This week, markets focused on the Federal Reserve’s dovish signals and rising geopolitical tensions. Fed Governor Waller backed a 25 bps rate cut in September, with further easing likely over the next three to six months. However, political risks grew as Tim Cook sued Trump and named Powell as a defendant, raising questions about Fed independence.
KEY INDICATORS
Fed policy turning dovish, but political risks to independence are rising
Tim Cook filed a lawsuit against Trump over the dismissal controversy, with Powell also named as a defendant.
A Biden-nominated judge will hold a hearing this Friday, with the case expected to reach the Supreme Court.
Trump’s Fed nominee Milan is likely to be confirmed before the September decision.
Fed Governor Waller supports a 25 bps cut in September and expects further cuts over the next three to six months.
IMF official: Markets still trust Fed independence, but risks remain.
ECB’s Rehn: Trump’s pressure on the Fed’s independence could have major global consequences.
Trade tensions persist, limited signs of de-escalation
The EU proposes scrapping some US tariffs to secure lower car tariffs from Washington.
India’s Russian oil imports in September are expected to rise by 10–20% month-on-month despite US threats.
The US plans to impose flat parcel tariffs of $80–$200 within six months, later shifting to specific rates.
German Chancellor Merz: No meeting between Zelensky and Putin.
Europe proposes a 40 km frontline buffer zone.
Political and economic events
US non-farm payrolls report expected Friday, forecast at about 78,000 new jobs; weak data could push the Fed closer to rate cuts and is highly watched as a key labour market signal.
Fed Governor Waller backs rate cuts, expecting 125–150 bps over the next three to six months; markets price in a 75–85% chance of a September cut, with further easing likely in 2025.
Key economic releases this week include PMIs, ISM manufacturing, eurozone inflation, and Brazil GDP; data will gauge global growth and inflation pressures and may shift market sentiment ahead of payrolls.
Jim O’Neill named CDC head, prompting resignations and backlash; Trump ends Harris’s Secret Service protection, drawing official criticism.
European Council President António Costa visits multiple EU states on the EU “tour des capitales.”
SCO summit gathers 20+ world leaders; China highlights regional influence with North Korea, while Xi Jinping hosts Putin and Kim Jong-un at a Beijing military parade, signalling strengthened anti-US alliances in Asia.
MARKET MOVERS
EUR/USD
- Primary trend: Bullish, though a short pullback may test support
- Support level: 1.1620 (secondary: 1.1580)
- Resistance zone: 1.1680–1.1685
- Long strategy: Buy on dips above 1.1620, target 1.1680–1.1685
- Short strategy: Sell near resistance at 1.1685, target 1.1620 with potential extension towards 1.1580
- Range trade: Buy near 1.1620 and sell near 1.1685 if price consolidates in this band
- Risk management: Keep stops tight given the bearish bias
GBP/JPY
- Primary trend: Bullish, with recent pullbacks showing signs of exhaustion
- Support level: 198.20 (secondary: 198.20–198.70)
- Resistance zone: 199.40–199.70
- Long strategy: Buy on dips near 198.20, target 199.40 with potential extension to 199.70
- Short strategy: Consider tactical shorts if price spikes into 199.40–199.70, target 198.70 with potential extension to 198.20
- Range trade: Buy near 198.20 and sell near 199.70 if price consolidates in this band
- Risk management: Use tight stops given prevailing bullish momentum
USD/JPY
- Primary trend: Mixed short-term range, with rallies sold and dips supported; medium-term bias remains bearish
- Support level: 146.80 (secondary: 144.00–146.80)
- Resistance zone: 148.50 (secondary: 148.00–148.50)
- Long strategy: Consider tactical longs if price holds above 146.80, target 148.00–148.50; place protective stops beneath support
- Short strategy: Sell on rallies towards 148.50, target 146.80 with potential extension to 144.10; use stops above resistance to manage risk
- Range trade: Buy near 144.00–146.80 and sell near 148.00–148.50 if price consolidates in this band
- Risk management: Keep stops tight given the broader bearish bias
NEWS HEADLINES
Dollar and bond markets
US dollar index fell 0.29% to 97.859, rebounding intraday on stronger GDP and jobless claims data but closing lower.
Treasury yields were mixed, with the 10-year at 4.209% and the 2-year at 3.637%.
Commodities
Spot gold rose for a third consecutive session, up 0.58% to $3,417.08/oz, briefly topping $3,420.
Silver gained 1.18% to $39.05/oz.
Oil prices recovered as hopes for a Zelensky–Putin meeting faded, with WTI up 0.69% to $64.09/bbl. and Brent up 0.68% to $67.62/bbl.
Equities
US stocks edged higher, with the Dow +0.16%, S&P 500 +0.3%, and Nasdaq +0.5%.
Notable movers included Nvidia -0.8% and Google +2%.
Nasdaq Golden Dragon China Index rose 0.14%, with XPeng -3%, Alibaba -2%, and Trip.com +14.9% post earnings.
European markets were mixed, with DAX -0.03%, FTSE 100 -0.42%, and Euro Stoxx 50 +0.07%.
Click here to open account and start trading.
