EURUSD
- EUR/USD recorded a 0.18% increase, reaching 1.1028, remaining just below a two-month peak. Despite soft Spanish inflation data, market expectations for further interest rate hikes by the European Central Bank (ECB) remained intact.
- Spanish consumer prices rose by 1.9% year-on-year in June, falling short of the ECB's 2% target. This suggests that the central bank should consider concluding its current rate-hiking cycle.
- In contrast to the soft Spanish inflation data, German inflation experienced an uptick in June, rising by 6.4% on an annual basis. This interrupted the previous trend of steady decline observed since the beginning of the year.
- The U.S. dollar weakened significantly, reaching a two-month low in early European hours on Wednesday, as investors awaited the release of a crucial U.S. inflation report.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: EUR/USD continued its upward momentum, approaching a two-month peak despite weaker Spanish inflation figures. The market's focus shifted towards the forthcoming U.S. inflation report, which influenced the decline of the U.S. dollar. The contrasting trends in inflation between Spain and Germany highlight the complex dynamics influencing the ECB's rate-hiking decisions.
GBPUSD
- GBP/USD experienced a 0.09% increase, reaching 1.2939, coming close to a new 15-month high of 1.2970 achieved earlier in the session. Traders anticipate additional interest rate hikes from the Bank of England (BoE) as the U.K. faces the highest inflation rate among major economies.
- British wages saw a significant rise, hitting the joint-fastest pace on record according to recent data. This puts further pressure on the BoE to take action. Additionally, the BoE's financial stability report, released on Wednesday, stated that the country's banks are adequately prepared to manage the potential risks arising from a growing mortgage rate crisis.
- The Dollar Index, which measures the performance of the U.S. dollar against a basket of other currencies, declined by 0.3% to 101.140. This extends the losses observed since the beginning of the week following indications from several Fed officials that the central bank is nearing the end of its tightening cycle.
- The upcoming U.S. Consumer Price Index (CPI) report is expected to show a 3.1% rise in June, a slower annual increase compared to May's 4%. The monthly increase is projected to be 0.3%. The annual core rate is anticipated to decline to 5% from 5.3%, marking the third consecutive monthly drop.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: GBP/USD continued its upward trajectory, hovering near a 15-month high, driven by expectations of further interest rate hikes by the Bank of England in response to soaring U.K. inflation. The U.S. dollar weakened as market participants interpreted comments from Federal Reserve officials as an indication of an approaching end to the central bank's monetary tightening cycle. All eyes are now on the upcoming U.S. CPI report, which could impact the direction of GBP/USD.
GOLD
- Gold prices moved higher on Wednesday, sticking close to a three-week high as markets bet that the Federal Reserve was close to reaching peak interest rates, with focus turning to upcoming consumer inflation data.
- An interest rate hike of 25 basis points at the Federal Reserve meeting later this month is largely priced in, but the U.S. consumer inflation report, due later in the session, could help dictate how many more hikes are left in the tank.
- The prospect of an eventual end to the Fed’s current rate hike cycle saw investors pivot out of the dollar and into other rate-sensitive assets, particularly stocks and commodities.
- Focus this week will be also on comments from more Fed officials, including Minneapolis Fed president Neel Kashkari and Cleveland Fed president Loretta Mester.
Closing statement: Gold prices moved higher on Wednesday, sticking close to a three-week high as markets bet that the Federal Reserve was close to reaching peak interest rates, with focus turning to upcoming consumer inflation data. An interest rate hike of 25 basis points at the Federal Reserve meeting later this month is largely priced in, but the U. S. consumer inflation report, due later in the session, could help dictate how many more hikes are left in the tank.
CRUDE OIL
- Crude oil prices barely moved on Wednesday as markets weighed a possible build in U.S. crude stockpiles and economic concerns against planned supply cuts by the world's biggest oil exporters and hopes for higher global demand.
- In a bearish demand sign, U.S. crude inventories rose about 3 million barrels in the week to July 7, market sources said, citing American Petroleum Institute industry figures.
- Forecasts from the U.S. EIA and the International Energy Agency point to the market tightening into 2024. The EIA projected global demand would outpace supply by around 100,000 bpd in 2023 and by 200,000 bpd in 2024.
- The data from the Energy Information Administration (EIA) are due later Wednesday.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: Crude oil prices barely moved on Wednesday as markets weighed a possible build in U. S. crude stockpiles and economic concerns against planned supply cuts by the world’s biggest oil exporters and hopes for higher global demand. In a bearish demand sign, U. S. crude inventories rose about 3 million barrels in the week to July 7, market sources said, citing American Petroleum Institute industry figures.
DAX
- Germany stocks were higher after the close on Tuesday, as gains in the Consumer & Cyclical, Food & Beverages and Retail sectors led shares higher.
- European stock markets traded higher Wednesday, helped by gains in the U.K. banking sector ahead of the release of key U.S. inflation data.
- The DAX index in Germany traded 0.44% higher, the CAC 40 in France rose 0.81%, while the FTSE 100 in the U.K. traded 0.62% higher.
- The DAX volatility index, which measures the implied volatility of DAX options, was down 5.77% to 16.66.
| SMA (20) | Slightly Falling |  | |
| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: Germany stocks were higher after the close on Tuesday, as gains in the Consumer Cyclical, Food Beverages and Retail sectors led shares higher. European stock markets traded higher Wednesday, helped by gains in the U. K. banking sector ahead of the release of key US inflation data.