COMMODITIES: Gold's Short-Term Weakness Corrective, Bull Cycle Still Intact

• Barclays project moderate month-end USD selling against most majors, with a weaker sign for EUR/USD. Their quarter-end model, however, indicates strong USD sales, with a weak sign for EUR/USD, and a moderate sign for USD/JPY.
• Citi see moderate USD sales this month, however the signal is weaker in GBP/USD due to outperformance in UK equities & bonds this month

• Yesterday's FX options volumes cleared $120bln - the busiest day for derivatives since June 12th and the second busiest since early May. Activity was led by a busier EUR/USD market, however EM FX was also in focus with much higher-than-usual activity across BRL, KRW and MXN.
• Given the post-ceasefire rally in EUR/USD spot, no surprise to see EUR calls dominating ($3 in EUR calls have traded for every $2 in puts so far this week). We note sizeable interest in $1.1700 calls, which see cumulative notional of over $4bln so far this week - a level spot hasn't traded above since 2021. Vol hedges have been a dominant theme so far Wednesday, with sizeable 1.1670 straddles (expiring late September) and 1.1430/1.1790 strangles (expiring early July) among the highlights.
• Where does this leave vol? The front end of the G10 FX vol curve remains under pressure. Implied vols across JPY, EUR, GBP, CHF and others are in the lower-end of the recent range, and through the bottom of the lower quartile in some instances. As a result, NZD and AUD are the G10 currencies maintaining a positive realised/implied vol ratio - and only just. This may signal a base in implied, which are holding despite the slide in realised volatility - as the expiry of the pause in Trump's Liberation Day tariffs on July 8th looms as the next potential driver of uncertainty.

Speaking at the NATO summit, US President Donald Trump says, "We're with them all the way" when asked by reporters about the US' commitment to Article 5 (the collective defence clause. Adds that "NATO will be very strong". NATO Secretary General Mark Rutte praises Trump on getting NATO countries to increase defence spending, says that "Today we will decide to go to 5% [of GDP]," adding "This is about Europeans and Canadians paying more, not American taxpayers." 

• Trump says that the Iran-Israel ceasefire is "going well". Asked on Iran's uranium enrichment plans, Trump says, "We will not allow that militarily...Iran is not going to have a bomb...the last thing Iran wants to do is enrich anything." Says the US will have "somewhat of a relationship" with Iran.
• Asked on the NYT report claiming that, according to intel reports, the US strikes on enrichment facilities only caused superficial damage, Trump says, "They really don't know". Adds "I believe it was total obliteration." Claims the Iranian nuclear programme has been put back "decades" and that the US strike "ended the war".
• Asked if the US would strike Iran again if it rebuilds nuclear sites, Trump responds: "Sure".
• US Secretary of Defence Pete Hegseth says that "The bombs landed right where they were supposed to, it was devastation". Says there will be an investigation into the leak of the report. Secretary of State Marco Rubio says the Iranian conversion facility "can't even be found on the map, it is wiped out."