Market Buzz: What's Happening Today?

Market Overview

Americans themselves are losing faith in democracy. Six in ten adults think democracy could be at risk depending on who wins the presidential election. Two in ten believe that democracy is strong enough to withstand any election outcome, while another two in ten believe democracy is already so seriously broken that it doesnt matter who wins.

But why does this matter to us？ Insecurity within the U.S. means insecurity for world markets. A loss of confidence among its people could lead to a loss of confidence in the worlds monetary standard, the dollar. All these factors are part of a broader narrative where the American people are increasingly dissatisfied and chaotic about the state of their country—one that once loudly championed democracy and freedom.

The PPI m/m came out at 0% according to FOREXFACTORY while the Core PPI m/m showed 0.1% -- both lesser than the expected number.

The July Producer Price Index increased a less-than-expected 0.1%, after rising 0.2% in June, the Labor Department said, as a rise in the cost of goods was tempered by cheaper services. In the 12 months through July, the PPI increased 2.2%, backing down from a 2.7% rise in June.

This disinflation supports the idea of the FED cutting rates this September. Slowing inflation and a cooling labor market have led financial markets to anticipate that the Federal Reserve will start its easing cycle in September. With inflation behaving and the unemployment rate surging to near a three-year high of 4.3% in July, an interest rate cut of 50 basis points from its current 5.25% to 5.50% range cannot be ruled out.

The July Consumer Price Index is due at 8:30 a.m. EDT (1230 GMT) on Wednesday. Thursday also brings indicators such as retail sales and weekly jobless claims. Claims have taken on more importance recently because of the Fed's scrutiny of labor market conditions.

“The market is hoping they confirm slowing in the economy that will also give the Fed more excuse to cut rates,” said Kim Rupert, managing director, of fixed income at Action Economics in San Francisco. 

The yield on the benchmark U.S. 10-year note fell 5.5 bps to 3.854%, about 4 bps below where it stood before PPI.

GOLD - Gold has stagnated after yesterdays trading, showing a corrective drop after nearly reaching its previous highest price point. We expect a continuation of bullish price action once developments in the Middle East become clearer. This increase is also supported by the latest PPI release, which indicates growth disinflation—lower than expected. We recommend exercising caution when trading gold, but we maintain a bullish outlook on this market.

SILVER - Silver is currently trading at 27.725, consolidating after yesterdays trading. Similar to our earlier analysis, we continue to view this market as bullish and anticipate that rising rate cut expectations will drive metal prices higher. However, current movements suggest a possible continuation of the bearish trend. With this in mind, we recommend reacting to price movements rather than relying solely on anticipation. In other words, do not buy based on speculation alone—wait for your market tools to align with your trading rules.

DXY - Following the PPI release, the dollar weakened after yesterdays trading, continuing its decline below 102.775. We expect the market to continue shorting from this point and foresee a weaker dollar overall. Although there may be some resistance heading into September, allowing larger traders to sell at higher levels, it is prudent to follow overall market expectations.

GBPUSD - The pound has risen above 1.28508, signaling further buying potential as the price has broken above the upper boundary of its range—driven by market expectations of a rate cut and lower-than-expected PPI. We need to monitor further market movements after this sudden price surge to determine if it will continue or reverse. Currently, market movements suggest a more bullish outlook.

AUDUSD - The Aussie dollar has continued to strengthen against the U.S. dollar after prices rose above 0.66145. We expect further growth in this market, albeit at a steady pace. However, we will await further data releases to confirm the Aussie dollars position as a stronger currency against the U.S. dollar.

NZDUSD -Before the RBNZ decision, analysts and traders were optimistic that rates would be maintained until November this year. However, the RBNZ surprised the market with a rate cut to 5.25% from 5.50%. This caused the Kiwi to weaken, and we may see it fall further. However, it is uncertain how much further it will drop as traders adjust to market expectations for the U.S. dollar.

EURUSD -The euro has gained against the dollar, reaching prices near 1.10361. With more U.S. data expected later today and this week, we might see prices stagnate. We anticipate further selling of the dollar, which would allow other currencies to strengthen.

USDJPY - The yen is currently trading at 146.512, with prices stagnating due to waning JPY strength following the BoJs recently announced cautious approach to rate hikes. However, this strength should not be underestimated, given the current risk-off sentiment in the markets. We expect prices to drop further below 146.512 and see the yen gain strength against other pairs. Nonetheless, we will wait for further technical confirmations with various tools to align with market expectations.

USDCHF - The Swiss franc remains below 0.87041, and higher prices for the franc are not benefiting the economy. In our last analysis, we discussed the desire to lower the francs value to boost investments, businesses, and exports. This led the SNB to become the first major central bank to cut rates to 1.50% last March. However, current market conditions suggest that the franc will soon gain more strength, as both technical and fundamental factors support this, at least for the time being. Therefore, we view the USD/CHF market as being on a bearish run, with the current rise in price being merely corrective.

USDCAD -The CAD has gained strength, breaking below 1.37261 after several months of consolidated price action. We expect the CAD to continue strengthening, supported by the potential rise in oil prices. With that said, we see this market as very bearish, though it may start off slightly weak.