Economic News Today

Market Overview

The dollar is trading at a four-week high ahead of the anticipated U.S. inflation report due this Wednesday.

Analysts predict that the U.S. central bank will maintain steady rates after the two-day policy meeting concludes on Wednesday.

“We are observing a strengthening U.S. dollar as concerns mount that the Fed might delay cutting interest rates in the near future,” said Darren Richardson, Chief Operating Officer at Richardson International Currency Exchange Inc.

The resilience seen from the employment changes, despite economic challenges, indicates ongoing growth, with labor playing a crucial role in market capacity and expansion. With this context, we await the CPI report expected later this Wednesday.

Forecasts suggest that the Core CPI will show steady growth at 0.3% from last month, while the annual CPI is expected to be 3.4%. However, a slowdown is anticipated for the monthly CPI, forecasted at 0.1%, down from the previous month's 0.3%.

According to the CME FedWatch tool, markets are currently pricing in around a 56% chance of a rate cut in September, down from 77.8% one week ago.

Meanwhile, the Fed is widely expected to keep rates at 5.25% to 5.5%, with attention on policymakers' updated economic projections, known as the “dot plot,” and Chair Jerome Powell's press conference for hints on the timing of potential cuts.

“Consensus seems to be that the number of cuts in 2024 will be downgraded from three currently to two in the latest dot plot,” said Kieran Williams, head of Asia FX at InTouch Capital Markets.

Powell is likely to adopt a relatively dovish tone during the press conference, given the disappointing growth indicators since the last Fed meeting, Williams added.

Most currencies paired against the dollar have been relatively flat ahead of the data release.

We anticipate the data release to have a dovish impact on the market outlook, but caution against speculation, as the market is highly sensitive to data changes, which can rapidly move prices.

GOLD:

Gold has stagnated, awaiting the upcoming data release. It has been trading between 2314.890 and 2295.536. Currently, there is a higher probability of bearish momentum at these price levels. We await further confirmation.

SILVER:

The price has remained steady ahead of the data release, moving sideways between 29.900 and 29.018. We will monitor the market's progress.

DXY:

Despite a slow and steady rise, the market is trending upward, indicating bullish sentiment towards the dollar. The market is creating new higher highs and higher lows above 105.071.

GBPUSD:

The price has moved away from Monday's levels but has slightly recovered from the fall. However, bearish sentiment persists. The formation of a triple top at 1.27938 suggests the price may move lower from its current level.

AUDUSD:

The price has stagnated after bouncing off 0.65869 and remains below 0.66145. We await further price action, but the likelihood of the price moving lower is higher than moving up.

NZDUSD:

The price has been trading between 0.61408 and 0.60954. Despite briefly moving above 0.61408, it was quickly rejected by market structure, indicating a stronger bearish sentiment.

EURUSD:

The EUR has fallen more than other currencies following the BoE rate cuts. We expect the price to fall further from its current level as bullish structures are broken. The price recently corrected from 1.07240.

USDJPY:

The W pattern has been confirmed, and the market is rising. However, the price is stagnating at around 157.193. We await further price action, but the chances of a bullish JPY remain high.

USDCHF:

The market has stagnated ahead of the CPI data release. We await further confirmation before establishing any bias in this market.

USDCAD:

The price appears bullish following the BoC rate cuts. We expect the price to rise further from this point after the data release. We await further confirmation.