Dow Jones Industrial Average follows equities higher

The Dow Jones gained ground on Wednesday as equities broadly push higher.
Markets are finding their bidding buttons amid a lack of game-changing news.
US GDP growth, PCE inflation data due through the latter part of the week.

Joshua Gibson FXStreet

The Dow Jones Industrial Average (DJIA) drifted upwards on Wednesday as global equities grind their way higher heading through the midweek lull. Investors are shrugging off United States (US) President Donald Trump’s attempts to dump and replace voting members of the Federal Reserve (Fed), and markets are betting that this week’s upcoming Gross Domestic Product (GDP) and Personal Consumption Expenditures Price Index (PCE) inflation updates won’t break the bank on bets that the Fed will deliver a quarter-point interest rate cut in September.

The Dow Jones is backfilling a technical decline that dragged the index off of record highs late last week, grinding back above the 45,500 level after finding a support floor near 45,200. The Dow is still a touch off its all-time peaks at 45,760, but the index’s long-term bullish tilt remains firmly intact.

US President Donald Trump is working on replacing Federal Reserve (Fed) Board of Governors members with his own picks who will, in theory, be more friendly to his desires for rapid interest rate cuts. Markets are largely brushing off the direct challenge to the Fed’s political autonomy, but a continued escalation in Fed policymaker headlines could chip away at investor sentiment moving forward.

PCE inflation, Nvidia earnings cast shadows over the midweek market

Q2 GDP growth figures are due on Thursday. Quarterly growth is expected to tick up to 3.1% on an annualized basis. The data docket is saving the best for last this week, with PCE inflation figures slated for Friday. Inflation remains a looming threat to the trajectory of Fed rate cuts, and could hammer back September rate cut hopes if it accelerates too fast, too quickly between now and September 17. July’s core PCE inflation is expected to rise to 2.9% YoY.

AI tech rally darling Nvidia (NVDA) will be releasing its latest quarterly earnings report after the closing bell on Wednesday. Nvidia has been the main driving force behind the AI-fueled bull run that has absorbed the lion’s share of equity moves recently. The chipmaker has grown so large that it now accounts for 8% of the entire Standard & Poor's 500 (SP500) index all by itself. Nvidia has outperformed analyst expectations for 11 of the last 12 straight earnings quarters, but still delivered a poor post-earnings performance for four of them.

Dow Jones daily chart

Economic Indicator

Core Personal Consumption Expenditures - Price Index (YoY)

The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Why it matters to traders?

After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Bitcoin has found or is near a bottom, extended consolidation to follow: K33

Bitcoin (BTC) is nearing or has already established a bottom, which could be followed by a sustained period of slow price movement, according to K33.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.