In the fast-paced and interconnected world of financial markets, being aware of forex news updates is not just a convenience but an absolute necessity for traders. The financial landscape is constantly evolving, driven by a myriad of economic, geopolitical, and corporate events. These developments have the power to swiftly reshape market dynamics, impacting asset prices, investor sentiment, and trading strategies.
According to Daily Forex, here are a few insights and potential trends to keep an eye on in the forex market.
Resumption of Risk-On Sentiment Due to Lower US CPI
The main highlight from last week was the robust resurgence of risk-on sentiment, prompted by the lower-than-expected US CPI figures. Annualized inflation decreased from 3.5% to 3.4%, aligning with expectations. The dovish surprise came from the monthly increase, which was just 0.3%, rather than the anticipated 0.4%.
It’s noteworthy that markets were already trending toward a weakly risk-on sentiment earlier in the week. This could be attributed to stronger-than-expected corporate earnings in the USA observed in recent weeks.
Key Data Releases Drive Bullish Sentiment
There were two other significant US data releases last week. The Producer Price Index (PPI) came in higher than expected, with a monthly increase of 0.5% compared to the anticipated 0.3%. This fueled concerns on Tuesday that the subsequent CPI data would also be high, which was not the case. Retail Sales data showed no growth over the past month, enhancing the impact of the lower CPI data and increasing the likelihood of an earlier rate hike.
Market Anticipates Federal Reserve Rate Cuts
According to the CME FedWatch tool, around 68% of market participants predict the first rate cut will occur at the Federal Reserve’s September meeting. This expectation stems from recent economic indicators that suggest a possible shift towards a more accommodative monetary policy by the Fed.
Last Week’s Data Releases
- US Empire State Manufacturing Index: Met market expectations, indicating stable manufacturing activity.
- US Unemployment Claims: Aligned with forecasts, suggesting no significant change in the labor market conditions.
- Australia Wage Price Index: Just a fraction lower than expected, which is very slightly dovish for inflation and rates.
- Australia’s Wage Price Index: Came in slightly below expectations. This minor shortfall suggests marginally lower inflationary pressure and could imply a more cautious approach to raising interest rates.
- New Zealand Inflation Expectations: Fell from 2.50% to 2.33%, which is dovish. This dovish development suggests that interest rates may not need to be raised aggressively.
- UK Claimant Count Change: Was better than anticipated. This improvement points to a stronger labor market than predicted.
- Australia Unemployment Rate: Rose unexpectedly from 4.1% to 3.9% which may be slightly dovish for inflation and rates.
Disclaimer
The news presented on Prime Codex is solely those of the analysts quoted. They do not represent the opinions of Prime Codex on whether to buy, sell, or hold specific pairs. Traders are advised to conduct their independent research before making an investment decision.
