The United States released a series of key economic data at 20:30 WIB, revealing a decrease in inflationary pressures while simultaneously indicating a slowdown in economic activity. The year-on-year Consumer Price Index (CPI) reported at 2.7%, falling short of Trading Central’s forecast of 3%, suggesting that the rate of inflation is becoming increasingly controlled. On the other hand, the manufacturing data revealed a sharp decline to -10.2, significantly underperforming the estimate of 6 and worse than the previous figure of -1.7, reflecting considerable stress within the industrial sector. Meanwhile, unemployment claims stood at 224,000, lower than the expected 229,000 and the preceding 237,000, indicating that the labor market remains relatively strong despite signs of an economic slowdown.
This combination of data has led to a shift in market sentiment, particularly regarding safe-haven assets and foreign exchange markets. The easing inflation and the weakened manufacturing sector have heightened expectations that the Federal Reserve’s tight monetary policy is starting to have tangible effects on the economy. As a result, Gold has considerably strengthened, reaching $4,336, amid rising speculation that there may soon be more room for monetary policy easing. In line with the movement of Gold, major currency pairs also saw significant gains, with GBP/USD surging to 1.34387 and EUR/USD strengthening to 1.17562, reflecting a weakened US dollar following the release of the data.
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Looking ahead, market focus will be on the Federal Reserve’s stance in response to these economic developments. With inflation continuing to decline but economic growth showing signs of slowing, the Fed is expected to adopt a more cautious approach, increasingly relying on data to guide policy direction. Although a cut in interest rates is not necessarily imminent, the likelihood of monetary policy easing is beginning to be considered by the market, particularly if future economic data continues to illustrate weakness. This outlook could keep market volatility high, with both Gold and major currencies remaining sensitive to shifts in the Fed’s policy expectations.
