The anticipation surrounding a potential rate cut by The Fed next month continues to be a major influence in the market as trading unfolds on Wednesday, with expectations carrying into Thursday (August 14, 2025).
According to the FedWatch tool, market participants are currently assigning a 100% probability to The Fed implementing a rate cut in September. Specifically, 95.8% foresee a reduction of 25 basis points (0.25%) from the current level, while 4.2% expect a larger cut of 50 basis points (0.5%).
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This sentiment is expected to keep affecting market movements alongside the release of economic data. Here is some information from Trading Central:
- UK preliminary GDP data (year-on-year/Q2); forecast 0.7% compared to the previous 1.3%
- Eurozone industrial production data (month-on-month/June); forecast -0.6% compared to the previous 1.7%
- US producer price index (PPI) data (year-on-year/July); forecast 2.5% vs previous 2.3%
- US unemployment claims (August/09); forecast 228K compared to 226K
GOLD
The price of Gold (XAUUSD) edged up slightly to $3,355.70 per troy ounce during trading on Wednesday. Gold has risen modestly over the past two days and today briefly peaked at $3,374.64 per troy ounce.
Gold is experiencing positive sentiment fueled by expectations of a rate cut by The Fed next month. This sentiment continues to have the potential to bolster Gold’s performance in the European trading session.
OIL
The price of Oil (CLS10) fell again to $62.73 per barrel on Wednesday, touching its lowest level since early June. Negative sentiment lingers, particularly due to the upcoming meeting between President Trump and Russian President Vladimir Putin this week.
Their meeting may avert sanctions on Russia, especially within the energy sector.
Pressure on Oil has intensified following the EIA’s report last night indicating US Oil stocks increased by over 3 million barrels in just one week. These two sentiments are likely to continue to apply pressure on Oil during the European trading session.
EURUSD
EURUSD moved up 313 points (31.3 pips) to 1.16707 during trading on Wednesday. This currency pair is receiving positive sentiment from the pressure on the US dollar driven by the expectations of a rate cut by The Fed.
However, there is a possibility EURUSD could face a correction in the European trading session, especially if Eurozone industrial production data is reported lower than the forecast of -0.6%.
GBPUSD
Strong UK labor market data has caused GBPUSD to surge over the past two days. During Wednesday’s trading, this currency pair recorded an increase of 712 points (71.2 pips).
The preliminary growth data for the UK economy (preliminary gross domestic product/GDP) could trigger significant movement again in the European trading session. Nevertheless, there is potential for GBPUSD to come under pressure and experience profit taking as the forecast for Q2 2025 GDP is expected to be lower than the previous quarter.
The downward pressure on GBPUSD will be amplified if the data is released lower than the forecast of 0.7%.
USDJPY
USDJPY decreased by 473 points (47.3 pips) to 147.305 at the start of trading on Wednesday, plummeting further by approximately 97 pips to 146.336 this morning.
USDJPY is under pressure due to the 100% probability of a rate cut by The Fed. The pressure is exacerbated by morning data from Japan, which showed that the producer price index (PPI) grew considerably, raising expectations that the BoJ may increase interest rates in the near future.
These two sentiments are anticipated to continue to influence USDJPY during tonight’s trading session.
Nasdaq
The Nasdaq index exceeded 24,000 and set an all-time high during trading on Wednesday, before facing some profit taking resulting in a minor decline. The sentiment around the Nasdaq remains positive as market participants are highly confident that The Fed will implement a rate cut in September.
When rates are cut, the US economy is expected to improve, leading to a more favorable outlook for company performance on the exchange.
