Dollar Undercut by Fed Rate Cut Expectations and Euro Strength

Group 1: Eurozone Economic Outlook - The euro is gaining strength after the ECB maintained interest rates and raised its 2025 Eurozone GDP forecast to +1.2% from +0.9% [1][5] - ECB President Lagarde indicated that the disinflationary process is over, suggesting that the ECB is done cutting interest rates [1][5] Group 2: US Economic Indicators - US August CPI increased to +2.9% year-on-year, up from +2.7% in July, aligning with expectations [3] - Weekly initial unemployment claims rose unexpectedly by +27,000 to a 3.75-year high of 263,000, indicating a weaker labor market [3][4] Group 3: Federal Reserve Rate Expectations - Markets are pricing in a 100% chance of a -25 basis point rate cut at the upcoming FOMC meeting on September 16-17, with an overall expectation of -73 basis points by year-end [2][4] - The dollar index is down by -0.24% due to rising expectations for Fed easing and the strength of the euro [4] Group 4: Precious Metals Market - Gold prices are under pressure due to the ECB's unchanged interest rates and reduced safe-haven demand from stock market strength [9] - However, gold prices are supported by geopolitical risks in Europe and increased gold purchases by China's central bank, which rose by +0.06 million troy ounces in August [10][11] Group 5: Japanese Economic Conditions - The yen is strengthening following positive economic news, including an increase in Q3 BSI large manufacturing business conditions and August producer prices [7][8] - Political uncertainty in Japan may limit the yen's gains, as the resignation of Prime Minister Ishiba could lead to more expansionary fiscal policies [8]