Market Watch Today

Market Overview

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

Analysts expect the U.S. central banks to hold the rates steady after the two-day policy meeting on Wednesday.

“We are seeing the U.S. dollar strengthen as people are concerned that the Fed may not be able to cut interest rates in the near future,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc. 

The strength that came from the employment change despite challenges in several aspects of the economy showed that growth is still ongoing as labor plays a bigger part in identifying market growth and capacity. With that in mind, we are waiting to see how the CPI will be printed later this Wednesday. 

The forecast suggests that the Core CPI will grow steadily from last month at 0.3% alongside the CPI y/y at 3.4%. However, the forecasts do suggest a slowdown from the CPI m/m at 0.1% from last month's 0.3%.

Markets are currently pricing in a roughly 56% chance of a cut in September, according to the CME FedWatch tool, down from 77.8% one week ago.

Meanwhile, the Fed is widely seen holding rates at 5.25% to 5.5%, putting the focus on policymakers' updated economic projections known as the “dot plot” and Chair Jerome Powell's press conference for clues of how soon cuts could begin.

“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 strike a relatively dovish tone at the press conference, however, given disappointing growth indicators since the last Fed meeting, Williams said.

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

We expect the release of the data to be dovish for the market outlook but we do warn against speculating as the market is very sensitive to the data, moving prices at a rapid rate from minor changes in data release. 

GOLD - Gold has stagnated, waiting for the data release later. It has been trading between 2314.890 and 2295.536. There is a higher chance for the bears to prevail at the current price level. We await further confirmation.

SILVER - The price has held steady ahead of the data release. The market is moving sideways, trading between 29.900 and 29.018. We will wait to see how the market progresses.

DXY - Although the rise has been slow and steady, the market is moving upward, showing bullish sentiment toward the dollar. The market is creating new higher highs and higher lows above 105.071.

GBPUSD -The price has moved away from Monday levels but has recovered slightly from the fall. However, we are seeing a bearish sentiment with the price. The formation of a triple top at 1.27938 suggests that 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 probability of the price moving lower is higher than moving up.

NZDUSD -The price has been trading between 0.61408 and 0.60954. Although the price briefly moved above 0.61408, it was quickly rejected by the market structure, indicating a stronger bearish sentiment.

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

USDJPY - The pattern has been confirmed, and the market is rising away from it. 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 as the BoC cut rates. We expect the price to rise further from this point after the data release. We await further confirmation.