Daily News Analysis By Ultima Markets

Optimism about rate cuts boosted global stocks, with the market focused on US inflation data.​

Global stock markets rallied on Monday, fueled by widespread expectations that the Federal Reserve (Fed) will restart its easing cycle in September. Japan's Nikkei 225 and the US Nasdaq both hit new highs. Further fueling the gains, the market is pricing in three interest rate cuts by 2025, according to the CME FedWatch tool. However, analysts at Ultima Markets caution that the market could quickly reprice after the first rate cut, shifting focus to the pace and depth of the easing cycle.


Chart: CME FedWatch Rate Cut Probability | Source: CME Group

Bond Markets, the US Dollar, and the Challenge of Inflation​

Despite the Fed's easing policy outlook, the bond market continues to show concerns about fiscal issues. The divergence of U.S. Treasury yields from other major markets has provided some support to the U.S. dollar. Currently, 98.50 and 97.50 , and its recent movement suggests a possible downside breakout.

Market attention now turns to this week's US inflation report, which will be the last major test before the Federal Open Market Committee (FOMC) meeting on September 16-17. A lower-than-expected Consumer Price Index (CPI) figure would reinforce market expectations for a deeper easing cycle. Conversely, if inflation remains stubbornly subdued, the Fed may need to act more cautiously.


Chart: S&P 500 daily chart | Source: Ultima Markets MT5

S&P 500 Technical Analysis​

The S&P 500's uptrend remains intact, but a rising wedge pattern has formed, which typically indicates that upward momentum is waning. This suggests that market sentiment may turn more cautious ahead of the inflation data release.
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Disclaimer : All commentary, news, research, analysis, prices, and other information contained herein is for general informational purposes only and is intended to assist readers in understanding 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. Content 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.
 

Expectations of Fed policy rise, with markets focusing on US inflation data​

Global stock markets traded this week amidst a cautiously optimistic atmosphere, as investors awaited the upcoming release of the US Producer Price Index (PPI) and Consumer Price Index (CPI) . These two key data sets will set the market tone ahead of next week's Federal Reserve policy meeting. Currently, the market has fully priced in a 25 basis point interest rate cut at the Federal Open Market Committee (FOMC) meeting on September 16-17, with expectations for three more rate cuts through 2025.

Federal Reserve officials have also recently reinforced their dovish stance. Governor Christopher Waller reiterated his support for a September rate cut and indicated that accommodative policy could continue for the next three to six months. Furthermore, Fed Governor Lisa Cook will participate in next week's FOMC vote, further strengthening the possibility of a policy shift.

Market Trends and Future Outlook​

  • Stock market: Driven by expectations of interest rate cuts, the three major U.S. stock indexes continued to hit new highs, and major European and Asian stock indexes also rose simultaneously.
  • Bond market: Despite a softening policy outlook, U.S. long-term Treasury yields remain higher than other major markets, reflecting concerns about fiscal issues.
  • USD: Supported by risk aversion and yield differentials, the USD is range-bound, awaiting inflation data as a clear trigger. If inflation data is soft, the USD may weaken faster.

US Dollar Index (USDX), 4-hour chart | Source: Ultima Market MT5

Market focus has shifted from whether to cut interest rates to the pace of those cuts. The upcoming PPI and CPI data will be a key test in determining the path of future easing.
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Disclaimer : All commentary, news, research, analysis, prices, and other information contained herein is for general informational purposes only and is intended to assist readers in understanding 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. Content 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.
 

US PPI weakens, market expectations of interest rate cuts rise​

The unexpectedly weaker Producer Price Index (PPI) data released by the United States reinforced market expectations that the Federal Reserve (Fed) will begin a rate cut cycle next week. This news boosted global stock markets, including Japan's Nikkei 225 and Hong Kong's Hang Seng Index, which both hit new highs. All three major US indices also closed higher.

Inflation cooling and CPI data become the focus​

The US Producer Price Index unexpectedly fell by 0.1% month-over-month in August , below market expectations for a 0.3% increase . This data suggests that business cost pressures are easing, boosting market confidence in moderating consumer inflation. According to the CME FedWatch tool, market expectations for a 25 basis point rate cut by the Federal Reserve at its September meeting are now nearing 90% .

Next, market attention will be focused on the upcoming Consumer Price Index (CPI) data for August. If the data shows a further cooling of inflation, it could trigger market expectations of a deeper easing cycle; conversely, if the data overheats, it could prompt the Federal Reserve to slow its easing pace.

Federal Reserve Policy and Market Response​

Recent comments from Federal Reserve officials have been largely dovish, signaling a gradual easing cycle over the next three to six months. The participation of Fed Governor Lisa Cook, in particular, has further increased the likelihood of an interest rate cut. With the September rate cut largely priced in by the market, the key question now lies in the pace of these cuts. CPI data will directly influence market judgment on whether subsequent rate cuts will be long-term or rapid.
  • Stock market : Driven by expectations of interest rate cuts, Wall Street's three major indexes continued to rise, with the Nasdaq and S&P 500 hovering around historical highs.
  • Bond market : The yield on the 10-year U.S. Treasury bond fell to a four-month low of 4.02% , reflecting the market's confidence in future interest rate cuts.
  • US Dollar and Gold : The US dollar briefly weakened after the PPI release before recovering, remaining in the 97.50-98.50 range. Spot gold, on the other hand, continued to hover above its historic high of $3,600 due to falling yields and safe-haven demand .

S&P 500 Technical Analysis Image Source: Ultima Market MT5

The S&P 500 continues to hit record highs, reflecting market optimism about the prospect of Federal Reserve rate cuts. While the overall technical uptrend remains solid, the formation of a rising wedge pattern suggests that upward momentum may be weakening, prompting investors to exercise caution.

Ultima Markets analysts warn that while the index may continue to rise in the short term, the risk of a short-term correction is increasing after next week's Federal Reserve meeting. Historical experience shows that after the first interest rate cut, the US stock market often experiences a correction due to investors taking profits.
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Disclaimer : All content provided herein, including commentary, news, research, and analysis, is for general market information purposes only and does not constitute investment advice. While every effort has been made to provide accurate and current information, its accuracy cannot be guaranteed and is subject to change. Ultima Markets assumes no liability for any losses arising from the use or reliance on any information contained herein.
 

US CPI strengthens expectations of rate cuts, while the European Central Bank remains cautious​

Thursday's US Consumer Price Index (CPI) data and the latest European Central Bank (ECB) decision delivered mixed signals to global markets, prompting investors to reassess the policy direction of major central banks. US inflation data was broadly in line with market expectations, and combined with recent soft labor market data, reinforced expectations that the Federal Reserve (Fed) will initiate an easing cycle in September. Meanwhile, the ECB maintained interest rates unchanged, emphasizing its cautious, "meet-by-meeting, data-dependent" approach rather than committing to a pre-set path.

US CPI data and interest rate cut outlook​

August's US CPI data showed a slight pickup in inflation, but it remained in line with market expectations. The core CPI annual growth rate remained at 3.1% . While inflation remains above the Federal Reserve's 2% target, the data has given the market confidence in the prospect of an interest rate cut later this year. Some analysts even believe the Fed may accept inflation stabilizing around 3% as the "new normal" in the post-pandemic era.

Divergence in monetary policy between Europe and the United States​

The ECB's latest decision stands in stark contrast to the Federal Reserve's projected path. The ECB believes the Eurozone economy is resilient and expects inflation to gradually return to target. However, the bank refused to commit to a timeline for future rate cuts, which the market interpreted as a cautious stance and tempered expectations for aggressive easing.

This policy divergence is expected to be a key driver of the euro, dollar and bond market trends in the coming months.

EURUSD Technical Analysis​


Image Source: Ultima Market MT5

The Euro/US Dollar (EURUSD) exchange rate has been range-bound recently. While diverging monetary policies between Europe and the US may provide support for the Euro, technically, the pair is currently facing key resistance at 1.1740–1.1800 . A breakout above this range could open up further upside; failing to do so, the pair is expected to continue its consolidation pattern.
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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

Global markets await central bank guidance as we prepare for "Super Central Bank Week"​

Global financial markets are at a critical juncture. Several major central banks, including the US Federal Reserve (Fed), the Bank of England, and the Bank of Japan, will announce their interest rate decisions within approximately 36 hours. These decisions will not only set the tone for the global economy in the fourth quarter but will also directly influence the direction of major currencies.

Focus: Fed rate cuts and policy game​

The most anticipated event of the week was undoubtedly the Federal Reserve's interest rate decision, with the market widely expecting a 25 basis point cut . While the White House continues to pressure for lower borrowing costs and Fed Chairman Jerome Powell remains wary of potential inflation caused by tariffs, recent signs of weakness in the US job market provide the primary rationale for a shift toward easing policy.

Global central banks are moving at different paces, with policy divergence becoming the key​

While the Federal Reserve is expected to shift toward easing, the policy pace of other major central banks around the world is not completely consistent.
  • Bank of Canada : Due to weak domestic economic data, it is expected to cut interest rates in tandem with the Federal Reserve.
  • The Bank of England and the Bank of Japan : Both are likely to keep interest rates unchanged. Markets will be closely watching any adjustments to the Bank of England's quantitative tightening (QT) program and any hints from the Bank of Japan's governor on the path of future rate hikes.
Click to expand...
This policy divergence is expected to be a key theme in market trading this week and could significantly increase market volatility.


US Dollar Index Technical Analysis Image Source: Ultima Market MT5

The daily chart of the US Dollar Index (USDX) shows that after a month of consolidation, it has fallen below the lower limit of its range. It is currently approaching key support at 96.23 . It is worth noting that as the market continues to price in the Fed's interest rate cut, traders should be wary of the potential " buy the anticipation, sell the reality " market that could emerge upon the official announcement.

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Disclaimer : All commentary, news, research, analysis, prices, and other information contained herein is for general informational purposes only and is intended to assist readers in understanding 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. Content 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.
 

Court rules to ensure Tim Cook's attendance at Fed meeting, legal battle heats up​

In a legal battle over the independence of the Federal Reserve (Fed), a recent U.S. Court of Appeals ruling temporarily blocked the Trump administration's attempt to remove Fed Governor Lisa Cook. The ruling ensures Cook's participation in key Federal Open Market Committee (FOMC) policy meetings on Tuesday and Wednesday. However, the legal battle is widely expected to continue and escalate to the Supreme Court.

The Justice Department's emergency application was rejected​

On the eve of the Federal Reserve's crucial interest rate-setting meeting, the U.S. Department of Justice filed an emergency motion seeking to expedite the removal process at a federal appeals court, but the request was ultimately rejected. The appeals court upheld a temporary injunction previously issued by a lower court, directly thwarting the Trump administration's plan to remove Cook before the FOMC meeting.

Legal Controversy over "Justifiable Cause"​

The legal dispute centers on defining the limits of the president's authority to remove a Federal Reserve governor. Under the Federal Reserve Act, the president can remove a Fed governor only for "good cause." Previously, a lower court judge ruled that the Trump administration's allegations of mortgage fraud as a justification for removing Cook might not constitute the legally required "good cause." Cook will remain in office pending a final Supreme Court ruling.
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Disclaimer : The commentary, news, research, analysis, prices, and other information contained herein are for reference only and are intended to help readers understand market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of the information, but cannot guarantee its absolute accuracy and may be subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, loss of profit) that may arise directly or indirectly from the use of or reliance on such information.
 

Euro breaks through four-year high against US dollar, market focuses on Fed decision signal​

The euro climbed to a four-year high against the U.S. dollar (EUR/USD) on Tuesday as traders prepared for the upcoming Federal Reserve policy meeting, where interest rate cuts are widely expected. Markets are now almost fully pricing in a 25 basis point rate cut and anticipate up to three more rate cuts in 2025.

The Federal Reserve in Focus: Political and Policy Game​

The Federal Reserve's two-day meeting began on Tuesday, with futures markets pricing in a near 100% probability of a 25 basis point rate cut , which could signal the start of a multi-month easing cycle.

The backdrop of the meeting was further complicated by political factors. While a court ruling temporarily prevented the removal of Federal Reserve Governor Lisa Cook, allowing her to participate in policymaking, Trump's hawkish nominee, Stephen Miran, was confirmed to the board. These developments highlight the Fed's challenge: maintaining its policy independence while responding to political pressure and market calls for monetary support.

EUR/USD Technical Outlook​

After nearly two months of consolidation, the euro has broken through the key resistance level of 1.1800 against the dollar . Analysts point out that the weakness of the dollar is the main driving force, but the subsequent rise will depend on the policy guidance of the Federal Reserve.


EUR/USD, 4-hour chart analysis | Source: Ultima Market MT5
  • If the Fed leans dovish : EUR/USD may continue its rise, targeting 1.1850 or even higher.
  • A more cautious tone could trigger a rebound in the US dollar, pushing the pair back towards the support area around 1.1740-1.1700 .
EUR/USD has now clearly broken through the key resistance zone of 1.1740–1.1800 , which has turned into important support. As long as the correction can hold this zone, the upward momentum is expected to be maintained.

Market Outlook​

The market generally expects the Federal Reserve to cut interest rates by 25 basis points , with three more cuts expected through 2025, reinforcing confidence that a new easing cycle is imminent. Meanwhile, the European Central Bank (ECB) chose to keep interest rates unchanged this week, emphasizing its "meeting-by-meeting, data-dependent" approach, without committing to a specific easing path.

This policy divergence, with the Fed leaning towards easing and the European Central Bank remaining cautious, is expected to be the main factor driving the euro against the dollar and bond markets in the coming months.
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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

The Fed resumed rate cuts, hinting at more easing to come​

The U.S. Federal Reserve (Fed) cut its interest rate by 25 basis points on Wednesday , lowering the federal funds rate target range to 4.00%–4.25% , its first policy adjustment since December. Policymakers also hinted at two more rate cuts possible before the end of the year, highlighting growing concerns about a weakening labor market as inflation remains above target.

The considerations behind the interest rate cut decision​

Federal Reserve Chairman Jerome Powell described the move as a "risk management" measure aimed at addressing signs of slowing job growth and rising unemployment pressures. He stressed: "We are not declaring victory over inflation, but we do recognize that the labor market is weakening faster than expected."

The resolution was not passed unanimously. New governor Stephen Miran voted against it, advocating a larger 50 basis point rate cut, reflecting differences within the Fed over the extent of easing.

Dot plot forecasts and market reactions​

The September Summary of Economic Projections (SEP) showed a distinctly dovish bias. The median dot plot projected two more quarter-point rate cuts this year, implying a possible drop of the federal funds rate to 3.50%–3.75% by December . This was a significant shift from the June forecast of only one to two rate cuts.


Fed Dot Plot – September Meeting | Source: Federal Reserve

Economic outlook downgraded​

In addition to the interest rate path, the Fed also lowered its GDP growth forecast for 2025 to 1.6% (from 1.9%) and raised its unemployment rate forecast to 4.6% (from 4.3%). However, Powell emphasized that the impact of tariffs is more of a one-time shock than a lasting factor.

Market reaction​

Traders interpreted the updated dot plot as confirmation of a new easing cycle. Short-term U.S. Treasury yields fell sharply, initially weakening the dollar, pushing EUR/USD, GBP/USD, and gold to new highs. However, the market quickly reversed its decline, signaling a "good news run" scenario, suggesting the market had already priced in a higher-than-expected rate cut.


US Dollar Index daily chart | Source: Ultima Market MT5
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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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

Bank of England keeps interest rates unchanged and slows quantitative tightening​

At its September meeting, the Bank of England (BoE) voted 7 to 2 to keep the Bank Rate unchanged at 4.00% , although two members supported an immediate 25 basis point cut , indicating internal disagreement.

In addition to the interest rate decision, the Bank of England also announced a slowdown in its quantitative tightening (QT) program, reducing its annual government bond reduction from £100 billion to £70 billion . This move aims to mitigate recent bond market volatility by reducing the sell-off of long-term government bonds and increasing the proportion of short- and medium-term bonds.

Key points from the Bank of England's statement​

  • Inflation : The Consumer Price Index (CPI) rose to 3.8% in August . The Bank of England warned that inflation risks remain tilted to the upside, particularly from pressures on wages and price setting.
  • Economy and Labor Market : Economic activity remains weak, unemployment is gradually rising, and wage growth is gradually slowing, all of which indicate that there is spare capacity in the economy.
  • Policy Guidance : The Bank of England emphasized that its monetary policy "is not on a pre-set path." Any interest rate cuts will be gradual and cautious, and contingent on sustained declines in inflation. Governor Andrew Bailey also reiterated that the UK is "not out of the woods" on inflation.

Market and GBP reaction​

The pound weakened further following the announcement. Investors viewed the slowdown in quantitative tightening and the votes in favor of a rate cut as dovish signals. However, stubborn inflation and the Bank of England's cautious comments limited downward pressure on the pound.

GBP/USD technical analysis​


GBPUSD, 4-hour chart analysis | Source: Ultima Market MT5

The British pound (GBPUSD) fell further following the Bank of England's decision, failing to hold above the key 1.3600 level. Technically, as long as GBPUSD remains below 1.3600 , downward pressure is likely to persist, potentially leading to a near-term range-bound market. Future trends will hinge on upcoming inflation and employment data, which will directly impact market sentiment and policy expectations.
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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

The dollar rebounded as the market focused on Fed officials' speeches and economic data​

The US dollar started the week on a strong note, rebounding from initial weakness following last week’s Federal Reserve meeting. Despite the Fed’s announcement of a 25 basis point rate cut and hints at two more rate cuts possible before the end of the year, profit-taking and positioning drove the dollar’s recovery.

Fed officials' speeches become the focus​

This week, market attention will shift to a flurry of speeches from Federal Reserve officials. Investors are eager to gauge whether the Fed will maintain its cautious easing stance or issue a clearer policy signal. Traders will be closely watching to see if officials signal sufficient reason to cut interest rates again at a future meeting.

The biggest highlight on Wednesday will undoubtedly be Federal Reserve Chairman Jerome Powell's speech, which is expected to set the tone for market sentiment. A hawkish tone could extend the dollar's gains, while a dovish tone could reignite selling pressure.

Key US economic data this week​

In addition to official speeches, economic data will also play a decisive role in shaping market expectations. The Federal Reserve has emphasized that future policy decisions will be data-dependent, so the upcoming data will be closely watched. Key data this week include:
  • Tuesday:
    S&P Global PMI , a measure of business activity and economic momentum.
  • Thursday: Second Quarter
    GDP and weekly initial jobless claims are both important signals reflecting the resilience of the U.S. economy.
  • Friday:
    PCE price index , the Fed's preferred inflation measure, will be carefully interpreted by the market for its policy implications.

US Dollar Technical Outlook Image Source: Ultima Market MT5

From a technical perspective, the dollar's rebound has yet to break through the key resistance zone of 97.50–98.50 . Price action in this area will be crucial over the next few trading days. A sustained breakout above this level could propel the dollar further upward; failure to reclaim this range would likely extend the dollar's overall downward trend.
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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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

Gold hits a new record high, but be wary of short-term correction risks​

Gold hit a new high of $3,759.7 in Asian trading today, driven by growing market expectations for continued interest rate cuts from the Federal Reserve (Fed). Last week's 25 basis point rate cut and hint of two more cuts possible before the end of the year fueled strong buying demand. Furthermore, continued gold purchases by central banks, lingering inflation concerns, and a weaker US dollar have all provided support for gold prices.

XAU/USD, 2-hour chart | Source: Ultima Market MT5

From a technical perspective, gold is approaching the overbought zone, with the Fibonacci extension target at around $3,750 , where profit-taking is already evident. If gold fails to hold above the current high, a short-term correction is possible. The first support below is at

$3,730 , stronger support is at the psychological level of $3,700 .

While there may be a short-term correction, the medium-term outlook for gold remains positive. If the Fed further enters an easing cycle, real yields will tend to fall, which will continue to support the upward trend of gold prices.

Looking ahead, gold prices will depend on comments from Federal Reserve officials and upcoming US economic data. If the data shows slowing economic growth or cooling inflation, it would reinforce expectations of easing and push gold prices to new highs. Conversely, strong data could support the US dollar and trigger a corrective pullback.
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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

The dollar rose against the yen, supported by comments from Fed officials.​

On Wednesday, the US dollar strengthened significantly, supported by cautious comments from Federal Reserve officials. The US dollar index climbed significantly, and the US dollar against the Japanese yen broke through the 148 mark, approaching 149 at one point .

The yen remained under pressure despite the release of the Bank of Japan’s (BOJ) minutes from its July meeting, which showed that some policymakers discussed the possibility of future interest rate hikes.

Bank of Japan meeting minutes: Hawkish tendencies revealed​

The minutes of the Bank of Japan’s July meeting showed that while the policy rate remained unchanged at 0.5% , some members expressed the possibility of a future rate hike. The internal debate over inflation, price pressures, and the timing of policy normalization has intensified. Some policymakers believe that with inflation approaching or reaching the Bank of Japan’s 2% target, more aggressive policy tightening is warranted. However, others believe that a cautious stance is warranted given global uncertainties and downside risks.

The minutes also stressed that any policy shift must be gradual and depend on data performance to avoid market turmoil.

Yen reaction and subsequent outlook​

The Japanese yen briefly strengthened in early trading Thursday following the release of the July meeting minutes, as more hawkish internal discussions heightened market speculation about future rate hikes. However, despite the Bank of Japan’s hawkish signals, the yen’s upside remained limited. This was primarily due to political uncertainty surrounding the upcoming Liberal Democratic Party leadership election and global trade risks stemming from US tariffs.

USD/JPY daily chart | Source: Ultima Market MT5

From a technical perspective, USD/JPY has broken out of the 146-148 range, but remains constrained by the resistance level of 149.00 . A successful break above this level would open up room for further upward momentum; otherwise, the pair may continue to fluctuate within the range.
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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

US GDP upward revision drives dollar rebound, market focus shifts to PCE inflation data​

The latest data released by the U.S. Bureau of Economic Analysis (BEA) shows that the final estimate of GDP growth in the second quarter of 2025 is 3.8% annualized , higher than the previous estimate of 3.3% . This upward revision is primarily due to strong consumer spending and a sharp drop in imports. This data suggests that the economy is stronger than expected, which may complicate the Federal Reserve’s (Fed) decision on further easing.

The impact of GDP data on interest rate cut expectations​

Strong GDP data has helped to temper market expectations for aggressive interest rate cuts in the near term, contributing to a sharp rise in the US dollar on Thursday. Solid economic growth has reduced the Federal Reserve’s scope for rapid rate cuts without triggering inflation risks. However, the Fed has emphasized that its policy will be “data dependent,” so all eyes will be on the upcoming release of key data on inflation, employment, and other key indicators.

US Dollar Index daily chart | Source: Ultima Market MT5

From a technical perspective, the US dollar has regained momentum, with the US Dollar Index (DXY) reclaiming the 98 mark and returning to the key range of 97.5 to 98.5 . This range has long served as key support for the US dollar at its multi-year lows, and this rebound shows that its fundamental support remains solid.

PCE price index becomes key battlefield​

Looking ahead, the market’s focus will be entirely on the Fed’s preferred inflation indicator -

PCE price index .
  • If a higher-than-expected PCE reading could heighten market concerns about stubborn inflation, potentially delaying or even stalling the Federal Reserve’s interest rate cuts.
  • On the contrary, if softer PCE data, especially the core PCE excluding food and energy, may revive market confidence in further easing and suppress the US dollar again.
In short, this upward revision to GDP puts the final nail in the coffin on inflation data. PCE is now the main battleground, which will determine whether the Fed leans dovish or remains on the sidelines.
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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 

US Dollar Faces Pressure Amid Government Shutdown Risks and Key Economic Data Insights​

On Monday (September 25), the US dollar index continued its weakening trend, falling 0.3% to 98.02, hitting a three-week low. This decline was primarily driven by dual pressures: rising political uncertainty (increasing the risk of a federal government shutdown) and a lack of economic data (investors remaining on the sidelines ahead of key indicators). Market trading volume was 15% below its 30-day average, reflecting widespread caution among participants.

Government Shutdown Risk: A Systemic Threat Emerges​

As the fiscal year-end of September 30 approaches, Congress remains deadlocked over the spending bill. History shows that a government shutdown triggers a triple chain reaction:
  • Administrative operations are paralyzed: Approximately 40% of federal employees are furloughed, disrupting public services.
  • Data releases are disrupted: The Department of Labor has warned that if a shutdown occurs, key data releases, such as the non-farm payroll report (October 6th) and the CPI report (October 12th), will be delayed.
  • Market confidence is dampened: During the December 2018 shutdown, the Volatility Index (VIX) surged 72% in a single month.
Profound impact on Federal Reserve decision-making: The Federal Reserve is currently at a critical juncture in its policy shift. Chairman Powell emphasized after the September FOMC meeting that “the future path is highly data-dependent.” However, in the context of a government shutdown:
  • The lack of non-farm payroll data will obscure labor market judgment (the current unemployment rate of 3.8% is near a historic low).
  • The lack of CPI/PCE data will weaken inflation assessments (core PCE remains 46% above target).
  • Increasing policy reactivity: Governor Waller admitted that “during a data vacuum, decision-making may be overly reliant on financial market sentiment.”

PCE Data Analysis: Two-sided signals for rate cut expectations.​

The August PCE, released last Friday, The E Price Index triggered a subtle market reaction:
  • Dovish support point: Core inflation remained below 3% for three consecutive months, reinforcing the consensus that the “interest rate hike cycle is over.”
  • Hawkish disruption point: The final second-quarter GDP figure, released the same day, was revised upward to 2.1% (preliminary estimate: 1.7%), reflecting unexpectedly resilient consumer spending.
  • Interest rate futures implied probability: Current pricing suggests a 68% probability of a 25bp rate cut in December, but this expectation could be repriced if the shutdown results in data loss.

Technical Analysis: Key Attack and Defense Zones for the US Dollar Index​


[Dollar Index Daily Chart | Source: Ultima Market MT5]

Affected by the above factors, the US dollar fell slightly, but its movement remained confined to its recent range. The US dollar index retreated but remained between 97.5 and 98.5, reflecting market wait-and-see attitudes in the absence of a decisive catalyst.

Technically, 97.50 is a key support level for the US dollar index. A sustained break below this level would signal renewed downward pressure, potentially leading to a deeper decline in the US dollar. On the other hand, if this area holds, the index will remain in a broader consolidation range, with 98.5 remaining a major resistance level.

Market Outlook: Data and Politics Will Drive Next Moves​

With the US dollar hovering near multi-year lows, the next directional catalysts could come from economic data and political developments:
  • If a federal government shutdown becomes a reality, data delays could exacerbate uncertainty and weigh on US dollar sentiment, especially if risk appetite in the equity market persists.
  • If a shutdown is successfully averted, market focus will quickly shift back to upcoming US economic data—including labor market indicators and inflation trends—as investors seek further clues about the Fed’s path.
Overall, the US dollar remains vulnerable in the short term, but the resilience of the US economy provides some support. With the risk of a shutdown and uncertainty surrounding non-farm payroll data, the market’s movements over the next few days will set the tone for October.

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, lost profit) arising directly or indirectly from the use of or reliance on such information.
 
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