Markets enter the week digesting the Fed’s first 25bp rate cut of 2025. The debate has already shifted from the initial move to how quickly policymakers might follow through with more easing. Traders will be tuned to Fed speakers, including Chair Powell, for clues on the path ahead.
Equity flows remain a key watchpoint. Global equity funds saw nearly $39B in outflows last week – the largest since 2020 – even as U.S. indices hold near record highs. That divergence could amplify volatility around data releases.
In FX, the Australian dollar has been one of the standout G10 performers, supported by stronger commodities and signs of improvement in China’s trade pulse. Meanwhile, the U.S. dollar index (DXY) is consolidating between 96.40 support and 97.86 resistance as policy expectations ebb and flow.
Commodities remain in focus. Oil is locked in a $61-65 range, weighed down by robust supply, while gold is holding firm above $3,640, with resistance flagged around $3,710-3,725. Both assets are headline-sensitive, with geopolitics still the wild card for energy markets.
This Week’s Calendar (UTC)
- Tuesday: EU and UK flash PMIs, U.S. flash PMI, Powell speech
- Wednesday: Australia CPI
- Thursday: U.S. Q2 GDP final estimate, weekly jobless claims
- Friday: U.S. Core PCE inflation (the Fed’s preferred measure), personal income and spending, EU consumer confidence
Technical Picture
- AUD/USD: Support near 0.6580, resistance 0.6700
- EUR/USD: Support at 1.0620, resistance 1.0780
- DXY: Support at 96.40, resistance 97.86
- Gold: Support at 3,675 then 3,640; resistance 3,710-3,725
- S&P 500: Range 6,600-6,700; RSI stretched but trend intact
- Nasdaq 100: Range 24,200-24,700
- WTI: Range 61-65; rallies capped at 64-65
Positioning and Sentiment
CFTC data show speculative USD longs being trimmed after the Fed cut. Gold positioning remains heavy on the long side, raising the risk of pullback if yields stabilize. Equities remain net long in futures markets, but the sharp outflows underline fragility. Oil positioning is mixed, with funds cautious in chasing a range-bound tape.
Volatility Watch
FX pairs are set for wider ranges around Tuesday’s PMI releases and Friday’s Core PCE cluster. Gold remains prone to $30-40 daily swings. Equities have become choppier intraday despite the broader uptrend, while oil volatility is subdued but sensitive to headlines.
