Asset Summary – Tuesday, 9 September
GBPUSD experienced upward pressure as the dollar weakened following disappointing US jobs data. This data has increased the likelihood of the Federal Reserve cutting interest rates, further diminishing the dollar’s appeal. Market expectations are now leaning towards significant rate cuts in 2025. However, the pound’s gains may be limited by domestic factors, including fiscal uncertainty and anxieties surrounding the upcoming Autumn Budget. Furthermore, cautious remarks from the Bank of England Governor regarding the timing of UK rate cuts introduce additional headwinds, potentially tempering further appreciation of the currency pair.
EURUSD is exhibiting upward pressure, driven by a weaker dollar and a generally cautious market mood. Political uncertainty in France, specifically the upcoming confidence vote, could introduce some volatility, but the primary influence appears to be the expectation of the ECB holding steady on interest rates. The ECB’s concerns about trade and potential US tariffs are also relevant. Meanwhile, the focus on the US inflation report, following soft labor data, suggests the market is pricing in a higher probability of a Federal Reserve rate cut, possibly an aggressive one. This expectation of lower US interest rates is weighing on the dollar and supporting the euro’s strength.
DOW JONES’s near-term performance hinges significantly on upcoming inflation data. With the producer price index and consumer price index reports due later in the week, traders will be closely watching for signals regarding the Federal Reserve’s future interest rate policy. The recent increase in the Dow Jones Industrial Average, along with gains in the Nasdaq Composite and S&P 500, indicate underlying market strength. However, corporate-specific news, such as the decline in Fox’s stock price and Dell Technologies’ slip, illustrate factors that could create downward pressure. The market’s anticipation of a potential Federal Reserve rate cut, possibly a substantial one, could provide a boost, depending on whether inflation data confirms this expectation.
FTSE 100 experienced upward movement driven by positive performance in specific sectors and companies. Homebuilders like Vistry and retailers such as Marks & Spencer contributed to the index’s gains following positive company-specific news. Oil giants Shell and BP also lent support amid rising crude prices. However, the Phoenix Group’s decline, despite strong profits, offset some of these gains. Macroeconomic signals were mixed, with slowing wage growth potentially easing inflationary pressures while political uncertainty in France may have a limited negative impact. Overall, the FTSE 100’s direction seems influenced by a combination of individual company performance and broader economic factors.
GOLD is experiencing a significant upward trend, recently reaching a record high, driven by anticipation of interest rate reductions by the Federal Reserve later in the year. The market’s belief in these rate cuts, spurred by weaker-than-expected employment data, has fueled investment in the precious metal. Upcoming inflation data releases will be closely watched for further clues about the Fed’s monetary policy. In addition to interest rate speculation, the value of gold is being bolstered by its traditional role as a safe haven investment amidst global economic and political anxieties, including concerns about US tariffs and geopolitical instability. The combination of a weakening US dollar, robust central bank buying activity, accommodative monetary policies, and a climate of global instability has contributed to the metal’s substantial gains this year.