The bond markets are calmer, bringing some relief to financial sectors, while the dollar stays stable. Currency traders are cautious, waiting for important US data releases. Major dollar pairs are showing little movement. The EUR/USD is trading within a narrow 30-pip range due to large option expirations. The USD/JPY has risen slightly by 0.1%, reaching 148.27 after talks between the US and Japan about auto tariffs. Commodity currencies are slightly down, but the changes are not significant. For example, AUD/USD has fallen by 0.4%, resulting in a weekly change of just -0.2%. In the coming days, key US economic data will be released, which are crucial for market direction. Yesterday’s JOLTS job openings hinted at possible market reactions. Today’s attention is on the ADP employment change, weekly jobless claims, and ISM services PMI data, all leading up to tomorrow’s non-farm payrolls. This data will be closely monitored by the markets heading into the weekend. With the market in a holding pattern, this creates a classic setup for a volatility event. The tight ranges in pairs like EUR/USD indicate calm before the storm of major US employment data. This quieter time allows traders to consider strategies that could benefit from significant price movements, no matter the direction. Derivative traders should consider buying volatility ahead of the Non-Farm Payrolls report. Options strategies like straddles or strangles on EUR/USD could be useful, as they pay off if the pair breaks out of its current tight range. Similar quiet periods in 2023 were followed by strong movements when key jobs data surprised the market. The spotlight is on the US labor market, which has shown resilience throughout early 2025, preventing the Federal Reserve from cutting rates. The expectation for tomorrow’s payrolls report is around 180,000 jobs, but a much higher figure could boost the dollar significantly. We’ve seen August job numbers exceed expectations before, especially in 2022, when a strong report changed market rate predictions. For EUR/USD, the large option expirations are acting as a temporary anchor at the current price. Once the data is released and the expirations are cleared, the pair will be able to move freely, with a strong US report likely testing support levels below 1.0700. This is particularly relevant given the recent Eurozone manufacturing PMIs for August 2025, which indicated continued contraction in Germany. In USD/JPY, the pair’s sensitivity to US yields means a solid jobs report could easily drive it back toward the 150 level. We should be cautious, as Japanese officials have recently started voicing concerns about currency weakness as the pair has trended higher this year. Any movement above 149 might trigger verbal, if not actual, intervention. The weakness in commodity currencies like the Australian dollar could worsen if the US data is strong. The 0.4% drop is small for now, but disappointing trade balance figures from China for August 2025 have already set a bearish tone. A strong US jobs report could intensify the situation, likely pushing AUD/USD to test its year-to-date lows.

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### Eurozone Retail Sales Drop July’s retail sales report disappointed, showing a bigger-than-expected fall in consumer spending. Key essentials like food and fuel led the decline, indicating that households may be feeling tighter financial squeezes. This suggests a weak spot in the Eurozone economy as it heads into the third quarter. However, it’s important to note that the June sales figure was adjusted upwards, changing from +0.3% to +0.6%. This creates a mixed picture, implying that consumers aren’t in freefall but may be growing more cautious. The market is left wondering if July’s decline is just a temporary dip or the beginning of a weaker trend. This slowdown in consumer activity comes alongside the August flash inflation estimate, which stands at 2.7%. This rate remains stubbornly above the European Central Bank’s (ECB) target. As a result, the ECB faces a tough situation with its upcoming meeting this month. Slower growth combined with persistent inflation leads to uncertainty in policy, which often causes higher market volatility. ### Currency and Equities Strategies For currency traders, this data slightly weakens the outlook for the Euro. Traders might consider buying put options on the EUR/USD pair, aiming for strikes below the 1.0800 level for October expiries. This strategy allows them to profit from a possible decline while limiting maximum risk. In the equities market, this data impacts consumer-focused sectors. We may want to buy puts on the Euro Stoxx 50 index or certain retail ETFs to protect against a potential market downturn in the upcoming weeks. The rising uncertainty also makes volatility derivatives, like options on the VSTOXX index, more appealing. This situation feels reminiscent of the fluctuating data we saw in 2024, where economic signals were often inconsistent from month to month. Therefore, it’s wise not to commit too strongly to a single perspective based on one report. For now, hedging strategies appear to be more prudent than speculative bets. Create your live VT Markets account and start trading now.

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The United States and Japan are close to finalizing discussions to lower tariffs on Japanese car imports. The plan is to reduce the current tariff from 27.5% to 15%, with a possible start by the end of September. The exact date for this change is still unclear and depends on ongoing talks. Ultimately, US President Trump needs to approve any deal, which could cause some delays. If they reach an agreement, it could strengthen the yen. This would relieve some pressure on the Bank of Japan regarding interest rate hikes. However, the outcome is still uncertain because of required Supreme Court appeals and necessary discussions on agricultural agreements with Japan. Currently, US-Japan tariff discussions appear to be nearing completion, creating an opportunity in the currency markets. A successful tariff reduction would likely strengthen the Japanese economy and the yen. Traders should prepare for a decrease in the USD/JPY pair, which has been around 162, close to a 35-year high, for much of this year. This trade relief would be beneficial for the Bank of Japan. It has been trying to support the yen without making significant rate hikes that could harm the economy. Recent data shows Japan’s core inflation has fallen to 2.3%, limiting the central bank’s ability to tighten its policies. A stronger yen from a trade deal could help achieve currency stability through diplomatic efforts instead of monetary ones. For stock traders, Japanese automakers will be the most directly affected since they closely follow US trade policies. Last year, over 30% of sales for major companies like Toyota and Honda came from the US market, meaning a tariff cut would significantly benefit them. We expect there to be strong demand for call options on these stocks, especially for those expiring in late September and October, to take advantage of the potential announcement. Reflecting on the past, we recall the sharp market reactions to trade news between 2018 and 2020, which often resulted in temporary but intense impacts. The uncertainty around President Trump’s final decision could keep implied volatility high. As a result, strategies like long straddles or strangles on key auto stocks might be appealing. These strategies allow traders to benefit from anticipated price swings without guessing the direction. On the other hand, US automakers like General Motors and Ford might face increased competition. Their stock prices have been underperforming compared to the S&P 500 this quarter, due to fears of slowing domestic demand. A tariff deal that advantages their Japanese competitors could benefit those who own or are considering put options on these US companies. However, if these discussions fall through, we could see a quick reversal of current trends. The yen might weaken sharply, and Japanese auto stocks would likely drop in response. This uncertainty makes it risky to hold short USD/JPY positions or long positions in auto stocks until we have a clear announcement.

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The Ifo Institute has updated its projection for Germany’s economic growth. They now expect a slight increase of 0.2% for this year, down from their earlier prediction of 0.3%. Looking ahead, they foresee the economy growing by 1.3% in 2026, a reduction from the previous forecast of 1.5%. For 2027, the Ifo Institute projects a growth rate of 1.6% for Germany. They highlight that US tariffs are still a challenge for the country. If economic policies do not change, Germany may encounter additional difficulties, which could harm future business prospects. The latest Ifo forecast cuts the growth for 2025 to a minimal 0.2%. This trend reinforces the economic stagnation in Germany and suggests continued pressure on corporate earnings, especially in the industrial sector. Recent data shows a 1.1% drop in factory orders, as reported by Destatis in August 2025, confirming this ongoing weakness. For traders focusing on derivatives, this outlook hints at a bearish strategy for the German DAX index in the upcoming weeks. We believe that put options or short positions on DAX futures could be effective ways to prepare for potential declines. The index has struggled, and this news could lead to testing lower support levels not reached since the second quarter. On the other hand, this situation may support German government bonds, likely resulting in lower yields. A stagnant economy makes it unlikely for the European Central Bank to raise interest rates and could even prompt discussions about rate cuts. We predict increased demand for 10-year Bund futures as traders anticipate a more accommodating ECB. The Euro may face challenges, especially against the US dollar, due to Germany’s key role in the Eurozone economy. The mention of US tariffs as a significant threat underscores the vulnerability of Germany’s export-driven model, which accounted for over 47% of its GDP in 2024. We expect traders to test the lower limits of the recent EUR/USD range, possibly breaking below crucial support levels. Additionally, we foresee rising market volatility due to this uncertain outlook. The warning about “economic paralysis” introduces considerable policy uncertainty, which can heighten market anxiety. Traders might consider buying options on the VDAX-NEW index for protection, as it could see a sharp increase from its current lows, similar to what we observed during the slowdown in 2023.

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The UK construction PMI for August was 45.5, slightly higher than the expected 45.0, according to S&P Global data. This shows a small recovery from July’s low, the worst in over five years. However, the number is still below 50.0, indicating ongoing contraction in the sector. Residential and civil engineering activities saw significant declines, though a slower drop in commercial building helped balance these losses. Some improvements in supply conditions, like shorter delivery times and more subcontractor availability, were mainly due to weak demand and a shortage of new projects.

Business Confidence Declines

Business confidence in the construction sector fell further in August. Only 34% of panelists expect an increase in output over the next year, down from 37% in July. This is the lowest level since December 2022, due to high uncertainty and worries about the UK economy. The slight rise in the August construction PMI to 45.5 is misleading, as the sector remains in contraction for the eighth consecutive month of 2025. This decline is reflected in reports from major UK housebuilders like Taylor Wimpey, which have noted slowing sales reservations this year. As a result, buying put options on a UK housebuilder ETF might be a good way to protect against or capitalize on further drops in residential construction. This ongoing downturn in construction is the longest since the disruptions of early 2020 and suggests a broader economic slowdown. UK GDP growth was nearly flat in the second quarter of 2025, amplifying worries that weakness will continue into the third quarter. Thus, it might be wise to take a bearish stance on the British Pound, perhaps by shorting GBP/USD futures or purchasing options that yield profit if the exchange rate falls below specific levels.

Interest Rate Expectations

The ongoing weakness makes a Bank of England interest rate hike unlikely in the near future, supporting the idea that the bank will maintain its pause that began in early 2024. This report also increases the chances of a rate cut later this year, a sentiment reflected in falling government bond yields. Traders could consider going long on UK Gilt futures, which would gain value if interest rates are cut. It’s important to note the differences within the report, as commercial building showed more resilience compared to the sharp downturn in housing. This may create pair trading opportunities for those with specific sector knowledge. For example, a trader might take a long position in a commercial property-focused company while shorting a residential housebuilder. Create your live VT Markets account and start trading now.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

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Oil prices slipped again in early Thursday trading, with concerns over potential extra supply weighing on sentiment. West Texas Intermediate fell 1.0% to $63.32 a barrel, while Brent crude shed 0.9% to $66.96, erasing the prior day’s advance.

The weakness followed a Reuters report hinting that OPEC+ may discuss loosening its production limits at the next policy meeting.

No firm decision has been taken, but the prospect of more barrels hitting the market was enough to unsettle bullish traders.

Oil prices extend losses as OPEC+ considers another output hike https://t.co/xWBDlcaowz https://t.co/xWBDlcaowz

— Reuters (@Reuters) September 4, 2025

Caution is high ahead of the US Energy Information Administration’s (EIA) inventory data later today. Investors are keen to see whether demand from the world’s largest consumer can offset last week’s unexpected stockpile increase.

Technical Analysis

Crude oil (CL-OIL) last traded at $63.26, down 0.75% on the session, with the market stuck in a consolidation phase after a volatile year. Prices tumbled to $55.11 in April before rebounding strongly to $77.90 in July.

Since then, the market has been moving sideways. The 30-day moving average has flattened, while shorter-term averages (5 and 10) are struggling to stay above it, a sign of hesitation.

The MACD indicator shows a modest bullish cross, but remains close to neutral, pointing to limited momentum. Immediate support is found at $60, with a firmer floor near $55. Resistance lies at $67, and higher up at $72.

A move above $67 could revive upward momentum, whereas a break below $60 would raise the risk of revisiting this year’s lows.

In the short run, oil is likely to continue swinging within its current band, with traders keeping a close eye on OPEC+ policy direction, US stock data, and wider demand cues.

Cautious Forecast

Unless OPEC+ walks back supply speculation, crude may remain under pressure into the weekend. A bearish EIA print could drive WTI toward the $60 handle, while any dovish surprise may offer brief reprieve. All eyes on Vienna and on barrels.

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Minimal Growth Expected

The Kiel Institute for the World Economy (IfW) predicts that the German economy will grow only 0.1% in 2025 after two years of decline. Better business expectations and increased government spending could help boost the economy, but US tariffs are a significant challenge in the short term. Looking ahead, IfW forecasts a slow recovery, estimating growth of 1.3% in 2026 and 1.2% in 2027. The budget deficit is also likely to widen, increasing from 2% of GDP in 2024 to about 3.5% by 2027. With growth projected at just 0.1% this year, we see limited potential for German stocks. This follows two consecutive years of economic decline, as shown by July 2025’s industrial production figures, which reported a 0.5% drop from the previous month. Therefore, we might consider shorting DAX index futures or buying put options on the index soon. US tariffs pose a direct threat to Germany’s export-driven industries, especially the automotive sector. We remember how trade disputes affected companies like Volkswagen and BMW from 2018 to 2020, and this new risk could similarly impact stock performance. It would be wise to hedge our investments or take bearish positions in these export-focused companies.

Economic Pressure and Strategies

The expected rise in the budget deficit, potentially hitting 3.5% of GDP by 2027, puts pressure on the Euro. Combined with the European Central Bank maintaining interest rates at its August 2025 meeting amidst weak growth, there is a bearish outlook for the currency. We recommend shorting the EUR/USD pair as a suitable strategy for the near term. While there are some signs of improved business expectations, these positives seem fragile. If the market rallies due to this sentiment, it may provide better chances to enter our bearish positions. We anticipate continued volatility, as indicated by the elevated VDAX-NEW index, as the market processes this mixed information. With only a slight recovery expected for 2026, our focus should be on short-term derivative contracts. We should target options expiring in the fourth quarter of 2025 to make the most of the current stagnation. Longer-term bearish positions appear riskier given the possibility of a slow, eventual recovery. Create your live VT Markets account and start trading now.

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Future Outlook

Many are feeling uncertain about the future as the outlook index drops. This is mainly due to high long-term interest rates and challenges for the new government. While input price inflation has lessened, it still poses issues for construction. There are some signs of improvement, such as faster supplier delivery times—the best they’ve been since February. Subcontractor availability has increased, although the pace is slow, and their prices are rising more than before. The construction environment remains tough, and any recovery is expected to be gradual. The German construction PMI is at 46.0, clearly indicating weakness in this key area of Europe’s largest economy. This trend isn’t new; it mirrors what we saw during the economic downturn in 2023 when rising interest rates first impacted growth. The data strengthens concerns about German domestic demand in the coming weeks. With a significant fall in new orders for residential and commercial buildings, it may be wise to consider buying put options on major German construction and real estate firms. Companies like Vonovia and Heidelberg Materials, which are sensitive to the housing market, are good candidates for bearish bets. Recently, Heidelberg Materials lowered its Q3 revenue forecast due to a decline in residential project orders, aligning with the PMI data. A simple strategy would be to buy out-of-the-money puts on the DAX index, expiring in October or November 2025, to capitalize on a wider market decline. Weakness in construction often signals broader economic issues, and we expect German GDP for Q3 2025 to reflect this slowdown. With current market volatility low, options are an affordable way to prepare for a potential downturn.

Interest Rates and Economic Impact

High interest rates are contributing to the situation, with the European Central Bank keeping its main rate at 3.5% in its most recent meeting. This indicates that tackling inflation is still a top priority. The latest German inflation data for August 2025 is 3.1%, which is above the 2% target, meaning borrowing costs for construction projects are unlikely to decrease soon. This ongoing strain makes recovery in the sector seem remote for this year. On the plus side, civil engineering is benefiting from government spending on infrastructure. This creates an opportunity for experienced traders to engage in a pair trade. They can go long on firms heavily involved in public works projects while shorting a residential homebuilder, aiming to profit from the differing performances of these sectors. The ongoing economic weakness in Germany is also putting pressure on the euro. This could be a good time to short the EUR/USD currency pair using futures contracts or to buy put options on Euro-focused ETFs. With the US economy showing more strength, we expect the dollar to continue gaining against the euro through the fourth quarter. Create your live VT Markets account and start trading now.

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Dear Client,

As part of our commitment to provide the most reliable service to our clients, there will be maintenance this weekend.

Maintenance Details:

Please note that the following aspects might be affected during the maintenance:
1. The price quote and trading management will be temporarily disabled during the maintenance. You will not be able to open new positions, close open positions, or make any adjustments to the trades.
2. There might be a gap between the original price and the price after maintenance. The gaps between Pending Orders, Stop Loss, and Take Profit will be filled at the market price once the maintenance is completed. It is suggested that you manage the account properly.
3. During the maintenance period, VT Markets APP will not be available. It is recommended that you avoid using it during the maintenance.
4. During the maintenance hours, the Client portal will be unavailable, including managing trades, Deposit/Withdrawal and all the other functions will be limited.

The above data is for reference only. Please refer to the MT4/MT5 software for the specific maintenance completion and marketing opening time.

Thank you for your patience and understanding about this important initiative.

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