Markets in Overdrive as Fed Cut Bets Soar

• S&P 500 and Nasdaq 100 close at fresh record highs on Fed easing optimism.
• U.S. CPI holds at 2.7%, boosting odds of September and October rate cuts.
• USD Index falls below 98.00, weakest against all G10 currencies this week.
• GBPUSD up over 100 pips ahead of UK GDP; key resistance at 1.35887.
• Trade truce extension and U.S.–Russia dialogue hopes support global rally.

Global equities extended gains on Wednesday as traders priced in deeper Federal Reserve easing. July’s U.S. annual inflation rate held at 2.7%, against expectations for an uptick to 2.8%.

The data reinforced the likelihood of a September rate cut and increased the probability of another cut by October to 60%.

Key Market Moves

• Equities: S&P 500 and Nasdaq 100 closed at record highs.
• FX: USD Index broke below 98.00, losing ground to all G10 currencies.
• Crypto: Bitcoin rebounded toward $120,000.
• Commodities: Gold remained above its 50-day SMA.

Risk sentiment was further supported by President Trump’s extension of the U.S.–China trade truce to November 10 and optimism surrounding potential U.S.–Russia talks on ending the Ukraine conflict.

USD Index: Path Toward 97.00?

The dollar has weakened across the board this week. With the USD Index now below 98.00, momentum favors a move toward the 97.00 support level.

Data to Watch:

• U.S. PPI
• Initial jobless claims
• Fed speeches

Any upside surprise in the data may trigger a short-term bounce, but the broader trend remains downward.

GBPUSD: Focus on Thursday’s GDP

Sterling rose more than 100 pips on Tuesday, supported by dollar weakness and the Bank of England’s recent hawkish tone despite its rate cut. Thursday’s Q2 GDP data could set the next move.

Bullish Scenario: Strong GDP print could send GBPUSD above the July 24th swing high at 1.35887. Above this level will leave the multi-year high (1.37887) exposed.

Bearish Scenario: Weak GDP would revive rate cut expectations, exposing 1.3415 support. Below this will leave August 1st swing low exposed at 1.31412

Market View:

Equities remain supported by the prospect of Fed easing and improving geopolitical sentiment. For FX, USD weakness offers opportunities, particularly against currencies backed by more hawkish policy stances such as GBP.