Today's Economic Outlook

Market Overview

“The Federal Reserve's chairman emphasized the need for more evidence of slowing inflation before considering interest rate cuts,” Saxo Bank noted. “We believe long-term investor sentiment for gold will stay positive due to ongoing uncertainty about the U.S. economy and concerns over the unsustainability of the U.S. deficit.”

The U.S. CPI and PPI that are scheduled to be released later today and tomorrow respectively may set the rate cut expectations, and many analysts believe this to be the data the FED is waiting for to begin cutting rates.

Treasury yields showed mixed results: the U.S. two-year note was last seen yielding 4.639%, a rise of 0.2 basis points, while the yield on the 10-year note decreased by 0.9 basis points to 4.292%, driven by market expectations. This pause in Treasury yield growth has bolstered the stock market and metals while putting pressure on the currency.

Traders are currently pricing in a 46% probability that the Fed will have cut rates by two notches by the end of December's meeting and a 70% probability for the first cut in September, according to CME Group's FedWatch tool.

On Wall Street, the Dow Jones Industrial Average (DJI) surged by 429.39 points, or 1.09%, closing at 39,721.36. The S&P 500 (SPX) rose by 56.93 points, or 1.02%, to 5,633.91, and the Nasdaq Composite (IXIC) increased by 218.16 points, or 1.18%, reaching 18,647.45. The S&P 500 achieved its sixth consecutive record high close, while the Nasdaq marked its seventh straight record high.

Oil prices ended higher, spurred by data showing a significant increase in U.S. refining activity last week, leading to a larger-than-expected drawdown in gasoline and crude inventories. However, gains were limited as Hurricane Beryl caused minimal supply disruptions. U.S. crude (CL1!) settled up by 0.85%, or 69 cents, at $82.10 per barrel, while Brent (BRN1) finished at $85.08 per barrel, up 0.5%, or 42 cents.

GOLD -Gold prices edged higher, trading between 2365.443 and 2401.779. Anticipation of rate cuts and increasing uncertainty in the U.S. political and economic landscape are expected to drive gold prices to new highs this quarter.

SILVER - Silver prices found support at 30.668. In line with gold, silver is expected to strengthen further amid rising geopolitical tensions in the Middle East and economic uncertainties.

DXY - The DXY is trading below 105.071 and shows continued weakness. We anticipate further declines as the dollar has been sliding since the start of the quarter, creating new lows.

GBPUSD - The Pound has gained strength after finding support at 1.27938. We expect the price to rise further, driven by uncertainty surrounding the French elections as investors seek more secure investments in the U.K.

AUDUSD - The Australian Dollar is gaining strength in anticipation of rate cuts, breaking out of its range. We foresee continued upward momentum.

NZDUSD - The NZ Dollar experienced a sharp drop following unchanged cash rates at 5.5%. This was perceived as economic weakness, suggesting an earlier-than-expected rate cut this year. However, we await further confirmation as the NZD recovers, trading slightly above 0.60847, back within its range.

EURUSD - The Euro is outperforming the dollar amid expectations of U.S. rate cuts. While consolidation is anticipated due to uncertainties in both economies, the potential for growth remains.

USDJPY -Despite a sell-off in the dollar, the Yen is weakening against it, trading above 161.105. This decline is attributed to Japan's underperforming economy.

USDCHF -The CHF is showing a slight recovery but remains weak, with the price moving upwards despite its peers. We anticipate further declines as the CHF trades below 0.90054.

USDCAD -The CAD is strengthening against the dollar, trading below 1.36328 and approaching 1.35895. We expect the price to test this level and possibly fall further.