Asset Summary – Wednesday, 10 September
GBPUSD experienced upward pressure as the dollar weakened following disappointing US jobs data. This data increased the likelihood of Federal Reserve interest rate cuts, making the dollar less attractive. Market expectations for substantial Fed easing in 2025 further contributed to dollar depreciation. However, the pound’s gains were tempered by domestic factors, including fiscal uncertainties and concerns surrounding the upcoming Autumn Budget. Comments from the Bank of England Governor, suggesting uncertainty about the timing of UK rate cuts, added to the mixed signals for sterling, resulting in a relatively modest weekly decline despite the dollar’s weakness.
EURUSD is demonstrating resilience, maintaining a position near recent highs despite political instability in France. The ousting of the French Prime Minister introduces uncertainty, but the market’s expectation of this event suggests its impact may already be factored in. The upcoming European Central Bank meeting is unlikely to provide immediate upward momentum, as interest rates are projected to remain stable. However, the focus now shifts towards the forthcoming US inflation report, which could significantly influence the pair. Weak US inflation data would bolster expectations of a Federal Reserve rate cut and potentially pressure the dollar, giving the euro an upward advantage. The market’s increasing anticipation of a substantial Fed rate cut further amplifies this potential for euro appreciation against the dollar.
DOW JONES faces a mixed outlook. While positive momentum from Tuesday’s gains and potential Fed rate cuts could provide support, uncertainty surrounding upcoming inflation reports might limit upside potential. Strong earnings and cloud outlook from Oracle, especially its AI-related growth, signal broader tech sector strength which can reflect positively on certain Dow components, but it is yet unclear how the general economic uncertainty may affect the index. Investors are likely to remain cautious, awaiting further economic data before making significant moves.
FTSE 100 experienced an upward trajectory, fueled by substantial increases in the mining and energy sectors. The proposed merger of Anglo American and Teck Resources significantly impacted Anglo American’s stock value, pulling up peers in the mining industry as well. Rising crude oil prices, spurred by geopolitical tensions, also contributed to gains in major oil companies listed on the index. Furthermore, stronger-than-anticipated UK retail sales figures provided additional support, reflecting improved consumer spending and reinforcing positive economic sentiment that lifted market confidence.
GOLD is experiencing upward price pressure as expectations of looser US monetary policy and widespread uncertainty bolster its appeal. Weaker-than-previously-reported US employment figures suggest the Federal Reserve may be more inclined to cut interest rates, potentially diminishing the attractiveness of the dollar and making gold more relatively appealing. Furthermore, geopolitical risks arising from the Middle East and calls for trade actions against China and India connected to the Ukraine war also contribute to a risk-off environment, traditionally favorable for gold investment. Upcoming inflation data will be crucial in confirming or challenging the prevailing dovish outlook and influencing the precious metal’s immediate trajectory.