Welcome Thursday. Today brings a very busy macro calendar, with several events that can shape the direction of major currencies. We are waiting for the interest rate decision from the UK, where a 25 basis point cut is expected, and for the Eurozone rate decision, where no change is anticipated and rates should remain at 2.15%. That’s not all, because later in the day we will also get US inflation data, with CPI expected at 3.1%. With rate decisions and inflation data all packed into one session, volatility across FX markets is very likely.
Looking at the broader market, indices remain under pressure. Yesterday was a clearly negative session for equities, and while Thursday’s European session is starting with slight optimism, futures are only modestly green. For now, this looks more like a pause or a small correction after yesterday’s weakness rather than a strong bullish reversal. Equity sentiment remains fragile and highly dependent on how today’s macro data comes in.
On the currency market, the dominant theme is the ongoing weakness of the Japanese yen. The yen was much stronger at the beginning of the week, but as we approach the end of it, those gains are being fully unwound. As a result, yen pairs are climbing higher across the board. Another notable move is the strength of the Canadian dollar, which is gaining traction and standing out among the majors today.
Commodities continue to tell an interesting story. Metals are clearly strong, with palladium up more than 3%, silver holding near long-term highs after breaking higher yesterday, and gold slightly lagging but still very close to its all-time highs. Given the momentum in silver, the odds of gold printing new all-time highs in the near future remain elevated. Oil is attempting a rebound, trying to erase the sharp losses from the first half of the week, although the broader picture for oil is still fragile. Finally, cryptocurrencies remain under pressure. Bitcoin continues to move lower, and for now, the negative sentiment is well established, with little sign that buyers are regaining control.