The ECB rate decision
Checking in for the European Central Bank rate decision tonight at 7:15 pm Cambodia time, with many widely anticipating to see an unchanged rate decision.
This comes as the EU’s inflation is now skewing around the restrictive rate of 2%, which could be a sign that the ECB has finally reached the annual target rate. But the tariff concern shall also be monitored regardless.
The purchasing managers’ index report has raised some concerns about the pricing and labor productivity shortage; having such a steady rate would leverage them to even hold the inflation tight but not too tight, while leaving some breathing room for the economy to grow as well. Therefore, focus on the statement and find the current pain point from the central bank’s perspective.
US Inflation Headline
Followed by major US inflation data released at 7:30 PM Cambodian time, with many widely anticipating seeing some rising inflationary pressures on consumption tonight. Last night, wholesale inflation data came in softer than expected, yet the market did not react much.
So my thought here is:
- If the inflation comes hotter → the September rate cut will still happen, but this will also scale back on the October and December rate cuts. → Gold is likely to retrace.
- If the inflation print cooler → the FED will be dovish; the market could even go further and price in some odds for 50 bps, while the October and December rate cut chances will also increase, favoring the gold price and weakening the USD. And tonight’s data will also likely cause more fluctuation.
