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11
Sep

U.K. GDP, U.S. Core CPI, EIA Crude Oil Inventories

calendar 11/09/2024 - 07:24 UTC

The US dollar experienced a moderate uptick on Tuesday, with the dollar index (USDX) closing 0.04% higher as investors maintained a cautious stance, ahead of the upcoming U.S. inflation data that could provide more guidance on the potential size of an interest rate cut by the Federal Reserve later this month. The upcoming US inflation report could play a key role in the Federal Reserve's decision on interest rates. If inflation remains low, the Fed may be more inclined to cut rates. The CPI and core CPI are expected to rise 0.2% in August following similar advances in July.

According to the CME's FedWatch tool, the market is currently pricing in a 71% chance of a 0.25% interest rate reduction by the Federal Reserve in September. While a larger cut of 0.5% is seen as less likely at 29%, there is still a significant probability of further easing in November, with odds currently standing at 52.1%.

In other news, the first presidential debate was finalized with Vice President Kamala Harris repeatedly bringing up sensitive topics, drawing strong responses from the former president. However, she failed to address the current economic situation after four years under the Biden administration. The debate underscored the potential for a highly volatile 2024 presidential election, which could have significant implications for market stability given the candidates' major differences on key policy issues.

United States stock index futures exhibited a narrow trading range on Tuesday, with the S&P 500 and Nasdaq 100 registering slight upward movements. The ascent in the technology sector partially offset declines in energy and financial sectors, anticipating the release of a significant inflation report a day ahead of an important inflation report.

In corporate news, Apple's stock declined following a European Court of Justice ruling requiring the company to pay 13 billion euros in back taxes. The news comes one day after Apple's unveiling of the iPhone 16 on Monday, which is slated to go on sale September 20 with pre-orders commencing this Friday in an effort to boost weak sales of the device.

Within the energy sector, the two principal crude oil benchmarks, West Texas Intermediate (WTI) and Brent, exhibited fell sharply on Tuesday, with the move primarily attributed to escalating concerns regarding oversupply and a pessimistic outlook for demand.

A series of key economic reports are scheduled for release this week, with the U.S. Consumer Price Index and Producer Price Index figures occupying the center of attention.

EUR/USD

The EUR/USD pair retreated on Tuesday following Germany’s inflation report, reinforcing speculation about an ECB interest rate reduction.

The Harmonized Index of Consumer Prices (HICP) in Germany fell to 2%, hitting the European Central Bank's (ECB) target and increasing the likelihood of further rate cuts.

This development has prompted expectations of a 25 basis point (bps) rate cut from the ECB, which remains committed to a restrictive policy stance to mitigate inflation risks.

Looking ahead, August's U.S. Consumer Price Index (CPI) data, expected to be released later this week, will be closely watched.

EUR/USD

Gold

Gold prices remained strong above the $2,500 mark on Tuesday, as traders positioned themselves ahead of key U.S. inflation data that could offer more insight into the Federal Reserve's interest rate path.

Investors will closely analyze Wednesday’s U.S. Consumer Price Index (CPI) release and Thursday’s Producer Price Index (PPI) data for further clues on inflation trends.

Gold

WTI Oil

Oil prices declined on Tuesday as fresh indications of weaker demand heightened fears of a potential supply surplus, overshadowing the possible disruption to U.S. oil production from Tropical Storm Francine.

The Organization of the Petroleum Exporting Countries (OPEC) further reduced its global oil demand growth forecast for 2024 in its latest monthly report.

Most of the downgrade stems from China, where demand growth is now projected at 650,000 bpd for 2024, down from the earlier forecast of 700,000 bpd.

WTI Oil

US 500

US 500 and US Tech 100 ended the session higher on Tuesday while US 30 posted losses as a rally in tech stocks helped counterbalance weakness in the energy and financial sectors, ahead of a closely watched inflation report due later today.

The mostly subdued session comes in anticipation of the August Consumer Price Index (CPI) data, which will be a key factor in shaping expectations for the Federal Reserve’s next move on interest rates.

The technology sector continued its recent run of gains, buoying the broader market, though Apple ended the day slightly below the flatline. This came after the European Court of Justice ruled that Apple must repay €13 billion in back taxes, overturning an earlier decision in favor of the company.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

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