The unexpected decline in US PPI reinforced expectations of a rate cut, while the US dollar remained stable. Market focus was on CPI and Fed personnel changes.
2025-09-11 10:59:09
After the unexpected weakening of PPI, the market generally believes that the Federal Reserve will cut interest rates by 25 basis points at its September meeting, and even does not rule out the possibility of a 50 basis point cut.
According to the CME FedWatch tool, traders have almost fully priced in easing measures at this meeting. The US dollar index held at 97.822 after rising for the third consecutive day, reflecting the market's cautious wait-and-see attitude ahead of the CPI release.
"The market is priced in for a September rate cut by the Fed, and the latest PPI results further confirm that this pricing is reasonable." - Rodrigo Catril, currency strategist at National Australia Bank
The Trump administration's recent actions have intensified the debate over the Federal Reserve's independence. The White House is seeking to remove Fed Governor Lisa Cook and is pushing Stephen Miran's nomination to a vote by the Senate Banking Committee.
These developments have led the market to worry that the Federal Reserve's policy decisions may be subject to greater administrative intervention, increasing uncertainty about the future direction of monetary policy.
The USD/JPY exchange rate was flat around 147.41, with Japan's wholesale price index rising 2.7% year-on-year, indicating persistent inflationary pressures. The euro rebounded slightly to 1.1698, with the European Central Bank expected to maintain interest rates but potentially signal a more dovish stance in response to the complex economic and geopolitical environment.
The Australian dollar edged up to 0.66165, benefiting from strong performance in iron ore, crude oil and gold prices, while the British pound remained relatively stable around 1.3527.
In Europe, Poland announced it had shot down a Russian drone that had entered its airspace, with support from its allies. This was the first direct exchange of fire since the outbreak of the Russia-Ukraine conflict, further fueling market concerns about the situation in Europe. Geopolitical risks may provide additional support for safe-haven currencies and gold.
Editor's opinion:
The key to the dollar's short-term performance remains the upcoming release of the US Consumer Price Index (CPI) and the Federal Reserve's policy decision. While the decline in the PPI reinforces expectations of a rate cut, the Trump administration's challenge to the Fed's independence has increased market uncertainty.
The coming week may be the most volatile period in the foreign exchange market, and we should be wary of the dual disturbances of policy and geopolitical risks.
According to the CME FedWatch tool, traders have almost fully priced in easing measures at this meeting. The US dollar index held at 97.822 after rising for the third consecutive day, reflecting the market's cautious wait-and-see attitude ahead of the CPI release.
"The market is priced in for a September rate cut by the Fed, and the latest PPI results further confirm that this pricing is reasonable." - Rodrigo Catril, currency strategist at National Australia Bank
The Trump administration's recent actions have intensified the debate over the Federal Reserve's independence. The White House is seeking to remove Fed Governor Lisa Cook and is pushing Stephen Miran's nomination to a vote by the Senate Banking Committee.
These developments have led the market to worry that the Federal Reserve's policy decisions may be subject to greater administrative intervention, increasing uncertainty about the future direction of monetary policy.
The USD/JPY exchange rate was flat around 147.41, with Japan's wholesale price index rising 2.7% year-on-year, indicating persistent inflationary pressures. The euro rebounded slightly to 1.1698, with the European Central Bank expected to maintain interest rates but potentially signal a more dovish stance in response to the complex economic and geopolitical environment.
The Australian dollar edged up to 0.66165, benefiting from strong performance in iron ore, crude oil and gold prices, while the British pound remained relatively stable around 1.3527.
In Europe, Poland announced it had shot down a Russian drone that had entered its airspace, with support from its allies. This was the first direct exchange of fire since the outbreak of the Russia-Ukraine conflict, further fueling market concerns about the situation in Europe. Geopolitical risks may provide additional support for safe-haven currencies and gold.
Editor's opinion:
The key to the dollar's short-term performance remains the upcoming release of the US Consumer Price Index (CPI) and the Federal Reserve's policy decision. While the decline in the PPI reinforces expectations of a rate cut, the Trump administration's challenge to the Fed's independence has increased market uncertainty.
The coming week may be the most volatile period in the foreign exchange market, and we should be wary of the dual disturbances of policy and geopolitical risks.
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