Today’s session has been dominated by significant economic events and notable market reactions. The calendar has kept traders busy with surprises and shifts in sentiment across various asset classes.
The day began with exceptional data from the Australian job market, which showed stronger-than-expected results. This immediately bolstered the Australian dollar, making it the standout performer among currencies. Overnight momentum carried into the European session, with the currency gaining against most of its peers.
The Swiss National Bank delivered the day’s biggest surprise by cutting interest rates by 50 basis points, double the expected 25 basis points. This decision sent the Swiss franc tumbling, making it the weakest currency on the market today. The unexpected aggressiveness from the SNB contrasted with the more measured moves seen elsewhere, including the European Central Bank’s decision later in the day.
As expected, the ECB delivered a 25 basis point rate cut, which was fully priced in by markets. Consequently, volatility on the euro was muted. However, some pressure emerged on EUR/JPY, where the pair dropped during the second half of the European session. Currently, EUR/JPY is testing a key support level around 159.3, a zone reinforced by a long-term uptrend line. Buyers are attempting a counterattack here, as evidenced by a developing long candlestick tail, but the outcome remains uncertain.
In the U.S., producer inflation (PPI) came in higher than expected at 0.4%, underscoring persistent inflationary pressures. This print has injected caution into markets ahead of further U.S. inflation readings, as traders weigh the possibility of sustained Federal Reserve hawkishness.
Commodities have seen a shift in sentiment following strong gains on Wednesday. Oil, which enjoyed a bullish day yesterday, is now showing signs of a bearish correction after hitting a local resistance level. Similarly, precious metals like gold and silver, which rallied mid-week, are facing a short-term pullback, with sentiment turning negative for the immediate future.
On the indices front, American futures are trading in the red, signaling caution among investors. Despite today’s softer start, the broader sentiment for equities remains overwhelmingly positive, with recent sessions reflecting strong bullish momentum. However, today's data could trigger short-term corrections as traders digest the implications of inflation and interest rate moves globally.
This Thursday has been a day of contrasting fortunes across markets, from the Australian dollar’s surge to the Swiss franc’s slump. As the session unfolds, all eyes will be on the sustainability of these moves and the market's interpretation of the latest inflation data. The stage is set for an interesting close to the week.