04/09/2025 - 07:18 UTCThe USDX was down 0.16% on Wednesday as it held ground ahead of key economic data from the United States. The dollar is appreciating ahead of fresh labor market data that could shape the interest rate outlook, with traders awaiting the ADP Employment Change, weekly Jobless Claims, and the ISM Services PMI. This comes as the CME FedWatch tool indicates markets are pricing in more than a 90% probability of a 25-basis-point Fed rate cut in September, a sentiment bolstered by weaker-than-expected July JOLTS Job Openings data. However, a cautious tone was struck by some Fed officials who warned that tariffs are pushing consumer costs higher and that high inflation remains a main risk. Attention is now shifting toward Friday’s Nonfarm Payrolls report, which is projected to add about 75,000 jobs in August.
On the commodities front, the price of WTI crude oil fell significantly, reversing gains from Tuesday to move below the $64.00 per barrel mark as traders considered the likelihood of an additional output hike by OPEC+. At the same time, gold's rally extended for a seventh day, pushing the precious metal to a record high past the $3,570 per troy ounce mark, fueled by the prospects of further Federal Reserve rate cuts. Silver also climbed, surpassing the $41.00 per ounce mark for the first time since the summer of 2011.
Most Asian markets saw mixed movements on Thursday, tracking overnight gains in the main US equity indices as investors grew more optimistic that the Federal Reserve would cut interest rates in September. Chinese markets lagged significantly. The China SSE and China SZSE fell -1.86% and -3.58% respectively as of 06:41 AM GMT Thursday, while the Hong Kong 50 shed -1.34%. Chinese regulators are reportedly considering curbs on stock market speculation, which caused local benchmarks to tumble from recent peaks as investors also locked in profits after a strong rally in August. In Japan, the Japan 225 was the best performer in the region, rising 1.29%, while the Japan 100 gained 0.75%.
In corporate news, BYD Co Ltd was a major weight on the Hong Kong 50, losing 2.68% after it reportedly slashed its sales outlook by at least 16%. Reports stated that the new target is 4.6 million vehicles, down from a prior forecast of 5.5 million. The move comes as BYD faces stiff competition in mainland markets, which has pressured margins and contributed to a recent 30% drop in quarterly profit.
The main US equity indices saw a mixed close on Wednesday. Tech led a market rebound fueled by cooling Treasury yields, as signs of softer labor demand boosted hopes for a Fed rate cut. Significant support in the US 500 came from Alphabet stock that saw sharp gains of 9.01% on Wednesday, following a favorable antitrust ruling that allows the company to avoid a forced spin-off of its Chrome browser. Apple shares were also up 3.84%, since the ruling allows Google to continue its lucrative payments to the iPhone maker. On the earnings front, software firm Salesforce is expected to report its latest results after the close of US stock markets. The report comes amid growing concerns that the artificial intelligence boom, which has underpinned recent stock market gains, may be seeing some cracks. However, analysts note that sentiment for the enterprise software sector has started to shift positively in recent weeks following a few solid earnings reports.
The upcoming August non-farm payrolls data, set for release on Friday, is a critical moment for investors evaluating the Federal Reserve's potential to cut interest rates. While a stronger-than-expected employment number could influence market sentiment, analysts suggest it may not significantly alter current expectations for a September rate cut. The key factors to watch are the unemployment rate and any revisions to previous data, as a higher unemployment rate or downward revisions could reinforce the narrative of a slowing economy and increase the likelihood of a rate cut.
The euro pared some of its recent losses on Wednesday, edging higher against a broadly weaker US dollar, though it remained below the key 1.1700 level.
The dollar came under pressure after disappointing US economic data reinforced expectations that the Federal Reserve will resume its easing cycle at the September policy meeting.
The latest Job Openings and Labor Turnover Survey (JOLTS) showed vacancies falling to 7.181 million in July from 7.357 million in June, underscoring signs of a cooling labor market. Meanwhile, factory orders dropped 1.3% month-on-month, slightly better than the forecasted 1.4% decline but still highlighting persistent weakness in the manufacturing sector.
Despite growing bets on easing, several Fed officials struck a hawkish tone. Minneapolis Fed President Neel Kashkari and Atlanta Fed President Raphael Bostic reiterated that bringing inflation back to the 2% target remains the top priority, even as the labor market shows signs of cooling.
Attention now turns to Friday’s Nonfarm Payrolls (NFP) report, with economists expecting the economy to add 75,000 jobs in August. Ahead of that, traders will watch Thursday’s weekly jobless claims and the ADP employment report for further labor market clues.
In the Eurozone, the HCOB Services PMI for August came in slightly below expectations at 50.5 versus a forecast of 50.7. Meanwhile, producer prices rose 0.4% month-on-month in July, slowing from 0.8% in June. On an annual basis, prices increased 0.2%, down from 0.6% the prior year.
Gold surged to fresh all-time highs on Wednesday, fueled by weaker US labor market data that bolstered expectations of a Federal Reserve rate cut later this month. Persistent global uncertainties also reinforced safe-haven demand.
The latest JOLTS report showed US job openings fell more than expected in July, with hiring remaining subdued—adding to evidence of a cooling labor market. Gold, which was already trading in record territory, extended gains on the release. Following the data, traders increased the probability of a 25-basis-point Fed rate cut at the September 16–17 meeting to 98%, up from 92% earlier, according to CME’s FedWatch tool.
Fed Governor Waller backed a September rate cut, while Governor Cook resisted Trump’s attempts to remove her from office. Trump, who has criticized Chair Powell, is also seeking Supreme Court support for his tariffs. Rising concerns over Fed independence are weakening confidence in the dollar and boosting gold demand.
Gold’s appeal is also supported by sluggish eurozone growth, as well as the broader backdrop of geopolitical and economic uncertainty.
Oil prices slid more than 2% on Wednesday, pressured by concerns that OPEC+ may move forward with another production hike at its upcoming meeting this weekend.
According to two sources familiar with the matter, eight members of OPEC and its allies—collectively known as OPEC+—will discuss the possibility of further raising output targets for October during Sunday’s meeting. The group, which accounts for roughly half of global oil supply, is looking to recapture market share after years of production restraint.
If approved, the adjustment would accelerate OPEC+’s plan to roll back an additional 1.65 million barrels per day (bpd) of cuts—equal to about 1.6% of global demand—well ahead of its original timeline. The alliance had already agreed to lift output by roughly 2.2 million bpd between April and September, plus an additional 300,000 bpd for the United Arab Emirates.
Traders also awaited fresh U.S. inventory data, due Thursday. Preliminary figures from the American Petroleum Institute showed crude stocks rose by 622,000 barrels last week, ending August 29.
Soft economic indicators added to downward pressure on prices. U.S. Labor Department data showed job openings fell to 7.181 million in July, below expectations for 7.378 million.
U.S. stocks closed mixed on Wednesday, with the US 500 advancing as Alphabet led a rebound in technology shares following a favorable antitrust ruling, while easing Treasury yields supported expectations for a Federal Reserve rate cut.
Alphabet jumped more than 9% after a judge ruled that the company would not be forced to divest its Chrome browser, a key point in a long-running antitrust case. While Google must share some search data with competitors and end exclusive licensing agreements, the decision was viewed as a legal win that lifts near-term regulatory pressure.
Apple also gained after the ruling preserved Google’s ability to pay billions annually to keep its search engine as the default option in Safari.
Bond yields retreated after new data pointed to softening labor demand. Job openings in July fell the most since the pandemic, reinforcing bets on rate cuts at the Fed’s September meeting.
Fed Governor Christopher Waller reiterated his support for easing, warning that labor market weakness could signal broader economic risks. The Fed’s Beige Book, released on Wednesday, also highlighted slowing consumer demand and persistent inflation concerns.
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