14/08/2025 - 07:02 UTCThe US Dollar Index (USDX) extended its decline for a second session on Wednesday, slipping toward 97.70—its lowest level in over two weeks—amid mounting expectations for a Federal Reserve rate cut in September. This pressure follows July’s inflation data, which showed headline CPI in line with forecasts but slightly softer annual growth, while core inflation came in just above expectations, signalling lingering price pressures. Markets are now pricing in a high probability of a 25 bps cut next month. The Greenback’s weakness is compounded by growing fiscal concerns after US national debt surpassed $37 trillion, alongside political uncertainty as President Trump intensified criticism of Fed Chair Jerome Powell, raising questions over the central bank’s independence. Attention now shifts to Thursday’s US jobless claims and Producer Price Index (PPI) data, which could shape expectations for the September Fed meeting, while broader risk sentiment will be influenced by developments in upcoming US–Russia peace talks.
Across the rest of Asia, markets were mixed on Thursday. Japan’s Nikkei 225 dropped 0.88% as of 06:10 AM GMT from record highs, as a stronger yen—driven by rising expectations of a US Fed rate cut—pressured exporters by reducing overseas earnings in local currency terms. The Japan 100 also slipped 0.60% at the time of writing, with profit-taking adding to the pullback after the recent multi-session rally. Meanwhile, investor sentiment in Tokyo was tempered by caution ahead of key US economic data, which could influence the yen’s near-term trajectory.
Australia 200 jumped on Thursday, fueled by robust earnings and upbeat labor market data, underscoring the resilience of the economy despite a softer growth outlook. Gains were led by Westpac, Origin Energy, and Suncorp after strong earnings releases, while July’s jobs report showed employment rebounding and unemployment falling. The data suggests the Reserve Bank of Australia may adopt a more measured approach to future easing after this week’s 25 bps rate cut, balancing inflation risks with economic momentum.
US equities extended gains on Wednesday, with the US 500 rising 0.25% to a fresh record close, the US 30 gaining 1.02%, and the US tech 100 ending the session almost unchanged. The advance was supported by growing expectations of a September Federal Reserve rate cut after July’s CPI data showed subdued price growth, reinforcing the view that policymakers may prioritize supporting a slowing labor market over above-target inflation.
Analysts noted that the softer inflation reading tilts the odds toward a 25 bps cut next month, with the potential for one or two more cuts by year-end. However, comments from former St. Louis Fed President James Bullard cooled speculation of a larger 50 bps move, warning such an action could signal panic, while Atlanta Fed President Raphael Bostic maintained that the Fed still has room to wait given labor market resilience. Earnings also played a role in market sentiment, with Cisco Systems in focus ahead of its quarterly results after the close, expected to benefit from strength in its cybersecurity and networking segments
The cryptocurrency market surged early on Thursday, with Bitcoin hitting a new record high before erasing some gains later on. Gains were fueled by growing expectations of a September Federal Reserve rate cut—markets now price a 97% chance of a 25 bps move—and a wave of corporate treasury buying. The trend, popularized by MicroStrategy, saw Metaplanet purchase over $60 million in Bitcoin this week, while MicroStrategy itself recently boosted its holdings to 628,946 coins. Bullish sentiment was further supported by Peter Thiel-backed Bullish Inc’s strong NYSE debut, which valued the exchange at over $10 billion.
Ether rallied nearly 4% on Wednesday, lifted by increased corporate adoption and Standard Chartered’s upgraded 2025 price target to $7,500 from $4,000.
EUR/USD surged on Wednesday, reaching a two-week peak near 1.1730 as the US Dollar (USD) faced selling pressure. Traders are pricing in the possibility that the Federal Reserve (Fed) may adopt a more dovish stance following comments from US Treasury Secretary Scott Bessent. Bessent suggested that the Fed should cut borrowing costs by 50 basis points at the September meeting, citing weakness in the US labor market. In an interview with Bloomberg, he added that rates should ultimately be “150–175 basis points lower.”
Tuesday’s US inflation data showed headline Consumer Price Index (CPI) for July held steady at 2.7% year-on-year, slightly below the forecast of 2.8%. Core CPI, however, came in at 3.1%, above June’s 2.9% and estimates of 3.0%.
In Europe, Germany reported July inflation aligned with the ECB and Bundesbank’s 2% target, while Spain’s CPI stood at 2.7% year-on-year. The European Central Bank (ECB) has signaled a more neutral policy stance following its recent rate cuts.
Expectations that the interest rate gap between the Fed and ECB could narrow are supporting the euro, alongside optimism over a potential resolution to the Ukraine-Russia conflict, which may lift EUR/USD further in the near term.
Looking ahead, the EU economic calendar will feature jobs data, industrial production, and GDP releases. In the US, markets await the Producer Price Index (PPI), initial jobless claims, and Fed speeches.
Bitcoin (BTC) hit a new all-time high on Wednesday, climbing above $124,000, just one month after setting a previous record in July. This marks the fourth time Bitcoin has reached a record high in 2025.
Bitcoin’s surge follows a softer-than-expected US Consumer Price Index (CPI) print on Tuesday, which renewed hopes for a Federal Reserve (Fed) rate cut at the September Federal Open Market Committee (FOMC) meeting.
Market participants now price in a 95% probability of a rate cut in September, according to the CME FedWatch tool. Earlier on Wednesday, US Treasury Secretary Scott Bessent called for a series of Fed rate reductions, starting with a 50-basis-point cut next month. The CPI data also coincided with renewed criticism of Fed Chair Jerome Powell from President Trump, who labeled him “too late” and suggested potential legal action against the Fed.
Bitcoin’s rally is also supported by the current US administration’s favorable regulatory stance toward crypto. In July, President Trump signed the stablecoin-focused GENIUS Act, while the CLARITY Act on crypto market structure passed the US House. Since January, Bitcoin has hit new all-time highs on four occasions, with the latest surge following just a month after the previous record.
Oil prices fell to over two-month lows on Wednesday after bearish supply guidance from the U.S. government and the International Energy Agency (IEA), while investors monitored U.S. President Donald Trump’s warning of “severe consequences” if Russia’s Vladimir Putin obstructs peace in Ukraine.
The Energy Information Administration (EIA) reported a 3 million-barrel rise in U.S. crude inventories to 426.7 million barrels, contrary to analysts’ expectations of a 275,000-barrel draw. Net U.S. crude imports increased by 699,000 barrels per day last week. The IEA raised its forecast for oil supply growth this year but lowered its global demand estimate, adding to the bearish outlook.
Investors are also watching a planned meeting between Trump and Putin in Alaska on Friday, aimed at discussing an end to Russia’s war in Ukraine. When asked if Russia would face consequences if Putin refuses to halt the conflict, Trump responded, “Yes, they will,” adding the repercussions could be “very severe.” He also noted a potential follow-up meeting including the leader of Ukraine. Meanwhile, OPEC+ in its monthly report on Tuesday raised its global oil demand forecast for next year while trimming supply growth estimates from the U.S. and other non-OPEC producers, signaling a tighter market ahead.
U.S. stock index futures were largely unchanged Wednesday evening after the US 500 closed at fresh record highs, supported by expectations of a Federal Reserve rate cut in September.
Moderate U.S. consumer price growth in July has strengthened expectations for a Fed rate cut, with policymakers seemingly prioritizing support for a slowing labor market over inflation concerns. Market participants now price in nearly a 95% chance of a September rate reduction, according to CME FedWatch. Investors are awaiting Thursday’s release of the Producer Price Index (PPI) for final demand, alongside weekly jobless claims. Friday will bring U.S. retail sales and a consumer sentiment survey.
In corporate news, Cisco Systems’ shares dipped in extended trading after closing 1.4% lower on in-line quarterly results. CoreWeave Inc fell more than 20% after reporting larger-than-expected quarterly losses.
Looking ahead, Deere & Company and Coach parent Tapestry Inc are scheduled to report quarterly earnings before Thursday’s opening bell.
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