Daily News Analysis By Ultima Markets

[Ultima markets]

US CPI remained stable in July, but core inflation rose to a six-month high! Betting on a September rate cut heats up, and the dollar weakens​

The latest US Consumer Price Index (CPI) data for July presented mixed signals. While the headline CPI remained stable at 2.7% year-over-year, in line with market expectations for contained inflation, core inflation, excluding food and energy, unexpectedly accelerated, jumping to 3.1% year-over-year, the largest annual increase in six months. This data boosted market optimism that the Federal Reserve (Fed) will cut interest rates in September, contributing to a weakening of the US dollar and pushing US stocks to new record highs.

The dual signals behind the data: Inflation is controllable vs. core stubbornness​

• Overall inflation remained stable, with energy and food prices declining : The overall CPI rose by 2.7% year-on-year in July, slightly below market expectations. This was mainly due to falling energy prices, including a 2.2% drop in gasoline prices in July, while annual food inflation remained at 2.9%.
• Core inflation accelerated, with service prices being the main driver : The annual core inflation rate jumped from 2.9% to 3.1%, the fastest pace in six months. The increase was mainly driven by service prices, including sharp increases in airfare, medical care, and housing.

Market reaction: Over 90% of bets on a September rate cut push the stock market to a new high​

The data, which showed inflation was under control but stubborn at its core, temporarily eased market concerns about stagflation and strengthened risk appetite. Wall Street reacted positively:

• Stocks : The S&P 500 and Nasdaq both hit record highs, while the Dow Jones also posted gains.
• Rate cut expectations : According to CME FedWatch data, the interest rate swap market is currently betting that the probability of the Federal Reserve cutting interest rates by 25 basis points in September has exceeded 90%, and it is expected that there may be as many as three cumulative rate cuts in 2025.
• Probability of a rate cut at the Federal Reserve meeting

Image Credit: Source: CME Group

The US dollar weakens, and technical analysis focuses on key support​

Compared with the strong performance of the stock market, the US dollar weakened as the market increased its bets on the Federal Reserve's easing. The US dollar index (USDX) fell below 98, but remained above the recent low of around 97.80.

Image source: US Dollar Index (USDX) daily chart | Source: Ultima Market MT5

If the US dollar index clearly falls below 97.80, it may open up further downward space; on the contrary, if this level can provide solid support, the US dollar still has a chance to stabilize.

Follow-up observation: Producer Price Index (PPI) and the impact of tariffs​

While the CPI data provided a brief boost of optimism, stubborn core inflation remains a concern. Market attention will next turn to Thursday's Producer Price Index (PPI) data, which will provide clearer insights into how the new tariffs are transmitting to US inflation. A cooling PPI reading could further support stocks and weaken the dollar; a strong reading could reverse market optimism surrounding a Federal Reserve rate cut.

Risk Warning: Leveraged derivatives are complex and come with a high risk of losing capital rapidly due to the leverage effect. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your capital.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein is for informational purposes only and is intended to help readers understand market conditions. It does not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but cannot guarantee its absolute accuracy, and it is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, lost profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

US CPI data boosts markets, interest rate cut expectations surge: dollar retreats, Bitcoin soars to record high​

Expectations of a Federal Reserve (Fed) rate cut surged significantly after the July U.S. Consumer Price Index (CPI) data came in below expectations, driving a broad rally in global risk assets. The U.S. dollar index (DXY) fell to 97.70, its lowest level since late July. Meanwhile, Bitcoin surged to a new all-time high, signaling a sharp shift in market sentiment.

Expectations of interest rate cuts rise, with both stock and bond markets rising​

Driven by shifting market sentiment, global stock markets rallied sharply, led by the US market. Both the S&P 500 and Nasdaq indices hit new highs, while US Treasury yields declined in response. Market consensus currently places the probability of a 25 basis point Federal Reserve rate cut in September at approximately 94%, with some investors even betting on a larger cut or three cuts this year.

The Japanese yen also benefited, rebounding sharply against the US dollar and other major currencies on Thursday morning, mainly because the market believed that the US-Japan interest rate gap would narrow.

Bitcoin hits record high, crypto market heats up​

Bitcoin climbed above $124,000, a new all-time high, amid improving risk appetite and potential easing monetary policy. Ethereum also surged, approaching its highest level since November 2021.

Ultima Market analyst Shawn pointed out that the rise of cryptocurrencies benefited from optimism about the Federal Reserve's interest rate cuts, strong institutional buying, and Trump's friendly stance on crypto regulation.

• Bitcoin daily chart

Image Credit: BTCUSD, Daily Chart | Source: Ultima Market MT5

Shawn mentioned in his technical analysis report that Bitcoin may still have room to rise, and the next target price may be around the $130,000-131,000 range. However, he also emphasized that the specific trend will depend on market sentiment, especially the reaction after the release of the US Producer Price Index (PPI) on Thursday.

What will the market focus on next?​

• U.S. Producer Price Index (PPI) : Thursday's PPI data will reveal whether upstream price pressures are easing or accumulating, which will be an important signal for future Federal Reserve policies.
• Cryptocurrency Updates : Investors will be watching to see if Bitcoin can sustain its upward momentum around $125,000.
• Political pressure : U.S. Treasury Secretary Scott Bessent and President Trump are continuing to pressure the Federal Reserve to take more aggressive action to cut interest rates.

Risk Warning: Leveraged derivatives are complex and come with a high risk of losing capital rapidly due to the leverage effect. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your capital.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein is for informational purposes only and is intended to help readers understand market conditions. It does not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but cannot guarantee its absolute accuracy, and it is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, lost profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

US PPI unexpectedly surges in July, dampening expectations of a rate cut​

3.3% year-on-year in July , far exceeding market expectations of 2.1% and a staggering increase from 2.3% in the previous month. This data, released two days after the Consumer Price Index (CPI) came in roughly in line with expectations, has rekindled market uncertainty about the Federal Reserve's interest rate cut prospects.

Data core focus​

• PPI year-on-year : 3.3% (previous value: 2.3%, expected: 2.1%)
• Core PPI year-on-year : 3.7% (previous value: 2.6%, expected 2.7%)
• Month-on-month growth : Both PPI and core PPI rose by 0.9% , compared with 0.0% in the previous month, indicating that inflationary pressure is intensifying at the wholesale end.

Experts pointed out that the increase in data is mainly due to the continued impact of tariffs imposed during the Trump administration, which are constantly pushing up corporate costs and this trend is likely to continue in the coming months.

Market reaction and policy outlook​

Strong PPI data dampened market sentiment, with investors quickly adjusting their expectations for the Federal Reserve's policy.

Interest rate cut expectations and market trends​

Market expectations for the number of interest rate cuts in 2025 have been lowered from three to two, according to the latest data from CME Group.

CME Group Federal Reserve Meeting Probability | Source: CME Group

After the expectation of rate cuts weakened, the US dollar gained support and rebounded. Although the US stock market fell briefly after the release of PPI data, it quickly rebounded and continued to rise, indicating that investors' overall optimism about the US stock market remains solid.

Policy challenges​

The conflicting situation of weakening CPI and strengthening PPI in July presents the Federal Reserve with a more complex inflation environment. If high inflation persists, the Fed may slow the pace of interest rate cuts to ensure inflation remains within its target range.

US Dollar Index Analysis​

The US Dollar Index (USDX) is currently trading in a narrow consolidation range, and its breakthrough direction will depend on changes in macroeconomic data or further guidance from the Federal Reserve.

US Dollar Index daily analysis | Source: Ultima MT5

The US dollar may resume its upward trend as the market reduces its bets on rate cuts, but whether this can be confirmed depends on subsequent price action. The US dollar index (USDX) remains in a narrow range, reflecting the current stable sentiment.

Follow-up observation points​

Next, the market will closely monitor the following key indicators and trends:

1. PCE Price Index : The upcoming Personal Consumption Expenditures (PCE) Price Index will be the key to determining whether wholesale inflation is transmitted to the consumer end.
2. US dollar trend : The US dollar may regain upward momentum amid reduced bets on rate cuts.
3. Bond market trends : Cooling expectations of rate cuts may keep bond yields high.

Risk Warning: Trading leveraged derivatives carries a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice of any kind. While reasonable care has been taken to ensure the accuracy of this information, its accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, lost profit) arising directly or indirectly from the use of or reliance on such information.

 

[emilyzheng]

With PPI hot and rate-cut odds wobbling, what’s your go-to hedge—short-duration futures, long USD, or just trimming beta until Jackson Hole?

 

[Ultima markets]

Jackson Hole Annual Meeting in Focus: Powell's Speech Affects Rate Cuts and Inflation Outlook​

This week, global markets are focused on the Jackson Hole Global Central Bank Annual Meeting, with investors closely watching the Federal Reserve's (Fed) monetary policy direction and future interest rate outlook. The timing of this meeting is particularly crucial given the mixed inflation data released last week.

Why is Jackson Hole so important?​

The annual gathering provides a key platform for Federal Reserve Chairman Jerome Powell to outline his strategy for addressing current economic challenges. His remarks will be closely interpreted by markets as to how the Fed will balance conflicting data, persistent inflation concerns and growing political pressure.

Recent economic data underscores this uncertainty:

• Consumer Price Index (CPI) : The overall CPI data showed signs of cooling, but the core CPI remained high.
• Producer Price Index (PPI) : The unexpected rise in PPI has triggered market concerns that the cost pressure brought by tariffs may gradually be passed on to consumers.

Key issues of market concern​

1. Rate Cut Expectations : The market currently prices an 84-85% chance of a 25 basis point rate cut in September. However, easing pressure from the White House (such as Treasury Secretary Scott Bessent's call) conflicts with the Fed's data-dependent stance. Powell's comments will determine whether the expected rate cut is confirmed or postponed.
2. Balancing economic contradictions : While inflation remains above target, the labor market has shown signs of cooling. How Powell strikes a balance between caution and optimism will be key to influencing market expectations for the rest of the year.

Market Outlook: US Dollar and US Stocks​

The foreign exchange market is currently on the sidelines, with the dollar fluctuating in a narrow range ahead of Powell's speech. Any change in his tone could trigger fluctuations in the foreign exchange and stock markets.

• Dovish signal : If Powell makes dovish remarks, it will strengthen market expectations of a near-term rate cut, which may lead to a weakening of the US dollar while boosting stocks and risky assets.
• Hawkish signal : If his remarks lean toward caution or hawkishness, it could delay expectations of rate cuts, thereby supporting a stronger dollar and potentially increasing volatility in bond and stock markets.

US Dollar Index Analysis​

US Dollar Index (USDX) daily analysis | Source: Ultima Market MT5

The US dollar index has recently been consolidating in a narrow range between 97.50 and 98.50. The market is generally in a wait-and-see mode. The outcome of the Jackson Hole meeting may become a catalyst to break this consolidation pattern and lay the foundation for the next directional trend.

Risk Warning: Trading leveraged derivatives carries a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice of any kind. While reasonable care has been taken to ensure the accuracy of this information, its accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, lost profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

Markets steady ahead of Jackson Hole; Asian stocks rise, cryptocurrencies retreat​

Global markets generally consolidated on Monday, with investors closely monitoring key events such as the Jackson Hole Global Central Bank Annual Meeting and the Ukraine peace talks. Oil prices and the US dollar fluctuated within a narrow range, reflecting geopolitical uncertainty and subdued market risk sentiment.

Asian stocks and cryptocurrencies diverge​

In contrast to cautious global markets, Asian stock markets continued to rally, driven by growing expectations of monetary easing. Japan's Nikkei and Taiwan's Weighted Index both hit new highs, while Chinese blue-chip stocks climbed to their strongest level in nearly 10 months. This rally was primarily driven by strong earnings reports from US tech stocks and high expectations for a September interest rate cut by the Federal Reserve.

However, last week's unexpectedly high Producer Price Index (PPI) figures dampened some of the market's optimism. The stronger-than-expected inflation data raised concerns that cost pressures could be passed on to consumers, potentially delaying or reducing the timing of any Federal Reserve interest rate cuts.

Meanwhile, cryptocurrencies saw profit-taking after last week’s strong gains, with both Bitcoin and Ethereum retreating as traders realigned positions ahead of major macro events.

Caution ahead of Jackson Hole​

Shawn Lee, senior analyst at Ultima Markets, said: "The recent pullback in stocks and cryptocurrencies is mainly due to profit-taking after a strong rebound, and the market has become more cautious ahead of key events."

Bitcoin Technical Analysis​

From a technical perspective, Bitcoin is facing profit-taking pressure near $125,000. However, as long as support at $112,000 holds, its medium-term uptrend remains intact. Shawn Lee added that a more significant sell-off would likely require a stronger catalyst for risk aversion, which would likely depend on the outcome of the Jackson Hole symposium.

BTC/USD daily chart analysis | Source: Ultima Market MT5

What will the market focus on next?​

Market attention now turns to the Jackson Hole Global Central Bank Annual Meeting, where Federal Reserve Chairman Powell is expected to deliver key signals on the outlook for monetary policy. Investors expect him to confirm a September rate cut, but a cautious tone could temper dovish market expectations.

In addition to the Jackson Hole symposium, US inflation and employment data in the coming weeks will also have a decisive impact on this year's policy path. If inflation remains resilient, it may prompt policymakers to adopt a more gradual pace of easing; conversely, if the data weakens, it may strengthen market bets on multiple rate cuts.

Risk Warning: Trading leveraged derivatives carries a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to help readers understand market conditions. They do not constitute investment advice of any kind. While Ultima Markets has taken reasonable steps to ensure their accuracy, they cannot guarantee their absolute accuracy, and the content is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, lost profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

U.S. stocks fell as risk aversion increased ahead of the Jackson Hole Symposium, with tech stocks leading the decline​

U.S. stocks fell on Tuesday as investors turned risk-averse, with technology stocks particularly down. Here are the key market developments:

Market performance:​

• Tech sell-off : Artificial intelligence and tech giants faced significant selling pressure amid concerns about lofty valuations, including Nvidia's 3.5% drop and Palantir's more than 9% plunge.
• Index Trends : The Nasdaq Composite Index fell 1.65%, led by declines in large technology stocks. The S&P 500 fell 0.65%, while the Dow Jones Industrial Average was roughly flat, thanks to slight gains in some retail stocks.

Key factors:​

• Jackson Hole : Investors are preparing for this week's speech by Federal Reserve Chairman Jerome Powell at the Jackson Hole symposium. Markets are digesting mixed inflation signals as they prepare for a crucial week of monetary policy.
• Risk aversion : While the VIX volatility index remains below the key threshold of 20, its rise to 18.5 suggests that investors are making defensive rather than panic positioning adjustments.

VIX Index, daily chart

• Market Outlook : Shawn, senior analyst at Ultima Markets, noted that the current price action is a defensive correction. However, if Powell sends a more hawkish signal, the Nasdaq 100 index could face a larger correction.

NAS100 index, 4-hour chart

Historical Trends :​

In the past, U.S. stocks have often sold off ahead of the Jackson Hole meeting, followed by a rebound during or after the event. However, with major indices currently trading at all-time highs, the market's next move will depend on how Powell positions his outlook—whether he emphasizes inflation risks or leans toward policies that support economic growth.

Risk Warning: Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but its absolute accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, lost profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

The New Zealand dollar fell after the Reserve Bank of New Zealand cut interest rates to a three-year low​

The Reserve Bank of New Zealand (RBNZ) recently announced a 25 basis point cut in the official cash rate (OCR) to 3.0%, a three-year low. This brings the cumulative rate cuts to 250 basis points since August 2024. While a majority of policymakers (four out of six) supported the decision, two members preferred a larger 50 basis point cut, indicating a shift within the committee toward more aggressive easing.

The rate cut was mainly in response to growing signs of economic weakness. According to the report, the New Zealand economy faces multiple challenges, including:

• Economic growth stagnated in the second quarter, with both household consumption and business investment sluggish.
• The unemployment rate rose to 5.2%, and falling house prices further dampened market confidence.
• External risks, especially uncertainty over US tariffs, continue to weigh on business confidence and trade activities.

The RBNZ stated in a statement that it stands ready to provide additional support if economic conditions deteriorate. Notably, the RBNZ lowered its forecast low point for the OCR to 2.55% (previously 2.85%), a move interpreted by the market as a signal of further easing. Swap markets are already pricing in further rate cuts in October and November, potentially bringing the OCR down to 2.5% by year-end.

The market reacted quickly to this dovish decision. The New Zealand dollar (NZD) fell sharply by about 1.2% against the US dollar, hitting a four-month low of 0.5820 and breaking through the support level of 0.5855.

NZD/USD daily chart Source : Ultima Market MT5

This decline suggests the New Zealand dollar may be entering a new downtrend in the short term. If selling pressure persists, further declines are possible. Investors should continue to monitor key economic data from New Zealand, including employment, inflation, and consumption, to assess whether the Reserve Bank of New Zealand (RBNZ) will implement further interest rate cuts.

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but its accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, loss of profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

Markets remain cautious ahead of the Jackson Hole meeting, while strong US PMI data boosts the dollar.​

Global financial markets remained cautious on Thursday ahead of Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium. Investors were seeking clues on whether an interest rate cut would occur in September. Stock and foreign exchange markets remained range-bound due to thin liquidity and constrained positioning.

Key market dynamics:​

• US Data : The latest S&P Global PMI data shows that US business activity is accelerating. The composite PMI rose to 55.4, while the manufacturing PMI reached a multi-year high of 53.3. This suggests that US economic growth momentum remained solid in the third quarter. However, price indicators suggest that businesses continue to pass on costs, and inflation concerns remain. This may prompt Powell to adopt a more cautious stance. The US dollar strengthened slightly after the data was released.
• Japan Inflation : Japan's core CPI fell to 3.1% year-on-year in July, indicating some easing of price pressures. However, the core-core CPI remained at 3.4%, well above the Bank of Japan's 2% target. This has sustained market expectations of further policy normalization by the Bank of Japan later this year. The yen's reaction was muted, as market sentiment was primarily driven by Powell's upcoming remarks.

USD/JPY: The USD/JPY pair has been trading in a narrow range ahead of Powell's speech, reflecting a wait-and-see approach among investors. Strong US PMI data provided limited support for the dollar, keeping USD/JPY above 148.00. However, persistently high inflation in Japan limited the yen's weakness.

USD/JPY 4-hour chart analysis Source : Ultima Market MT5

In the short term, the pair is expected to remain range-bound, with key support at 148.00 and resistance at 149.00. If Powell's comments are hawkish, USD/JPY could rally. Conversely, a dovish tone or stronger-than-expected CPI/wage data from Japan next week could put downward pressure.

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but its accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, loss of profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

Powell hinted at a possible rate cut in September, and the market reacted dovishly but remained cautious.​

Federal Reserve Chairman Powell hinted at a possible shift in policy easing in his speech at the Jackson Hole symposium, a move widely interpreted by the market as dovish. He cited increasing downside risks to the labor market amid persistent inflation, suggesting this situation warrants a shift from tightening to easing monetary policy. However, he emphasized that all decisions remain "data dependent," prompting market caution regarding the future path.

Main observation points:​

• Policy Framework Adjustment : The Federal Reserve officially announced it would abandon its "average inflation targeting" approach and adopt a more flexible framework. This means that even if inflation doesn't return to exactly 2%, the Fed may cut interest rates prematurely as long as price pressures remain under control.
• Concerns about Political Interference : In his speech, Powell specifically addressed former President Trump's criticism of Federal Reserve officials and reaffirmed the central bank's independence. Shawn Lee, senior analyst at Ultima Markets, noted that the atmosphere of political interference cast a shadow over the annual meeting, raising market concerns about the credibility of the Fed's future decision-making.

Market reaction: After Powell's speech, the market reacted quickly, showing a clear "dovish" tendency:

• U.S. stocks rebounded : The S&P 500 rose about 1.5%, the Nasdaq rose nearly 2%, and the Dow Jones Industrial Average also hit a new high.
• Treasury yields fell : The 2-year U.S. Treasury yield fell to about 3.69%, the lowest level since August 13.
• Weaker US dollar : The market expects an 80%-90% chance of a rate cut in September, leading to a significant weakening of the US dollar.

Despite the optimistic market sentiment, Shawn Lee, an analyst at Ultima Markets, still advises caution. He believes that while Powell's remarks had a dovish tone, the overall tone remained cautious. Future data, particularly the September employment report and PCE inflation data, will be key in determining whether the expected rate cut is confirmed or delayed.

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but its accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, loss of profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

The Reserve Bank of Australia's meeting minutes showed a dovish trend, and the policy path depends on future data.​

The minutes of the Reserve Bank of Australia (RBA)'s August meeting signaled a more dovish stance. Policymakers acknowledged a strong case for a 25 basis point cut in the cash rate, opening the door to possible rate cuts in the coming months. However, the RBA emphasized that policy will be "data dependent," and the pace of easing will depend on incoming economic data and evolving global risks.

Key points of the minutes:​

• Rate Cut Considerations : The Board concluded that while policy remains "somewhat tight" for now, further rate cuts may be necessary over the next year. Policymakers weighed two paths: gradual rate cuts if the economy's potential capacity remains uncertain, or more rapid easing if the labor market is already balanced, potentially to prevent inflation from falling below target.
• Economic Support Factors : The minutes pointed out that the Australian economy has several supporting factors:
  • Inflation : Although higher than the target median, it is generally under control.
  • Employment : The labor market remains "somewhat tight."
  • Demand : Domestic demand showed signs of recovery.
  • Housing market : House price increases remain within normal range and residential construction has also begun to pick up.
• Balance Sheet Policy : The Board decided not to accelerate the reduction of government bond holdings and will continue to allow them to mature gradually.

Market Impact and AUD/USD Trends​

The more dovish-than-expected minutes have intensified downward pressure on the Australian dollar. The AUD/USD pair has broken below its recent rising channel, but continued USD weakness has limited its decline. A sustained period below 0.6500 would reinforce the bearish outlook.


AUD/USD, 4-hour chart. Source : Ultima Market MT5

Market sentiment remains cautious in the short term, with investors closely watching key data releases, especially the monthly CPI (August 27) and the third quarter CPI (October 29), which will determine the RBA's next move.

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but its accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, loss of profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

The Federal Reserve under the shadow of political intervention: US Treasury bonds fluctuate and gold rises​

Former US President Donald Trump's recent pressure on the Federal Reserve is unsettling global financial markets. Investors are generally concerned that the central bank's independence could be eroded, which could in turn affect the direction of future monetary policy.

Federal Reserve independence put to the test​

Trump's removal of Federal Reserve Governor Lisa Cook was seen by the market as a signal that he might further intervene in monetary policy. This move not only highlights his long-standing dissatisfaction with the Fed's slow rate cuts, but also raises widespread doubts about the central bank's independence.

The Federal Reserve's independence has long been considered a cornerstone of financial stability. Investors worry that if political considerations take precedence over economic fundamentals, the Fed's credibility will be undermined. This undoubtedly adds further uncertainty to an already challenging financial outlook.

Market reaction: Bond yield divergence and rising safe-haven demand for gold​

Amidst political pressures, market sentiment has diverged significantly. Traders are betting that Trump's influence could accelerate interest rate cuts, driving down short-term Treasury yields. However, concerns about the Federal Reserve's waning credibility have also pushed up long-term yields, reflecting uncertainty about the future inflation outlook. This divergence has exacerbated bond market volatility.


Chart 1: US 20-year (blue) vs. 10-year (red) Treasury yields. Source: TVC

Analysts at Ultima Market noted that markets have begun to factor in political risks, which is an unfavorable combination for both the dollar and U.S. bonds.

Meanwhile, concerns about the Federal Reserve's policy direction and the impact of political pressure on the US financial system have increased investor risk aversion, driving up gold prices. Gold (XAU/USD) hit a two-week high this week.

Chart 2: XAU/USD, 4-hour chart. Source: Ultima Market MT5

From a technical perspective, if risk aversion persists, gold prices are expected to further test the $3,400 level.

Subsequent focus: Pay attention to the Fed’s response​

Looking ahead, markets will be watching closely to see if Trump makes more changes to the Fed's leadership. Any such moves could heighten concerns and weigh on the dollar.

Meanwhile, subsequent statements by Fed Chair Powell and other Fed governors will be crucial moments for the market to examine their credibility. At a time when confidence is fragile, the Fed's ability to bolster its independence through clear communication is crucial to market stability.

Risk Warning: Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are provided for market information purposes only and do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but does not guarantee its accuracy and reserves the right to make changes at any time. The company assumes no liability for any loss arising directly or indirectly from the use of or reliance on this information.

 

[Ultima markets]

Global markets await PCE data, with optimism for tech stocks continuing​

Global financial markets struck a cautious tone and remained range-bound on Thursday as investors awaited the release of the US Personal Consumption Expenditures (PCE) price index. Equity markets were generally stable, while volatility in foreign exchange and bond markets was relatively calm.

Technology sector: NVIDIA's earnings report boosts confidence​

Following NVIDIA's better-than-expected earnings report, market focus remained on the technology sector. The report reinforced optimism about continued growth in demand for artificial intelligence (AI). While NVIDIA's positive outlook boosted market confidence, the broader tech index has shown signs of fatigue after its recent rebound, leading investors to remain cautious about chasing further gains.

While the performance of the earnings season highlights the strong momentum of AI-related companies, it also reveals the sensitivity of the U.S. stock market to concentration risk.

Foreign exchange and bond market volatility remained muted​

In the foreign exchange market, the US dollar exchange rate fluctuated within a narrow range, with traders mostly opting to wait and see ahead of the PCE data release. Major currency pairs also remained within a tight range. Meanwhile, US Treasury yields saw only minor adjustments, reflecting a balance between expectations of future Federal Reserve rate cuts and uncertainty about the inflation outlook.

PCE data becomes a key catalyst?​

Looking ahead, July's PCE price index will be the most closely watched data point this week. A weak reading could reinforce expectations of a Federal Reserve rate cut later this year. Conversely, a strong reading could reignite concerns about sticky inflation and delay market bets on a policy shift.

The CBOE Volatility Index (VIX) remains at recent lows, suggesting that investors are not making significant investments ahead of the data release. Despite market confidence in the resilience of the tech sector and relatively stable inflation, a surprisingly strong PCE reading could still trigger a significant repricing of rate cut expectations and a sharp increase in market volatility.


VIX Volatility Index | Source: Ultima Market MT5

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Risk Warning: Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but its accuracy cannot be guaranteed and is subject to change without notice.