions. These options could provide protection if trade negotiations break down and new tariffs are introduced. On the other hand, a positive outcome could lead to a significant rally, making short-term call options appealing for those willing to take that risk. Create your live VT Markets account and start trading now.

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Michigan Governor Gretchen Whitmer met with President Donald Trump in the Oval Office on Tuesday. She conveyed a crucial message: his tariffs were harming the auto industry he promised to protect.

Tariff Effects on Michigan

During their third meeting since Trump took office, Whitmer warned that the tariffs could lead to serious economic problems in Michigan. This state played a key role in Trump’s 2024 election victory. She also asked for federal assistance after a recent ice storm and requested a delay in Medicaid changes that could impact healthcare coverage. Sources who attended the meeting, speaking anonymously, said that Trump did not make any firm commitments. While he listened, he showed no intent to change his trade policy. The president seems to be sticking to his trade decisions, despite warnings about the auto industry. This indicates that the pressure from tariffs on carmakers and their suppliers will likely continue. Derivative traders should be aware of this ongoing risk as fall approaches. We’ve observed the effects of these trade policies on the market. Recent figures reveal that U.S. auto sales in the second quarter of 2025 dropped almost 4% compared to last year. This decline is likely due to higher costs for materials like steel and aluminum, which have reduced profits for manufacturers.

Investor Considerations

Given the president’s unwavering position, traders might want to consider buying put options on major automakers like Ford and General Motors. These options could help protect against potential drops in stock prices in the coming weeks. The absence of any commitment to change policy raises the risk for these companies. Remember, market volatility surged during the trade disputes in 2018 and 2019. The CBOE Volatility Index (VIX) spiked whenever new tariff announcements were made. This historical trend suggests that implied volatility on auto stocks could increase, making options pricier but also potentially more rewarding. This issue goes beyond tariffs; unresolved matters like federal aid for storm recovery and Medicaid changes add to the uncertainty. This broader policy uncertainty could shake investor confidence across various sectors. As a result, traders should also monitor ETFs in the broader industrial sector for signs of weakness. Create your live VT Markets account and start trading now.

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The People’s Bank of China (PBOC) set the yuan (CNY) reference rate at 7.1405 to the US dollar today, which is stronger than the expected rate of 7.1845. The PBOC uses a managed floating exchange rate system, allowing the yuan to fluctuate within 2% of this midpoint. The previous closing rate was 7.1799. The PBOC also injected 112 billion yuan through 7-day reverse repos at a rate of 1.40%. However, 544.8 billion yuan will mature today, leading to a net outflow of 432.8 billion yuan in the financial system.

Currency Stability Over Export Boost

The People’s Bank of China is clearly indicating that it won’t allow the yuan to weaken excessively. By setting a stronger reference rate, the bank is pushing back against depreciation pressures. This suggests that, in the coming weeks, the USD/CNY exchange rate is likely to be capped by policymakers. This approach comes even as economic data shows some slowdown. For instance, the July 2025 manufacturing PMI fell to 49.2, indicating contraction. This suggests the PBOC is prioritizing currency stability instead of letting the yuan weaken to support struggling exports. The ongoing net liquidity drain highlights the bank’s focus on maintaining financial order rather than stimulating the economy broadly. For derivative traders, this is a warning against betting heavily on a weaker yuan. Strategies based on long USD/CNY call options now come with significant policy risks, so it may be wise to reduce such positions. Selling out-of-the-money call spreads on USD/CNY could be a smart way to take advantage of the expectation that upside is now limited.

Implications For Traders And Markets

Policy can be unpredictable, as we saw after the surprise devaluation in August 2015. However, today’s actions seem aimed at discouraging speculation and preventing a chaotic decline. This strong guidance will likely reduce short-term volatility in the currency pair. An artificially stronger yuan poses challenges for China’s export-driven companies, which could impact equity markets. This pressure may be seen in derivatives related to the Hang Seng China Enterprises Index (HSCEI). Traders might consider buying put options on these indices to hedge against potential earnings weakness in export-focused firms. On the flip side, a stronger currency boosts China’s purchasing power for important imports. This could temporarily benefit commodities like copper and crude oil, which have seen their prices decrease recently due to concerns about Chinese demand. Call options on these commodities may present a tactical opportunity if this policy remains in place. Create your live VT Markets account and start trading now.

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China’s Contemporary Amperex Technology Co. Ltd. (CATL) has paused operations for at least three months at its Jianxiawo lithium mine in Jiangxi province. This halt followed the expiration of its mining permit on August 9 and has led to speculation about wider supply cuts as Beijing tackles overcapacity problems. While analysts believe this change won’t significantly affect the market’s current oversupply, there might be a chance for temporary price fluctuations. If other Yichun mines face disruptions after September 30, prices could shift away from “reasonable levels”. Still, Citi analysts don’t expect any lasting supply shortages, even if the suspension briefly boosts market sentiment.

Surge In Australian Lithium Stocks

In Australia, lithium stocks have surged. The Australian benchmark index, the S&P/ASX 200, has reached a new high, exceeding 8852. The stop at CATL’s Jianxiawo mine is a short-lived issue in a market still facing long-term oversupply. This situation seems like a temporary lift in sentiment, not a major change. Traders should see the resulting price swings as a limited-time opportunity. Historically, lithium carbonate prices plummeted from near $80,000 per tonne in late 2022 to below $20,000 for most of 2024, due to an influx of new supply. Prices have steadied around $23,500 per tonne in mid-2025, showing that sentiment can quickly be swayed by market realities. The current production pause is minor compared to the significant global capacity growth over the past two years. In the coming weeks, we think call options on lithium producers and related ETFs are a good strategy. The important date is September 30 when other mining permits in China’s Yichun region are up for review. News of further halts could prolong the rally, making short-term call options expiring in October or November 2025 particularly appealing.

Hedging Against Market Corrections

The rise in Australian stocks like Pilbara Minerals and Arcadium Lithium may be ahead of the actual situation. The S&P/ASX 200 index reaching a record high amid this material rally poses a potential risk. If supply concerns diminish after September, these gains could quickly reverse. Thus, a counter-strategy is necessary. As we enter the fourth quarter, the market will likely refocus on ongoing oversupply issues. We are considering buying put options that expire in early 2026 to prepare for a price correction once this short-term news cycle concludes. Create your live VT Markets account and start trading now.

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