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Fed minutes signal slowing economy: Markets anticipate rate cuts
The Federal Reserve's June FOMC minutes reveal cautious optimism about the U.S. economy
Gold prices show mild gains
Switzerland's June CPI data suggests a potential pause in rate cuts
Crude oil prices retreat from two-month highs
Federal Reserve and Interest Rates
The FOMC minutes from the Fed's June meeting suggest that while the U.S. economy is gradually slowing, more data is needed to ensure that cutting interest rates won't trigger a resurgence in inflation. Bankers indicated that a weak labor market could lead to a faster rise in unemployment than historically observed. This has led to partly dovish interpretations of the Fed minutes, especially after ISM services data fell to its lowest level since May 2020. This unexpected drop has raised hopes for a quicker rate cut in the fall.
USDJPY
The Bank of Japan is expected to reduce its monthly bond purchases by roughly 16 trillion yen under a new quantitative tightening plan set for release this month. After the news the pair fell from nearly 162 to 160.7 mainly due to a weaker U.S. dollar but recovered some losses.
Swiss Economy
In Switzerland, the June CPI rose by 1.3% year-over-year, slightly below the expected 1.4%, while core CPI increased by 1.1%. This trend aligns with the Swiss National Bank's recent shift from FX sales to FX purchases in Q1 this year. This data could provide the SNB with reasons to pause on rate cuts.
Commodities
Gold
Gold prices (XAU/USD) showed a mild positive trend during early European trading hours on Thursday but lacked momentum, remaining below a nearly two-week high from the previous day. The robust bullish sentiment in global equity markets is acting as a headwind for the safe-haven metal amid thin liquidity due to the Independence Day holiday in the U.S. Traders are cautious, awaiting the release of the Nonfarm Payrolls (NFP) report on Friday before making significant moves.
Oil Market
Crude prices retreated from a two-month high as traders evaluated lower U.S. crude inventory data and the impact of Hurricane Beryl, which prompted platform evacuations. Brent traded below $87 a barrel, and West Texas Intermediate remained above $83. U.S. crude inventories fell by over 12 million barrels last week, the largest drop in almost a year.
