This week, key economic events such as the ECB meeting, U.S. CPI and PPI, Chinese CPI, and Japanese GDP have shaped market movements.
In the U.S., the CPI data came as expected on a yearly basis, reaching a three-year low. Core CPI held at 3.2%, its lowest level since 2021. Following the CPI release, expectations for a 50 basis point rate cut dropped to 13%. On Thursday, the PPI data came in below expectations, renewing hope for a potential 50 basis point rate cut, which caused the DXY to drop to the 100 level. Markets, as of the week’s close, are still pricing in a 25 basis point cut on Wednesday, with a 40% chance for a 50 basis point cut after the PPI data.
In Europe, the ECB delivered a 25 basis point cut, reducing the interest rate to 3.50%. German CPI dropped to 4.1%, while the U.K.’s GDP came in lower than expected. European indices reacted positively to the data, with both the GBP and EUR strengthening.
In Asia, concerns persist, particularly after weak Chinese CPI data, which raised worries about declining demand and consumer spending. The Chinese yuan was a hot topic, though it showed some strength by the end of the week. Japan’s lower-than-expected GDP data helped the NIKKEI perform well, but the yen weakened until U.S. PPI data on Thursday, when the USD/JPY dropped to 140.4, its lowest level since December 2023.
Commodities surged, with gold hitting a new all-time high at $2,580, boosting other precious metals and Brent crude oil. Silver reached $30.70, a key resistance level, and Brent rebounded from the $70 level following the dollar’s decline.
Cryptocurrencies tracked the Nasdaq’s movements, with Bitcoin climbing to $58,000, outperforming Ethereum, which gained 2.3% compared to Bitcoin’s 5.7% rise.
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