Dollar Holds Gains as Markets Await Fed Insights and US Inflation Data (10.09.2024)

The dollar index remained strong near 102.5 as investors focused on the release of the Federal Reserve’s meeting minutes and the upcoming Consumer Price Index (CPI) report for further guidance on U.S. interest rate policy. 

Last week’s robust U.S. jobs report reduced expectations for a large rate cut, with markets now pricing in an 85% chance of a 25 basis point reduction in November. In other markets, the yen stabilized at 147.7 ahead of the Fed’s minutes, and gold retreated to $2,620 per ounce amid strong labor data. The British pound and silver also held steady as traders awaited U.S. data releases to determine future market direction. The geopolitical tensions in the Middle East continue to support safe-haven demand for the dollar and gold, albeit gold's gains have been capped by solid U.S. economic data.

Dollar Holds Gains as Markets Await Fed Insights and US CPI Data

On Wednesday, the dollar index was around 102.5, lingering highs in seven weeks as investors awaited the minutes from the Federal Reserve’s last meeting for new insights into monetary policy. The upcoming September Consumer Price Index report, set for release on Thursday, is also anticipated to impact expectations for Fed rate cuts. Following a stronger-than US jobs report last week, traders adjusted their forecasts, diminishing the likelihood of a significant 50 basis point rate cut in November. Currently, markets estimate an 85% chance of a more modest 25 basis point reduction, with a 15% probability of no change. The dollar remained stable against most major currencies but gained strength against the New Zealand dollar after the Reserve Bank of New Zealand cut its cash rate by 50 basis points for the second consecutive meeting due to easing inflation and sluggish economic conditions.

In the EUR/USD pair, the initial resistance will be at 1.1000 followed by 1.1050 and 1.1100 if this level is surpassed. On the downside, the first support is at 1.0950, with subsequent supports at 1.0900 and 1.0850 below that.

USD/JPY Traders Eye FOMC Minutes for Clues on US Monetary Policy

On Wednesday, the Japanese yen began trading at around 148.50. Given the absence of significant economic data from Japan for the day, it is anticipated that the primary drivers influencing the currency pair will come from the United States. In particular, the release of the FOMC meeting minutes is expected to play a crucial role in shaping market movements for the yen. Investors will closely monitor these minutes for insights into the Federal Reserve’s monetary policy direction, as any hints regarding future interest rate adjustments could significantly impact the yen’s valuation against the dollar. With market participants on edge regarding potential shifts in U.S. economic policy, the FOMC minutes will likely provide clarity on the Fed’s stance amid ongoing economic developments.

In USD/JPY, the first support is at 147.30, with subsequent levels at 145.20 and 144.00 below that. On the upside, the initial resistance is at 149.30, followed by 150.00 and 151.00 if this level is breached.

Gold Retreats as Markets Await Fed Minutes and Key US Inflation Data

On Wednesday, gold was trading around $2,620 per ounce, marking its lowest point in over two weeks. This decline comes as the US dollar remains strong and markets adjust their expectations for a significant rate cut from the Federal Reserve. Recent US jobs data exceeded expectations, alleviating worries about a slowing labor market. Currently, there’s an 89% chance that the Fed will enact a modest 25 basis point rate cut in November. Investors are now looking ahead to the FOMC minutes later today, as well as crucial CPI data on Wednesday and PPI figures on Friday, which could provide further insights into monetary policy. Additionally, gold prices faced pressure following a briefing from China, a major consumer, that lacked detailed plans for further stimulus. Still, gold retains its appeal as a safe-haven asset due to rising concerns over potential conflict in the Middle East.

In gold, the first support is at 2600, with subsequent levels at 2550 and 2500 below that. The initial resistance is at 2635, followed by 2660 and 2685 if this level is surpassed.

GBP/USD Focuses on US FOMC Minutes Amid Lack of UK Data

On Wednesday, the British pound started trading at approximately 1.3084. With no significant economic data scheduled for release from the UK throughout the day, it is expected that the primary influences on the currency pair will originate from the United States. In particular, the minutes from the recent FOMC meeting are likely to have a substantial impact on market dynamics for the pound.

In GBP/USD, the first support is at 1.3080, with subsequent levels at 1.3050 and 1.3000 below that. On the upside, the initial resistance is at 1.3145, followed by 1.3200 and 1.3250 if this level is surpassed.

Silver Steady at $30.55 as Investors Await FOMC Minutes for Direction

On Wednesday, silver commenced trading at approximately $30.55. Given the current market conditions, it is anticipated that key economic data from the United States will be the primary influence on silver prices throughout the day. In particular, the release of the minutes from the recent FOMC meeting is expected to play a pivotal role in shaping market movements for silver. Investors will be closely focusing on these minutes for insights into the Federal Reserve's future monetary policy decisions, particularly regarding interest rates. Any signals indicating a shift in policy or changes in economic outlook could lead to significant volatility in silver prices.

As silver is often viewed as a safe-haven asset, its value may also be influenced by broader market sentiments and risk appetite, especially considering ongoing economic uncertainties. The interplay between the FOMC minutes and prevailing market conditions could trigger notable fluctuations in silver trading as investors react to any new information regarding U.S. economic policy.

In silver, the first support is at 30.50, with subsequent levels at 30.00 and 29.50 below that. On the upside, the initial resistance is at 31.15, followed by 31.85 and 32.20 if this level is surpassed.