AUD/USD: Rebound remains capped near 0.6775 ahead of Fed verdict
AUD/USD stalls its upswing near 0.6775 early Wednesday, following the dismal Australian Westpac Leading Index. Traders await the crucial Fed policy decision before the next leg of a directional move. However, increased bets of an oversized Fed rate cut revive the US Dollar selling, keeping the pair afloat.
USD/JPY extends the slide toward 141.00, Fed awaited
USD/JPY extends the decline toward 141.00 in Asian trading on Wednesday, reversing a part of the previous rebound. The BoJ's hawkish signal that it will hike rates again in 2024 contrasts bets for a more aggressive policy easing by the Fed, smashing the pair heading into the Fed event risk.
Gold price remains close to record high, awaits pivotal Fed decision before the next leg up
Gold price attracts some dip-buying and reverses a part of the overnight corrective slide. Bets for a 50 bps Fed rate cut keep a lid on the attempted USD recovery and lends support. Bulls seem reluctant to place aggressive bets ahead of the key central bank event risks.
UK CPI set to grow at stable 2.2% in August ahead of BoE meeting
The United Kingdom Office for National Statistics will release August Consumer Price Index figures on Wednesday. Inflation, as measured by the CPI, is one of the main factors on which the Bank of England bases its monetary policy decision, meaning the data is considered a major mover of the Pound Sterling.
DEEPER DIVE
Eurozone: Towards structurally higher savings
The household savings rate in France has risen further, up from 17.6% of households’ gross disposable income (GDI) in Q1 2024 to 17.9% in Q2 2024, according to the INSEE, i.e. 1 point more in a year.
Faster route to ‘normality’
Over the summer, the focus of the Fed has shifted from a singular emphasis on curbing inflation to now discussing the risk of causing significant damage to the labour market.
From fear of inflation to fear of slowdown
We agree with markets that slowing US inflation over the summer has cleared the path for a faster "normalisation" of policy rates in the US. Especially the broader services price pressures have eased.
FXS Signals
Technical Confluences Detector
Gold buyers re-emerge ahead of the key Fed event risk Premium
Gold price is finding some fresh demand near $2,570 early Wednesday, as buyers look to fight back control following the previous day’s correction from record highs of $2,590. Traders, however, could refrain from placing fresh directional bets on Gold price in the lead-up to all-important US Federal Reserve monetary policy announcements.
Gold price eyes Fed interest rate decision and Powell speech
On the Fed day, markets continue to price in a 65% probability of 50 basis points interest rate cut, the CME Group’s FedWatch Tool showed.
CRYPTOCURRENCIES
Why Polygon’s MATIC may have seen a bottom amid underperformance
Polygon MATIC, now known as POL, has been one of the most underperforming cryptocurrencies in the top 100 since the beginning of the year, declining more than 62% year-to-date. However, several key metrics on Wednesday show that its price may have seen a bottom.
SUI rallies as Circle announces the launch of USDC on its network
Layer-1 blockchain Sui has been gaining constant attention following big launches on its network, including the latest launch from USDC issuer Circle. Circle announced its plans to launch its USDC stablecoin on the Sui blockchain on Tuesday. The announcement also included the integration of Circle's CCTP for cross-chain building among developers.
Ethereum could rally 17% amid Bitwise thesis on ETH contrarian bet
Ethereum (ETH) is up 2% on Tuesday as anticipation grows for a 50-basis-point interest rate cut by the US Federal Reserve (Fed). Meanwhile, Bitwise's weekly memo noted that Ethereum still provides several opportunities and looks like a contrarian bet.
Bitcoin rallies with crypto market on steeper Fed rate cut speculation and Q4 positivity
Bitcoin (BTC) and the crypto market saw a brief rally on Tuesday following speculations that the Federal Open Market Committee (FOMC) may opt for a 50-basis-point rate cut during its meeting on Wednesday.
STOCKS
Apple stock sinks on lower iPhone 16 pre-orders Premium
Apple (AAPL) stock has moved lower on Monday after a Hong Kong-based analyst provided a sobering view of early iPhone 16 orders. AAPL stock has sold off about 3% at the time of writing.
Short squeeze, anyone?
One more day of S&P 500 gains extension almost to the neckline of Sunday discussed inverted H&S. Rate cut odds went up with discretionaries rallying on better than expected UoM consumer confidence and inflation expectations.
ECONOMIC CALENDAR
WEEKLY FORECAST
EUR/USD: Ladies and Gentlemen, here comes the Federal Reserve Premium
The EUR/USD pair reverted early losses and finished just below the 1.1100 mark, little changed for the week. The pair bottomed at 1.1001 mid-week, as the USD benefited from a risk-averse environment.
GBP/USD: Pound Sterling capitalizes on increasing odds of large Fed rate cut Premium
The Pound Sterling stalled its correction from over two-year highs against the USD and staged an impressive comeback, with the GBP/USD pair having tested the critical 1.3000 threshold.
US Dollar: Extra weakness should not be ruled out Premium
The pessimism around the US Dollar (USD) intensified in the latter part of the week, sending the US Dollar Index (DXY) back into negative territory for the second consecutive time on the weekly chart.
Gold: Bulls dominate as markets reassess odds of a large Fed rate cut Premium
Gold surged higher in the second half of the week and reached a new record high above $2,580, boosted by growing expectations for a large Fed rate cut at the upcoming policy meeting.
Bitcoin: On the road to $60,000
Bitcoin price retested and bounced off from the daily support level of $56,000 this week. US spot Bitcoin ETFs posted $140.7 million in inflows until Thursday and on-chain data supports a bullish outlook.
Week ahead – Fed to cut interest rates, BoE and BoJ to remain on hold
Investors are split between a 25 and 50bps Fed rate cut. BoE expected to stand pat, but resume cuts in November. BoJ to also stay on hold, focus to fall on future hike signals.
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