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On Thursday, gold prices hovered around $4,130 per ounce, remaining close to the two-month low hit on Wednesday, as investors assessed the minutes of the Federal Reserve's September meeting for clues regarding the interest rate outlook. The US dollar held near an 18-month high, while US Treasury yields remained close to levels not seen in over two decades. The minutes revealed that all 19 policymakers supported the September rate hike, with the majority deeming another hike before year-end appropriate. According to the CME FedWatch Tool, the market currently assigns a probability of nearly 17% for an October rate hike and over 85% for a hike in December. Rising interest rates diminish the appeal of non-yielding gold. Meanwhile, geopolitical tensions continue to support some demand for safe-haven assets. Shipping data indicates that the number of vessels passing through the Strait of Hormuz has dropped to its lowest level in over two months as regional hostilities escalate.
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The U.S. trade deficit widened sharply in August as imports surged amid strong demand for AI-related goods and shifting tariff policies, the Commerce Department reported Tuesday.
Imports rose 4.3%, pushing the trade deficit to $105.6 billion, up 13.7% from July and above economists’ expectations of $102 billion. This marked the largest deficit since March 2025, just before President Donald Trump announced his reciprocal tariffs.
Despite the increase, economists view the figures as a sign of strong domestic demand rather than economic weakness. However, the widening deficit could weigh on third-quarter GDP growth, prompting Goldman Sachs to lower its growth forecast to 3.1% and the Atlanta Fed’s GDPNow estimate to 3.7%.
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Third-quarter earnings season is getting underway, with Delta, Pepsi and Levi Strauss reporting this week before major banks including JPMorgan Chase and Bank of America kick off the main reporting period next week.
Analyst sentiment has strengthened, with S&P 500 earnings-per-share estimates raised by 1.3% during the quarter. FactSet expects S&P 500 companies to deliver 12.1% year-over-year revenue growth and 29.1% earnings growth in Q3. If achieved, it would mark the third consecutive quarter of earnings growth above 25%, reinforcing expectations that strong corporate momentum could support equities despite a volatile macro backdrop.
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Oil prices rose in September amidst the ongoing US-Iran standoff, with Brent crude gaining nearly 3% and WTI crude rising over 1.56%. Despite a slight recovery in Middle Eastern crude exports, Iran raised the alert level for 46 infrastructure sites; meanwhile, the Iranian Foreign Minister received feedback from the US in Doha, though differences remain regarding the "seven-day proposal." WTI crude is currently trading near $89 per barrel. Qatar expressed hope on Tuesday for a breakthrough in shuttle diplomacy between Tehran and Washington, though US President Trump denied reports by Axios and CNN—which cited US officials claiming Trump was willing to ease sanctions and unfreeze Iranian funds in exchange for "concrete" actions on Tehran's nuclear program. On Tuesday, Saudi Arabia resumed tanker loading at the Red Sea port of Yanbu following the restart of the East-West Pipeline. The restoration of crude supplies should alleviate price pressures stemming from supply constraints; however, persistent shortages of refined products and high freight costs may keep the broader energy market tight. Data released by the US Energy Information Administration (EIA) on Wednesday showed that US gasoline inventories fell by 1.7 million barrels last week to 204.4 million barrels.
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US inflation came in below expectations in August, according to the Fed’s preferred PCE gauge. Headline PCE rose 0.3% month-on-month and 3.4% year-on-year, below the 3.7% annual forecast. Core PCE increased 0.2% for the month and 3.0% annually, also below expectations of 0.3% and 3.3%.
The softer figures came alongside methodology changes by the BEA, which also lowered July’s core PCE reading.
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Wall Street will focus on key U.S. economic data this week, including the first inflation reading since the Federal Reserve raised rates on Sept. 16. August PCE inflation, the Fed’s preferred measure, could shape expectations for future rate decisions.
Consumer confidence and September employment data will also offer fresh insight into the economy and labor market.
On the corporate front, CarMax, Accenture and Micron Technology are among the companies reporting earnings. Micron will be closely watched as strong AI demand continues to drive growth in memory chips and data centers.
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Wishing you a wonderful Mid-Autumn Festival filled with good food, warm moments and time with the people who matter most.
Happy Mid-Autumn Festival from all of us at BCR 🌕
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On Wednesday, EUR/USD extended its intraday decline as stronger-than-expected US business activity data reinforced market expectations for further Federal Reserve rate hikes and boosted the US dollar. At the time of writing, the pair is trading near 1.1390, a level last seen in late July. Preliminary data shows the S&P Global US Composite PMI rising to 58.4 in September from 56.0 in August. The Manufacturing PMI climbed to 57.0, surpassing the expected 53.5, while the Services PMI rose to 58.7, exceeding the forecast of 56.0. Both readings improved compared to August. The survey indicated a sharp rise in prices paid by businesses, intensifying inflation concerns. Robust PMI data gives policymakers room to focus more on inflation. The US Dollar Index, which tracks the greenback against a basket of six major currencies, is trading near 101.00, marking its highest level since July 31.
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U.S. Treasury yields were little changed on Tuesday as investors awaited further clues on the U.S. economy. The 10-year yield edged below 4.96%, while the 2-year slipped to 4.74% and the 30-year held near 5.30%.
Markets are also watching upcoming Fed remarks. Chicago Fed President Austan Goolsbee warned that persistent inflation and stronger demand could require a policy response, while Fed Governor Michael Barr is scheduled to speak on Wednesday.
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The Fed raised interest rates last week, ending months of speculation and shifting Wall Street’s attention back to corporate earnings and consumer spending. Costco will report quarterly results, offering fresh insight into consumer demand as higher fuel prices influence spending. General Mills, Cracker Barrel and Darden Restaurants are also due to report, providing a broader look at food and dining trends. Elsewhere, Meta may reveal more about its AI strategy at a developer conference, while AutoZone reports results amid ongoing trade tensions with Canada. Fed policy will remain in focus, with five monetary policymakers scheduled to speak at conferences throughout the week.
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During early Asian trading on Thursday, the AUD/USD pair climbed to just above the 0.7100 level. Traders continue to assess the Federal Reserve's interest rate hike and comments from US President Trump. On Wednesday, the Fed raised interest rates to the 3.75%–4.0% range—the first such hike in three years—in line with broad market expectations. Fed Chair Kevin Warsh stated that the move was driven by inflation being "too high and persisting for too long," adding that it was a "prudent" and "responsible" decision. Warsh hinted that further rate hikes might be necessary to curb rising prices, signaling a hawkish stance. Nevertheless, Trump continues to demand that the Fed cut interest rates to 1% or lower. In a post on Truth Social, he wrote: "We are practically 'supporting' every country in the world; this situation cannot continue." Following three consecutive rate hikes earlier in the year, the Reserve Bank of Australia (RBA) has held the official cash rate (OCR) at 4.35%. According to RBA rate-tracking data, the market currently assigns a probability of nearly 76% that the RBA will raise the OCR to 4.60% at its next board meeting.
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The Federal Reserve takes centre stage this week, with its two-day policy meeting beginning Tuesday and the interest rate decision due Wednesday. After stronger-than-expected August jobs data and CPI inflation holding at 3.4%, markets are leaning towards a 25-basis-point rate hike.
August US retail sales will also be closely watched for evidence that higher prices and borrowing costs are affecting consumer spending. A strong reading could reinforce expectations for tighter Fed policy, while weaker sales could raise concerns about slowing economic momentum.
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USD/JPY edged higher during Thursday's Asian session, trading above the 153.50 level, as bears turned cautious ahead of the release of US inflation data. Nevertheless, the spot price remains close to the seven-month low touched earlier this week, as the market continues to price in a more hawkish stance from the Bank of Japan (BoJ), which supports the yen. Traders appear to have fully priced in a 25-basis-point rate hike at the BoJ's next policy meeting on September 17–18 and see a high probability of further action in December. This follows recent calls by hawkish BoJ officials—Hajime Takata and Naoki Tamura—for faster, more flexible rate hikes to address rising inflation. Additionally, upward revisions to economic growth forecasts and robust wage growth reinforce the central bank's policy normalization path, supporting the yen and capping gains in USD/JPY. Meanwhile, the US dollar and the USD/JPY pair are finding some support from market bets that the US central bank will raise borrowing costs later this month, driven by inflation risks linked to rising energy prices and escalating US-Iran tensions.
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