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US Producer Price Index (PPI) inflation came in below expectations, bolstering bets of interest rate cuts from the Federal Reserve (Fed) next week. The US Dollar (USD) is on the back foot, weakened by mounting market expectations that the Federal Reserve will cut interest rates again next week. This sentiment was bolstered by softer-than-expected US Producer Price data released on Wednesday. Now, all eyes are on Thursday’s US Consumer Price Index (CPI) report, which will offer a clearer picture of inflation and could heavily influence the Fed’s decision.
Currency Highlights
US Dollar Index (DXY): The DXY faded its Tuesday recovery and is now hovering around 97.60. Investors are closely watching the upcoming CPI data and weekly jobless claims to gauge the strength of the US economy.
EUR/USD: The Euro regained ground against the dollar, moving back above the 1.1700 mark. The market widely anticipates that the European Central Bank (ECB) will hold its interest rates steady for the second consecutive meeting.
GBP/USD: The British Pound made solid gains, pushing toward the 1.3560 level as the Greenback lost momentum. The only key data from the UK will be the RICS House Price Balance.
USD/JPY: The pair extended its decline from Tuesday, once again testing the critical 147.00 support level. Japanese market attention will be on the BSI Large Manufacturing index, Producer Prices, and weekly Foreign Bond Investment figures.
AUD/USD: The Australian Dollar is accelerating its monthly recovery, rising to levels not seen since early November 2024 and surpassing 0.6630. The upcoming Consumer Inflation Expectations and a speech from the Reserve Bank of Australia’s (RBA) Connolly are next on the docket.
Commodity Markets
WTI Crude Oil: Prices rose for a third straight day, climbing above the $64.00 per barrel mark. This rally is driven by ongoing geopolitical tensions, despite a bearish report from the US EIA that showed an increase in crude supplies.
Gold and Silver: Gold prices resumed their upward trend, retesting the $3,650 zone per troy ounce. Silver followed suit, reclaiming the $41.00 per ounce mark and leaving behind its previous day’s pullback. This renewed strength in precious metals suggests a flight to safety amid global uncertainties.
