EURUSD
- Market Performance: The EUR/USD is holding above 1.0800 in the European session on Wednesday. The pair still lacks a clear direction amid a cautious market mood and a steady US Dollar.
- ECB Commentary: Yesterday, ECB governing council member and Governor of the Bank of Italy Fabio Panetta said the central bank could gradually reduce interest rates without any hiatus to slow inflationary pressures.
- Investor Sentiment: The major shifts to the sidelines as investors await the United States (US) Consumer Price Index (CPI) data for June, which will be published on Thursday.
- Inflation Data: The inflation data will provide clues as to whether current expectations that the Federal Reserve (Fed) will start reducing interest rates from the September meeting are appropriate.
- Fed Commentary: Fed Chair Jerome Powell signaled in his commentaries at the semi-annual Congressional testimony on Tuesday that rate cuts are not appropriate until policymakers gain significant confidence that inflation is on course to return to the desired rate of 2%.
| SMA (20) | Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD is in a holding pattern above 1.0800, with market participants awaiting key US CPI data. If inflation data supports expectations of a Fed rate cut, the pair could see upward movement. Conversely, stronger inflation could weigh on the EUR/USD.
GBPUSD
- Market Performance: GBP/USD is trading around 1.2800 in European trading on Wednesday.
- BoE Rate Path Uncertainty: The uncertainty over the Bank of England (BoE) rate-cut path has deepened after hawkish guidance from BoE policymaker Jonathan Haskel.
- Broader Appeal: The broader appeal of the GBP/USD remains firm amid strong speculation that the Federal Reserve (Fed) will start reducing interest rates during the September meeting.
- Fed Commentary: Fed Chair Powell said, "Labor market conditions have cooled considerably compared to where they were two years ago," and added that the US “is no longer an overheated economy.”
- Inflation Data: Investors will now focus on the US Consumer Price Index (CPI) report for June, which will be published on Thursday.
| SMA (20) | Slightly Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: GBP/USD hovers around 1.2800 with investors awaiting US CPI data for June. Hawkish BoE commentary and Fed rate cut speculations are key drivers. A dovish CPI report could push GBP/USD higher, while a strong report might limit gains.
GOLD
- Market Performance: Gold is edging higher on Wednesday, continuing to recover after the PBoC-related sell-off on Monday.
- Central Bank Demand: Data emerged showing that worldwide central bank demand for gold remains buoyant.
- PBoC Impact: The negative impact of the news that the largest consumer of gold, the People’s Bank of China (PBoC), stopped buying the precious metal in June, extending its parsimony for another month after it also closed its wallet in May, following an 18-month buying spree.
- Fed Commentary: Gold shrugged off Federal Reserve (Fed) Chairman Jerome Powell’s testimony to the Senate Banking Committee on Tuesday, in which he refused to give a date for a first interest-rate cut, saying instead that the Fed would adopt a data-dependent approach to interest rates.
- Powell's Statements: At the same time, Powell did make some statements that acted as an antidote, as he acknowledged progress had been made on inflation and discounted the possibility of rate hikes.
Closing statement: Gold is showing resilience above $2,350, driven by robust central bank demand and cautious Fed commentary. If inflation concerns persist and rate hikes are further discounted, XAU/USD could target new highs. Conversely, renewed PBoC buying abstinence might cap gains.
CRUDE OIL
- Market Performance: West Texas Intermediate US Crude Oil extended a near-term decline on Tuesday, falling to $81.50 per barrel as American Crude Oil markets continue to struggle to find consistent bullish momentum.
- API Report: The American Petroleum Institute (API) reported another week-on-week decline in US Weekly Crude Oil Stock for the week ended July 5.
- Chinese Demand: Chinese demand continues to undershoot broad market expectations for overall upticks in Asian fossil fuel usage.
- Tropical Storm Beryl: Tropical Storm Beryl, which was downgraded from a category 1 hurricane, also failed to disrupt US Crude Oil markets as much as barrel traders had initially feared.
- Fed's Stance: The Fed has kept a cautious stance. The higher rate would negatively impact the economy of the United States, the largest Oil consumer.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Rising |
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Closing statement: Crude Oil prices are facing downward pressure due to weaker-than-expected Chinese demand and the limited impact of Tropical Storm Beryl on US production. While API data showing stock declines offers some support, the overall market sentiment remains cautious. If the Fed maintains its cautious approach, economic concerns might further suppress oil prices, possibly leading to continued declines in the near term.
DAX
- Market Performance: Germany stocks closed lower on Tuesday, with significant losses in the Construction, Technology, and Industrials sectors.
- Volatility Index: The DAX volatility index, which measures the implied volatility of DAX options, dropped 5.20% to 12.62, marking a new one-month low.
- Investor Confidence: The Sentix Investor Confidence index for the Eurozone plunged to -7.3, significantly below the expected -0.6, indicating growing pessimism among investors.
- US Focus: In the US, attention will be on Fed Chair Powell’s testimony and the release of crude oil inventory data, which is expected to show a modest increase of 0.7 million barrels.
- Fed Speeches: Market participants are also looking forward to speeches from Chicago Fed President Austan Goolsbee, Fed Governor Michelle Bowman, and Fed Governor Lisa Cook.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The DAX index is facing downward pressure due to sectoral losses and declining investor confidence as indicated by the Sentix index. With the focus shifting to Fed Chair Powell's testimony and upcoming US crude oil inventory data, any significant insights could influence market sentiment. If the Fed officials hint at a dovish stance, it might provide some relief to the market, but the overall outlook remains cautious given the current investor pessimism.