EURUSD
- EUR/USD Recovery: After three consecutive days of losses, EUR/USD has managed to regain some ground, currently trading around 1.1050 during the European session on Wednesday. The pair's rebound comes as investors digest key economic data and focus on upcoming central bank decisions.
- German Inflation Data: The Euro faced some downward pressure following the release of German inflation data. The Harmonized Index of Consumer Prices (HICP) showed a 2.0% year-on-year increase in August, in line with market expectations. Although inflation remains stable, it has not provided the euro with any significant upward momentum.
- ECB Rate Cut Expectations: Traders are increasingly pricing in a 25-basis point rate cut by the European Central Bank (ECB) at its Thursday policy meeting, which would bring the key interest rate down to 4.0%. Expectations of further monetary easing by the ECB are capping the euro’s recovery.
- US CPI Report: Market participants are eagerly awaiting the release of the US Consumer Price Index (CPI) data later in the North American session. This inflation report is seen as a critical factor in determining the path of Federal Reserve interest rate cuts. The report could provide fresh clues regarding the size of a potential rate cut in September.
- Fed Interest Rate Uncertainty: The recent US labour market report has increased uncertainty about whether the Federal Reserve will pursue an aggressive rate cut at its September meeting. Traders are closely watching for signals from both the US inflation report and any upcoming Fed commentary to gauge the likelihood of a significant rate adjustment.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The EUR/USD pair is attempting to recover from its recent losses, but upcoming ECB and Fed decisions will play a critical role in determining the next directional move. If the ECB delivers a rate cut as expected and the US CPI data points to lower inflation, the pair may find support around the 1.1050 level. However, continued uncertainty surrounding the Fed's rate path could keep volatility elevated. Traders will remain cautious as they await more concrete signals from the central banks.
GBPUSD
- Modest Gains for GBP/USD: On Wednesday, GBP/USD attracts some buying interest, supported by a modest US Dollar (USD) decline. Despite this recovery, the fundamental backdrop remains cautious, warranting restraint before placing aggressive bullish bets on the pair.
- UK Unemployment Rate: The UK's Office for National Statistics (ONS) reported on Tuesday that the ILO Unemployment Rate slightly decreased to 4.1% for the three months ending in July, down from 4.2%. This figure aligns with market expectations but has had a limited positive impact on the British Pound.
- Stagnant UK Economy: The UK economy showed signs of stagnation in July, with no notable growth. Additionally, Industrial Production unexpectedly declined, putting a cap on the Pound Sterling's upside. These disappointing figures have tempered market enthusiasm for further gains in GBP/USD.
- US Inflation Data in Focus: All eyes are on the upcoming release of the US Consumer Price Index (CPI) for August, which is scheduled for Wednesday. Markets are anticipating headline inflation to ease to 2.6% year-on-year (YoY), down from 2.9% in July. The CPI report is crucial as it may offer fresh insights into the Federal Reserve's policy path and the possibility of future rate cuts.
- Producer Price Index (PPI) Expectations: On Thursday, the Producer Price Index (PPI) data is expected to show a decrease in headline inflation to 1.7% YoY, compared to 2.2% in July. These inflation indicators will play a pivotal role in shaping market sentiment regarding the US Dollar and the broader economic outlook.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD is seeing modest gains due to a softer US Dollar, but the lack of strong UK economic data and looming US inflation reports are preventing the pair from gaining substantial momentum. Traders are likely to remain cautious ahead of the key US CPI and PPI data releases this week, which could drive the next major move in the pair. A softer US inflation reading may support further gains in GBP/USD, but the UK’s weak economic performance remains a significant headwind for the Pound Sterling.
GOLD
- Current trading: Gold price continues to consolidate its two-day uptrend, trading above the $2,500 mark during Wednesday's Asian session. However, traders remain cautious, opting to sit on the sidelines ahead of the much-anticipated US inflation report. The report is expected to provide clues about the size of the Federal Reserve's (Fed) potential interest rate cut next week.
- Fed Rate Cut Expectations: Markets are pricing in a 67% chance of a 25-bps rate cut, while the probability of a more aggressive 50-bps cut stands at 33%, according to the CME Group’s FedWatch Tool. The outcome of the US inflation test could determine which path the Fed takes, and this uncertainty is keeping gold traders on edge.
- US Dollar Weakness: The Gold price finds support from renewed selling pressure in the US Dollar. This USD weakness is partly driven by a sharp sell-off in USD/JPY, with the Japanese Yen spiking to fresh eight-month highs near 141.50 against the USD. The surge in the Yen followed hawkish remarks from Bank of Japan (BoJ) board member Junko Nakagawa, which intensified pressure on the USD.
- Presidential Debate Impact: The first US Presidential debate between former President Donald Trump and Democratic nominee Kamala Harris in Pennsylvania had minimal impact on the financial markets. Investors remained cautious, shifting their focus to US government bonds for safety, as the debate failed to introduce any significant surprises or policy shifts that could affect market sentiment.
Closing statement: XAU/USD is expected to remain within a consolidation phase above $2,500, as market participants await further clarity from the US inflation data. A softer inflation reading could increase the chances of a Fed rate cut, offering further support to gold prices. Conversely, a higher-than-expected inflation print might bolster the US Dollar, potentially capping further gains in Gold. For now, the yellow metal benefits from USD weakness, but its next major move will likely depend on the outcome of the US CPI report and the subsequent Fed policy decision.
CRUDE OIL
- OPEC Report: Crude oil prices have moved lower, even as the latest monthly OPEC report maintained a bullish outlook for demand and economic activity, which it expects will drive future demand. Despite OPEC's optimism, the market remains under pressure, likely due to other external factors weighing on sentiment.
- Tropical Storm: Bloomberg reports that Tropical Storm Francine is intensifying as it approaches the Gulf of Mexico, forcing oil drillers in the area to evacuate crews and halt offshore crude production. This region accounts for a significant portion of US oil output, raising concerns about potential supply disruptions.
- Mol Group Secures Oil Flow: In an effort to ensure continuous and safe oil supply, Hungarian energy company Mol Group has taken over the management of the Russian oil flow at the Belarusian-Ukrainian border. The company's move guarantees that oil will continue to flow into Hungary via Ukrainian land, mitigating concerns about potential geopolitical disruptions.
- China's Crude Imports: According to Bloomberg, Liao Na, chief consultant of energy and chemicals at Mysteel OilChem, has predicted that China’s crude oil imports may decline by another 1.2% year over year. The forecast underscores concerns over weakened demand from the world's largest crude importer, adding further downside pressure on oil prices.
- API Report: Market participants are awaiting the American Petroleum Institute's (API) weekly data on US crude oil stockpiles. Last week's report indicated a significant drawdown of 7.8 million barrels, and another large drawdown could help support oil prices in the near term.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: While OPEC maintains a positive view on future demand, the market remains concerned about potential supply disruptions from Tropical Storm Francine and continued weak demand from China, which may keep oil prices under pressure. In the near term, the API's US crude stockpile report will be closely watched. Another substantial drawdown could provide support to WTI prices, though broader macroeconomic and geopolitical factors are likely to keep price action volatile.
DAX
- Commerzbank Leadership Change: Commerzbank's CEO, Manfred Knof, announced that he will not seek another term after his current contract ends in December 2025. This decision coincides with the German government beginning to sell some of its shares in the bank, signaling a potential shift in leadership and ownership for Germany's second-largest lender. The timing of these announcements highlights a significant transition phase for Commerzbank.
- Deutsche Bank Shares Drop: Deutsche Bank saw its shares fall by 4.9% on Tuesday. Analysts pointed to comments from Goldman Sachs CEO David Solomon, who mentioned that trading revenue at the US investment bank could decline by 10% in the third quarter. The comments may have triggered a ripple effect, contributing to weakness in other major banking stocks, including Deutsche Bank.
- US Election Debate: The US Presidential Election Debate on Monday night reportedly impacted the betting markets. According to FICC Investor CN Wire, Polymarket displayed equal odds for Trump and Harris to win the 2024 election, indicating uncertainty surrounding the outcome.
- US CPI Report: Investors are closely watching the upcoming US Consumer Price Index (CPI) report, which will be released on Wednesday. Economists expect the annual inflation rate to fall from 2.9% in July to 2.6% in August. This data will likely influence the Federal Reserve's rate path and could lead to further market volatility.
- ECB Rate Cut Expected: On Thursday, the European Central Bank (ECB) is widely expected to implement another rate cut. This move comes in anticipation of a similar decision from the Federal Reserve as policymakers across the globe attempt to navigate economic challenges amidst steady inflation expectations.
| SMA (20) | Slightly Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: With a moderate inflation environment in Germany and a positive start to the week for the DAX, the index could continue to see gains if global data, particularly from the US CPI report, align with market expectations. However, caution remains due to the mixed economic signals from China and ongoing US election developments. Investors will remain attentive to economic data and geopolitical events for further direction.