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British Pound stabilises against US Dollar despite BoE’s warnings
The British Pound is stabilizing against the US Dollar after a three-day decline. It is trading just below 1.3600, around 1.3587, while the US Dollar Index is holding steady near 97.60.
The latest Financial Stability Report from the Bank of England highlights the strength of the UK financial system despite a challenging global outlook. Key risks include ongoing geopolitical tensions, disrupted trade flows, and rising sovereign debt. Global markets have calmed down as US tariff threats have paused, yet asset values remain vulnerable to sudden shifts.
At peak hour, the U.S. Treasury will auction $39 billion in 10-year notes.
The U.S. Treasury plans to auction $39 billion in 10-year notes soon. Recent averages show a bid-to-cover ratio of 2.56 times.
Key details of the auction include a tail of -0.7 basis points. Direct buyers, who are mostly domestic investors, make up 16.3% of purchases, while indirect buyers—mainly international participants—represent 71.7%. Dealers account for the remaining 12.0%.
Last month’s auction had a high yield of 4.421%.
The upcoming $39 billion auction indicates strong interest from a diverse group of investors. The bid-to-cover ratio of 2.56 shows stable demand—each dollar offered receives more than two and a half dollars in bids. This balance indicates steady interest without urgent adjustments needed.
The last auction had a tail of -0.7 basis points, meaning the final yield was slightly lower than expected. Bidders were willing to pay a bit more, showing confidence in long-term rates. This is a positive sign for overall market sentiment.
Direct buyers, mainly domestic institutions like pension and mutual funds, bought just over 16% of the total. Their consistent participation suggests they will likely keep investing, even with varying rates. Indirect buyers, including foreign central banks and investment firms, accounted for over 70% of purchases. Their strong involvement often comes when U.S. Federal Reserve policies are clear and there are no major risks with the dollar.
Dealers, the banks facilitating the auction, took only about 12% of the total. This smaller share indicates that the market absorbed the volume well, without dealers needing to take on extra risk. Typically, higher dealer allocations might signal weak demand, but in this case, a smaller share is somewhat supportive.
The previous auction cleared at a yield of 4.421%. While this is not as low as in 2020, it is stable considering the Fed’s pause on rate increases. Yield watchers can find some reassurance that auctions are not struggling to find balance, even as term premiums rise.
For those focused on rate derivatives or swap spread dynamics, these figures are more than just numbers; they set limits. The balance between direct and indirect bidder strength affects long-term options. The foreign buyers’ share above 70% can help reduce volatility in futures if they do not quickly sell off after the auction.
With dealers holding only 12%, there is less need for subsequent hedge positions. This means desks are not left with surplus inventory, leading to minimal impact on overnight basis or repo markets.
As we look to future issuances and their effects on funding markets, continued strong participation from indirect buyers could ease pressure on duration desks in the swap curve, especially between 7s and 10s. We may see this segment staying tight compared to implied rates, as long as current ranges hold.
In summary, this balanced supply allocation does not change perceptions of risk or market positioning. Flows continue to favor end-users rather than intermediaries. For those tracking calendar rolls or engaging in curve trades, this auction trend provides key insights. We should incorporate these findings into our theta and rolldown strategies for the weekly cycle.
Wholesale inventories in the United States declined by 0.3% in May, meeting expectations.
US wholesale inventories fell by 0.3% in May, which was in line with expectations. This decrease may be significant for economic analysts, though it is not intended as investment advice or market recommendations.
Bitcoin hit a new record of $111,980 on Wednesday, exceeding its previous high. This marks the third time in 2025 that Bitcoin has reached a new peak, having done so earlier on January 20 and May 22.
AUD/USD Exchange Rate
The AUD/USD exchange rate neared 0.6600, moving past the 0.6500 level. This was noted during ongoing analysis of the Reserve Bank of Australia’s policies and the fluctuating US Dollar. The EUR/USD pair showed little movement near the 1.1700 mark as the market focused on US-EU trade talks. Gold prices rose above $3,300 per troy ounce due to market uncertainties. Despite a stable US Dollar and falling bond yields, gold’s upward trend continued, fueled partly by anticipation of the FOMC Minutes. New US tariffs may affect Asian economies, with some countries possibly benefiting. Most tariffs are higher than expected, except for nations like Singapore, India, and the Philippines, which could see gains in future negotiations.US Wholesale Inventories
US wholesale inventories slightly decreased by 0.3% in May, which met analysts’ expectations. This likely indicates that businesses are managing their supply chains more carefully due to weak demand and cost-control measures. For traders, this suggests limited momentum for restocking and calls for tempered expectations for retail or industrial growth. It aligns with the overall trend of inventory adjustments following the overstocked conditions after the pandemic. On the other hand, Bitcoin’s surge above $111,980 puts digital assets back in the limelight. This is the third new high this year, suggesting a potential upward trend rather than a speculative push. With Anderson’s reports showing strong institutional flows, the rally seems well-supported. In derivatives, volatility is high, and option premiums have risen. The recent peaks may attract short-term momentum positions, but it’s crucial to manage delta exposure on calls as market movements become sharper. In the foreign exchange market, the Aussie Dollar is experiencing increased sensitivity. The pair’s rise toward 0.6600 reflects changing perceptions of the Reserve Bank of Australia’s interest rate stance, especially after Taylor’s comments introduced more uncertainty about inflation. Additionally, recent softness in the US Dollar before anticipated inflation revisions has played a role. We noted a slight widening of volatility premiums for short-term AUD/USD options, particularly at the upper end, indicating expectations of further weakening in the Dollar. The euro-dollar pair remained steady around 1.1700, with little movement caused by high-level discussions in US-EU trade. There were no significant shifts, but longer-term traders may notice that implied volatility has decreased. This reduction opens opportunities for short strategies in straddle structures, although it will be important to stagger expiries, especially with central bank announcements approaching later this month. Shifting to metals, gold prices rose comfortably above $3,300 per ounce. This growth isn’t solely based on macroeconomic factors anymore. Even with US real yields dropping and the Dollar stable, demand for gold as an alternative asset remains strong. Martinez has pointed out increased buying by central banks and a rise in strategic allocation flows, similar to last quarter. Longer-term gold call options continue to be favored as market expectations of dovish comments from Fed governors remain unchanged ahead of the minutes release. For derivative strategies, setups that prioritize mild convexity over high deltas may be more robust in this environment. US tariff changes have introduced new complexities, especially for Asia-Pacific economies. Countries not impacted by higher tariffs, such as India and Singapore, may attract attention due to shifts in capital flows and sourcing strategies. This is important because the cost volatility for exporters to the US will drive new hedging demand, particularly in forward FX contracts and materials-linked derivatives. Jackson from the trade analytics team acknowledged greater sensitivity in shipping-related commodities, which could lead to increased spread-based trading in futures related to Pacific operations. Traders managing cross-region exposure might find value in export-sensitive equity indices, particularly over quarterly periods. Create your live VT Markets account and start trading now.Goldman Sachs expects insights from FOMC minutes on rate outlook divides and policy discussions.
The June FOMC minutes should clarify disagreements about the 2025 rate outlook and offer insight into the Fed’s upcoming review of its monetary policy framework. The June dot plot showed a close 10–9 majority favoring two rate cuts in 2025. The minutes might explain what conditions could lead to rate cuts this year.
Goldman expects the minutes to provide details on the Fed’s internal discussions about its framework. The May minutes hinted at a possible return to flexible inflation targeting (FIT), moving away from the flexible average inflation targeting (FAIT) used since 2020. The Fed may keep a strategy for scenarios where rates reach the zero lower bound.
Committee Considerations
The minutes may also reveal how the Committee views inflation, tariffs, and labor market data. This information could help markets assess the chances of a rate cut this year. If there’s clarity on the framework review, it may shape expectations about how the Fed will respond to inflation in the future. In simple terms, the early signals suggest Federal Reserve policymakers are considering returning to their older approach—aiming for 2% inflation without excessively correcting past shortfalls. During the pandemic recovery, FAIT allowed inflation to exceed target for some time. Based on Powell’s comments and insights from the May minutes, there seems to be a stronger preference for responsiveness rather than overcorrection. Reading between the lines, it appears the group is split. The vote indicates a slight lean towards easing in 2025, but this balance could shift with a strong jobs report or a rise in core inflation. If the minutes explain why some participants favored only one cut or no cuts at all, it could refine our year-end policy estimates. Yellen’s recent comments, made outside the central bank, suggest she is closely monitoring inflation persistence, influencing discussions about what might prompt earlier or larger cuts.Policy Forecast and Implications
Many are paying close attention to the policy-setting group for hints that unexpected rate changes in 2024 could happen if inflation starts to fall below current levels. If the minutes highlight which data points are prioritized—such as PCE inflation, wage growth, or unemployment trends—it would give traders clearer reference points for setting rate expectations and managing risk. Tariffs are another factor to consider. If trade restrictions tighten, they naturally contribute to inflation. If the Fed acknowledges these risks in the minutes instead of avoiding them, it would impact future rate expectations. We’re especially focused on this for sectors sensitive to changes in trade flow. While issues like full employment targets and inflation symmetry are still debated, the key is how these discussions affect timing. For those involved in rate derivatives, small changes in tone can lead to significant moves in short-term yield curves, particularly if there’s clarity on whether policy shifts would be slow or immediate. Finally, if the minutes introduce new language about the review of their framework—especially suggesting increased flexibility—the market will likely see this as a sign of potential policy changes. Not immediately, but over the next six to twelve months, guidance will become more dependent on data. We’ll keep an eye on shifts in language, especially regarding inflation persistence and any preference for real-time adjustment over fixed-term planning. Create your live VT Markets account and start trading now.The euro falls against the Japanese yen amid trade tensions and signs of being overbought
EUR/JPY recently hit a high of 172.28 this year but has since pulled back due to trade tensions and being overbought. The pair has struggled to break the resistance level at 173.00, as concerns over US tariffs on Japan weigh on the Yen.
After solid gains since March, the EUR/JPY pair has faced resistance. It has fallen below 172.00 as the market focuses on ongoing trade talks between the United States, European Union, and Japan.
Impact of US Tariff Announcements
Recent tariff announcements from the United States have sparked speculation about their economic effects. Concerns are rising, especially regarding potential tariffs on auto parts and metals, affecting both Europe and Japan. With trade tensions ongoing, the Bank of Japan’s steady policy rate outlook reduces the likelihood of immediate rate changes. The Relative Strength Index (RSI) shows that the EUR/JPY pair is overbought, putting pressure on it to correct or consolidate until new trade agreements are reached. Technical analysis suggests potential support levels at 170.93 and 168.89. Without new trade deals, reaching the psychological level of 173.00 may remain challenging for now. After a strong upward trend early in the year, EUR/JPY is now facing a more volatile environment. It recently entered overbought territory—based on RSI metrics—before struggling around the 173.00 mark. The earlier momentum has slowed, and now the price is fluctuating below 172.00, indicating that easy gains could be behind us, at least temporarily.Response to Washington’s Tariff Position
Washington’s tariff decisions have noticeably affected markets. Now, the focus is on how Brussels and Tokyo respond, especially in the automobile and base metals sectors. The uncertainty surrounding the tariffs, rather than the tariffs themselves, contributes to pressure on the Yen. The Yen typically reacts to perceived shifts in risk more than to policy changes, and the latest announcements haven’t eased investor concerns. Meanwhile, Tokyo policymakers are maintaining their current interest rate policy. This steadiness keeps expectations grounded. As a result, it’s hard to see upward movement for the Yen unless an external factor disrupts this stability. Conversely, the European Central Bank’s (ECB) discussions have kept the Euro strong but not overwhelmingly so. Recent weeks have shown that speculative positioning and sentiment are somewhat overheated. With the RSI in stretched territory and no new policy actions or breakthroughs in trade discussions, a technical pullback seems increasingly likely. Support levels are well-defined at 170.93 and 168.89, and prices often test these levels when momentum fades. It’s less about a loss of confidence and more about a shift away from momentum-driven trades. Traders should monitor whether new headlines alter perceived risks. Continued entrenched positions without diplomatic progress are likely to lead to range-bound movement. In the coming sessions, the pair’s direction may hinge on sentiment, technical levels, and the pace of diplomatic efforts. Current momentum alone won’t drive the price much higher without a new catalyst. Any rise towards 173.00 is likely to be short-lived without solid economic backing. From our perspective, we must consider risk alongside policy stability and external shocks. Charts provide context but don’t contain all the answers. Moving forward, it’s essential to focus on volume and macroeconomic news. The market’s reactions to the news, rather than the news itself, will offer greater insights for positioning. Create your live VT Markets account and start trading now.New tariffs announced for various countries, impacting trade and imports.
The US has announced new tariffs starting on August 1, targeting smaller countries, with the Philippines being the most affected, contributing 0.4% to US trade. The detailed letters specify tariff rates for various nations, ranging from 5% to 30%.
Key tariffs include 30% for Libya, Iraq, and Algeria, and 5% for Moldova, which has minimal trade with the US. The Philippines will face a 20% tariff, with caution against the transshipment of goods. Overall, these countries make up small portions of US trade, with the Philippines at 0.42% and Moldova at just 0.001%.
The potential revenue from the Philippines’ $14.16 billion in imports could reach $2.832 billion. Earlier, 14 countries, including Japan and South Korea, were informed about the 25% tariffs on their imports, while Myanmar and Laos might face 40%.
Sector-specific tariffs include a 50% rate on copper, and there are future tariffs planned for semiconductors and pharmaceuticals. For Japan, which imports goods worth $148 billion, potential tariff income could hit $37 billion. The announcement highlights the need for balanced trade agreements, calling trade deficits a “major threat” to US economic and national security.
In summary, the United States is toughening its trade policy, applying tariffs to more small economies. Among these, the Philippines now faces a 20% tariff on its exports to the US. The US government has warned against rerouting goods through this country, indicating intense scrutiny. Other countries, many with minimal trade levels, are being subjected to tariffs ranging from 5% to 30%.
The precision of these measures is notable. The main reason given for this is to address trade deficits and negotiate better trade terms. This approach isn’t new; it builds on previous targeting of larger East Asian economies, suggesting a strategic and symbolic expansion of these measures.
Earlier, major exporting countries faced 25% duties, but this time the focus shifts slightly to smaller nations. Although the expected revenues may be lower—only a few billion—the US is signaling its intention not to limit actions to just the largest economies.
Targeting specific sectors like copper and semiconductors suggests an emphasis on supply chains. The 50% tariff on copper indicates a preference for sourcing from domestic or allied suppliers. With technology and healthcare components next on the list, sourcing for high-value inputs may become more complex.
What does this mean for those dealing in options and futures?
We anticipate increased volatility. Consistent policy actions often boost demand for protective measures, especially in sectors that directly impact production. Historically, trading volumes for certain commodities and industries rise following such announcements.
Keep a close eye on base metals, particularly copper. Timing is critical. With tariffs starting in early August, expect forward curves to react well in advance. Experience shows that the best positioning opportunities arise three to six weeks before implementation, influenced by customs enforcement and potential retaliatory actions.
Be mindful of secondary effects. Forex correlations usually increase when trade policies change significantly. Emerging markets tied to the nations affected may see small capital outflows, especially where US exposure is tied to exports. This can lead to FX volatility, which has previously matched or exceeded effects from interest rate adjustments.
This impacts implied volatility levels. Watch for changes in skew—especially if economic indicators suggest stress in technology imports or refined metals. Any downward adjustments in supply forecasts could widen volatility tails in those areas.
In terms of timing, mark the beginning of August, but don’t wait for customs data to confirm the changes. Past instances show that mere expectations can widen spreads ahead of time. The key is to observe when speculative positions unwind and liquidity shrinks before policies are enforced. Historically, this is where prices can create larger gaps.
Don’t limit your analysis to ETFs or broad commodity ranges. If previous market behaviors repeat, more detailed insights can be discovered. Distorted risk pricing tends to first impact sector-specific derivatives, especially those contracts linked to intermediate goods that rely heavily on consistent trade flows. When core materials like copper fluctuate, the effects directly impact industrial sectors.
In various cases we’ve examined, cross-sector correlation often spikes briefly before reversing sharply, potentially leaving over-hedged positions lagging. Choose wisely, stay agile with expiration rollovers, and favor precision in your trades where liquidity allows.
Monitoring daily volatility around August contract milestones could provide additional insights. If institutional players begin to secure protections ahead of changes in rates or commodity flows, it may signal broader implications.
Thus, we must not only watch for news or official reactions but also monitor actual price movements in related markets. The true trajectory is often revealed through changes in prices, compression of spreads, and increased trading volumes.
After a rally, the S&P 500 Index saw minor fluctuations and closed slightly lower following consolidation.
The S&P 500 Index closed down slightly by 0.07%, remaining almost unchanged after yesterday’s decline. Futures contracts suggest a possible rise of 0.2%, keeping the index close to Friday’s high of 6,284.65.
Recent findings from the AAII Investor Sentiment Survey show that 45.0% of investors are optimistic, while 33.1% feel pessimistic. The S&P 500 is currently above 6,200, according to daily charts.
Nasdaq 100 Overview
The Nasdaq 100 experienced a small increase of 0.07% on Tuesday, staying within its previous trading range. It reached a peak of 22,896.01 but fell to 22,587.47, indicating only a temporary correction. The Volatility Index (VIX) dropped to its lowest level since February at 16.11 last Thursday, suggesting a calm market. However, it didn’t reach a new low, showing some fluctuations in volatility without clear trends. In early trading, S&P 500 futures are holding below 6,300, facing resistance between 6,300–6,320 and finding support around 6,250. The market’s reaction to global events suggests continued potential for fluctuations. Overall, the S&P 500 seems ready for more gains, although the potential for profit-taking is present. There are no obvious negative patterns threatening the current trend. Currently, the market appears stable, not significantly retreating or advancing. The S&P 500 closed just below recent highs, showing a slight decline. Futures are indicating a modest upward trend, hinting at cautious optimism among traders looking ahead rather than just reacting to news.Analyzing Market Sentiment
Sentiment data provides useful insights. Bullish responses from retail investors are hovering in the mid-40% range, while about one-third remain bearish. This split matters less for predicting direction and more for understanding whether optimism or caution may be stretched. When too many investors lean toward one side, history shows a tendency for the opposite to occur—though not immediately or with perfect accuracy. In the tech-heavy Nasdaq 100, the focus is more on current positioning rather than clear trends. The index briefly rallied but then cooled near recent highs. This doesn’t signal a decline in fundamentals; it reflects a steady pace rather than a rush. Traders seem to be in a measured holding pattern—neither acting defensively nor making bold bets. Volatility, assessed by the VIX, has softened, reaching levels not seen in months. This lower reading may indicate complacency more than confidence. Yet, the inability to reach new lows shows there’s still an awareness of risk lurking beneath the surface. From a technical standpoint, the near-term resistance for S&P futures rests around 6,300–6,320, while support is at 6,250. As long as prices stay above 6,200 on daily charts, momentum should be maintained. Stocks generally fluctuate between these levels—alternating between hesitation and decisive movements. Given the current state, it’s essential to watch how prices behave around these levels. Staying below 6,320 may lead to neutral or slightly bearish short-term scenarios, while a breakout above could signal a new upward trend. Meanwhile, dips towards lower levels don’t necessarily mean a reversal; they could simply indicate a consolidation of previous gains. Strategic decisions should focus on well-defined price levels instead of just sentiment or macroeconomic narratives, no matter how appealing they appear. Sector rotations could happen, and leadership may shift. However, short-term derivatives will respond best to specific triggers, such as recent highs and lows. Thus, near-term strategies should prioritize positioning at clear technical points. Current sharp pullbacks are not supported by broader bearish trends, making it plausible to fade weakness within the established range. Profit-taking may be likely as we approach the upper limits of this current move, especially if resistance levels are briefly exceeded while volumes decrease or momentum slows. In this market environment, maintaining a balanced approach may prove more beneficial than holding strong convictions. Being overly rigid in either direction could be costly as trends narrow during the summer. Having the discipline to navigate through market noise—without jumping to conclusions too soon—often yields better results over shorter timeframes. Create your live VT Markets account and start trading now.European indices close higher, with France’s CAC and Italy’s FTSE MIB showing the biggest gains
Major European markets rose by 1% or more, except for the UK. France’s CAC and Italy’s FTSE MIB led the way, each climbing over 1.4%. Germany’s DAX hit new all-time highs, supported by gains in defense stocks.
A new trade deal with the US has lifted investor spirits. The European Commission is working on an agreement to resolve a longstanding trade dispute with the US, aiming to finalize it by the end of the week.
European Market Closing Levels
Closing levels were as follows: – German DAX: +1.30% – France’s CAC: +1.44% – UK’s FTSE 100: +0.14% – Spain’s Ibex: +1.24% – Italy’s FTSE MIB: +1.59% As European trading wrapped up, US stocks made smaller gains. The Dow rose by 0.11%, the S&P increased by 0.28%, the NASDAQ went up by 0.58%, and the Russell 2000 climbed by 0.24%. The changes in European markets reflect reactions to specific events rather than broad risk sentiment or economic shifts. A pattern is emerging around sectors like defense, visible in the DAX’s rise. This growth indicates ongoing institutional interest in German industrials involved in military contracts. Instead of just looking at index performance, focusing on the factors driving prices can reveal clearer trading patterns. The prospect of resolving a long-term trade dispute likely boosted investor confidence across Europe. Finalizing the deal quickly could protect the eurozone from US trade barriers, reducing risk for capital-intensive exporters. It seems that investor anticipation of this deal has already influenced market prices. Now, traders should focus on the actual deal terms and how they will impact specific sectors. The UK’s slight increase deserves attention. While France and Italy experienced strong gains, London lagged behind, indicating different investment flows. The FTSE is heavily weighted toward energy, financials, and other cyclical sectors, which haven’t benefited as much from trade optimism as their European counterparts.Across The Atlantic
Meanwhile, in US markets, we see slower growth. Although all indices rose, the momentum was not as strong as in Europe. This cautious pace suggests hesitance rather than weakness. The steady rise in the Russell 2000 indicates healthy, albeit cautious, interest in risk. The NASDAQ’s better performance aligns with ongoing investment in tech stocks seen since last year. It’s important not to overanalyze daily price movements. What’s more telling is what stays stable. For instance, the Dow’s modest gain shows that even with rising risk appetite in other markets, traditional weightings aren’t responding. This divergence hints at a changing preference that might persist. Looking ahead, attention should shift to sector rotation. With European benchmarks reacting to defense news and improving trade relations with the US, opportunities arise. Proper timing in sectors related to these developments could lead to strong performance. However, traders should wait for confirmation before acting—looking for actual price movements rather than just headlines. This week is unlikely to follow the trends of last week. Gains in Europe stemmed from optimism about real developments. As these unfold, market volatility may either decrease or reappear in sectors that were overlooked during the recent uptrend. Traders should monitor any sudden changes in price and volume, especially among mid-cap European stocks that have lagged but are linked to export-sensitive industries. Finalizing trade agreements affects not only currencies and bond yields but also alters valuations across sectors. For instance, France and Italy showed gains today, showing that external trade-related events impacted their domestic equities more than in markets focused on internal issues. What’s clear is that not all indices are climbing for the same reasons—that’s where the advantage lies. Focus on charts that respond to real developments and steer clear of those driven only by sentiment. There’s less noise to navigate in these cases. We should emphasize what can be seen and measured. In this instance, Europe’s dynamics aren’t speculative; they’re tied to ongoing trade flows and sector shifts. Create your live VT Markets account and start trading now.XAG/USD declines for the third straight time to around $36.40 due to a stronger US dollar
Silver is currently priced at about $36.40. This marks its third consecutive day of decline due to a stronger US Dollar and rising US Treasury yields. The metal is still trading within a narrow range, close to its recent 13-year high.
Recent threats of tariffs from the US have kept demand for safe-haven assets like silver steady. However, these tensions haven’t caused a clear price breakout. President Trump has announced new tariffs, including a 50% tariff on copper imports and a possible 200% tariff on pharmaceuticals. There’s also a planned 10% tariff on all BRICS nations, which are seen as opposing US interests.
Even with global uncertainties boosting demand for safe-haven assets, silver has struggled to rise. Strong US labor data from last week makes it less likely for the Federal Reserve to lower interest rates soon. This supports the US Dollar and reduces interest in non-yielding assets like silver. Currently, silver trades between $35.50 and $37.30, following an upward trend since April. It’s near the lower end of this range, above the 21-day EMA at $36.19, which has been supportive.
Technical indicators show weak momentum, with an RSI near 56 and an ADX of 12.50, indicating a lack of trend strength. A breakout above $37.30 could lead to price increases, but for now, silver is stuck in a range, focusing on geopolitical events.
With silver at $36.40, we see a frustrating third straight daily loss. This decline is linked to a stronger US Dollar and higher US Treasury yields, which generally hurt the appeal of precious metals. While silver is close to a 13-year high, it’s not gaining much and is just consolidating.
The White House’s new tariff proposals—like the striking 200% tax on pharmaceuticals and the blanket 10% on BRICS nations—have kept some demand for hard assets. Typically, increased trade tensions lead to stronger movements in metals, but lately, silver prices haven’t responded strongly and are just moving sideways.
The strength of the US labor market also plays a role. Better-than-expected data last week likely delayed predictions of any quick changes in monetary policy. This supports the US Dollar and raises yields—conditions not favorable for silver, which doesn’t yield any interest. Traders are caught between the safe-haven demand from political risks and the downward pressure from tighter monetary policy.
In terms of charts, silver is within an upward structure since April, constrained between $35.50 at the bottom and $37.30 at the top. The 21-day exponential moving average, roughly at $36.19, acts as a soft floor. As long as silver stays above this, it may discourage selling. However, bulls need more than just stability; they need to show initiative.
Technical signals are still weak. The RSI at 56 is neutral, not overbought or oversold. The ADX at 12.50 indicates low energy. Currently, there’s no strong trend. Therefore, it doesn’t make sense to take aggressive positions unless prices convincingly rise above $37.30 with strong volume. Until then, a drop could test existing support zones.
When planning trades, consider both macro factors and technical signals. With the US Dollar strong and no monetary easing in sight, the focus should shift towards short-term volatility instead of long-lasting trends. We might see temporary shifts in correlation, especially if geopolitical events heat up or market sentiment changes suddenly.
Pay close attention to yield movements in the bond market. If Treasury yields peak or decrease, we might see safe-haven flows return to metals. Conversely, more strong US economic data could keep yields high, making real rates attractive, which could prolong the current range-bound action or even invite declines.
For now, it’s best to watch and wait rather than make aggressive trades. Being patient and prepared for either side of the price range is a safer approach. Entry points should be carefully calculated, with stop placements that reflect uncertain but limited movements, supported by either moving averages or the edge of the trading channel, depending on market conditions.
Atlanta Fed’s GDPNow model keeps second-quarter growth estimate at 2.6% unchanged
The Atlanta Fed’s GDPNow model predicts that the US economy will grow by 2.6% in the second quarter of 2025. This estimate hasn’t changed since July 3.
Recent reports show a slight decrease in the forecast for real residential fixed investment growth, adjusting from -6.4% to -6.5%. Additionally, the contribution of inventory investment to annual GDP growth has been slightly reduced from -2.13 to -2.15 percentage points.
The next update for the GDPNow model is set for Thursday, July 17.
This means that expectations for the US economy are stable, even with some minor downward adjustments in certain areas. The overall growth rate of 2.6% for the quarter has not changed, indicating confidence that the economy will continue to grow steadily for now. This is based on how different GDP components, like housing investment and inventory changes, are currently assessed.
For example, residential fixed investment has dropped a bit—from negative territory to a slightly worse negative. While this isn’t a significant decline, it shows a slowing trend in sectors closely related to construction and housing. Higher borrowing costs or lower demand might be making developers more cautious, or projects could be experiencing delays. Even a small change of 0.1% adds to the narrative of weakness in sectors heavily reliant on physical assets.
Inventory investment is also slightly lower than previously thought. This isn’t a large change—just a small impact on GDP—but it suggests that businesses might be reducing production without immediate buyers. This often happens when companies anticipate less demand or are being cautious due to rising costs.
In the short term, this isn’t a major concern, but it’s something to monitor. For analysts watching trends, these updates are more significant than their minor changes might imply. The details of growth can be just as important as the overall rate, showing that underlying issues may be emerging.
As we prepare for the official update on July 17, we should consider not just new numbers but what they might indicate about overall sentiment and sector-specific trends. If the Fed stays focused on data, issues in housing or inventory levels will be important to observe. How we interpret recent data and whether a clear pattern emerges will inform short-term strategies.
For instance, keeping an eye on changes in rate expectations or commodity flows related to manufacturing can offer insights before traditional reports are released. It’s important not to expect the same pace week after week—the tempo may be slowing down slightly, and that matters.
We should also pay attention to upcoming corporate earnings, particularly from firms involved in residential construction or industrial production. Subtle comments about managing costs or future inventory can provide valuable insights, sometimes even more than hard data. Often, what’s left unsaid can clarify the situation.
So, before the next GDPNow release, there’s a useful opportunity to adjust models, update volatility assumptions, and reconsider hedging strategies. The overall macro signal is modest and stable, which might cause some to feel overly confident. However, beneath the surface are slow but important changes that we can leverage.
