Asset Summary – Thursday, 11 September
GBPUSD experienced an upward push as the dollar weakened following disappointing US jobs data, increasing anticipation of a Federal Reserve rate cut. This expectation of easing monetary policy in the US contributed to the pound’s rise above $1.35. However, gains in sterling were tempered by domestic concerns, including fiscal uncertainty surrounding the upcoming Autumn Budget and caution expressed by the Bank of England Governor regarding the timing of UK interest rate cuts. Despite the positive reaction to the US data, the pound is still poised for a weekly decline, indicating that domestic factors continue to exert downward pressure on the currency pair.
EURUSD faces a complex outlook influenced by several factors. The expected stability in ECB interest rates provides a degree of support, but uncertainty persists due to ongoing trade concerns and steady Eurozone inflation. Conversely, increasing anticipation of a potential Federal Reserve rate cut in the US, particularly if inflation data supports a more aggressive move, could weigh on the dollar and bolster the EURUSD. Political developments, such as the change in French leadership and geopolitical tensions involving Russia, Ukraine, Poland, India, and China could also introduce volatility and influence investor sentiment, potentially impacting the pair’s trajectory.
DOW JONES faces mixed influences. While positive inflation data could bolster the broader market and potentially lift the Dow, the anticipation of this data creates uncertainty and keeps futures flat. Concerns about interest rate decisions and upcoming economic reports add to the cautious outlook. Furthermore, specific company performance impacts the Dow: Apple’s recent struggles weighed it down, offsetting gains experienced by the broader market driven by companies like Oracle. Therefore, the Dow’s near-term performance may depend on the upcoming economic data releases and whether the positive momentum from some sectors can overcome negative pressures from others.
FTSE 100 experienced a decline following a recent period of gains, mirroring a wider downturn in European markets. The decline was significantly influenced by a substantial drop in AB Foods’ share price due to concerns regarding Primark’s sales performance and the sugar division, compounded by a lack of future earnings projections. Vistry Group also contributed to the downward pressure, with its cautious outlook on housing demand overshadowing otherwise satisfactory financial results. Conversely, positive signals emerged from the US, where weaker producer price data increased the likelihood of Federal Reserve interest rate cuts, potentially providing some support for the index, though this was insufficient to offset the negative company-specific news.
GOLD is exhibiting resilience near its record high, driven by a confluence of factors suggesting a potentially bullish outlook. Weaker-than-anticipated US producer price data, coupled with prior indications of a softening labor market, has fueled speculation about impending interest rate cuts by the Federal Reserve. This expectation tends to increase the allure of gold as a non-yielding asset. Heightened geopolitical risks, including escalating tensions in Eastern Europe and the Middle East, along with calls for trade actions, further bolster gold’s safe-haven status. Investors are closely monitoring upcoming consumer price data, as this information will serve as another indicator for the trajectory of monetary policy and its effect on gold’s appeal.