Currency Market - The euro rose by +0.03% after hawkish comments from ECB officials, indicating a potential end to the rate-cut cycle, contrasting with expectations of multiple rate cuts by the Fed [1] - The dollar index increased by +0.04% due to higher T-note yields, but fell back after a decline in consumer sentiment [5] - USD/JPY rose by +0.22% as political uncertainty in Japan and a commitment from US and Japanese officials to let markets determine currency rates reduced safe-haven demand for the yen [7][9] Inflation and Economic Sentiment - The University of Michigan's 1-year inflation expectations remained at +4.8%, while 5-10 year expectations rose unexpectedly to +3.9% [3] - The consumer sentiment index fell to a 4-month low of 55.4, indicating weaker consumer confidence than expected [3] Precious Metals - December gold closed up +0.35%, and silver rose +1.62%, supported by expectations of Fed rate cuts and increased geopolitical risks [10][11] - Gold prices are bolstered by central bank purchases, with China's PBOC increasing its gold reserves for the tenth consecutive month [11] - Political uncertainties in France and Japan are driving demand for gold as a safe-haven asset [12]

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]

Group 1 - The dollar index (DXY) recovered from a 1.5-month low, rising by +0.36% due to higher T-note yields strengthening interest rate differentials and sparking short covering in the dollar [1] - Preliminary benchmark payroll revisions indicated a loss of -911,000 jobs through March 2025, exceeding expectations of -700,000, signaling a weaker US labor market [3] - Markets are now pricing in a 9% chance of a 50 basis point rate cut at the upcoming FOMC meeting on September 16-17, with a 75% chance of a second -25 basis point cut at the October 28-29 meeting, leading to an overall -73 basis point cut in the federal funds rate by year-end [4] Group 2 - The EUR/USD fell by -0.50% due to a rebound in the dollar, with the euro pressured by a significant decline in French manufacturing production [5] - French July manufacturing production decreased by -1.7% month-over-month, worse than the expected -1.2% and marking the largest decline in 14 months [6]