All Eyes on PCE Inflation Report as Fed’s Rate Cut Faces Immediate Test

Economic

Summary:

Markets await Friday’s U.S. PCE inflation data, the Fed’s favored gauge, to validate its recent rate cut. A higher-than-expected print could reignite inflation fears and cast doubt on the Fed’s policy move...

Fed’s Rate Cut on Shaky Ground Ahead of PCE Data Release

The Federal Reserve’s decision to resume rate cuts last week will be swiftly tested on Friday, when the August Personal Consumption Expenditures (PCE) price index its preferred inflation gauge is released. With the forecast set at 2.8% year-on-year, anything higher could trigger renewed concerns that the Fed’s quarter-point cut was premature and inflation may not be fully under control.

Bond markets have already shown signs of skepticism. Yields on both 10-year and 30-year U.S. Treasurys edged higher following the rate cut a counterintuitive reaction if the market were fully aligned with the Fed’s dovish move. Typically, lower interest rates drive yields down, but concerns over government debt levels and long-term fiscal policy may be distorting the picture. The rise in yields may also reflect bond investors’ reluctance to embrace a rate-cutting cycle amid lingering inflationary risks.

In contrast, U.S. equities rallied strongly. The S&P 500 and Dow Jones Industrial Average ended the week at record highs, and the Nasdaq Composite rose 2.2%, showing risk-on sentiment among equity traders who welcomed easier monetary policy.

Upcoming PCE Report Is Critical

The core PCE price index has been the Fed’s go-to inflation metric for setting policy direction, as it offers a broader view of consumer prices excluding volatile items like food and energy. A print at or below the 2.8% forecast would support the Fed’s case that inflation is on a sustainable path downward, justifying the rate cut. But a surprise to the upside could trigger doubts over whether inflation has been tamed and force markets to reconsider expectations of further easing.

With bond markets flashing warning signs and equity markets optimistic, Friday’s data could either reconcile this divergence or widen the gap further. If inflation is shown to be stickier than expected, the Fed could face criticism for easing too soon, and the recent stock market gains might be seen as overextended.

Global Context Adds Complexity

The U.S. isn’t making decisions in a vacuum. Recent geopolitical and economic developments, such as President Trump’s high-stakes talks with Chinese President Xi Jinping over TikTok, Trump’s proposed $100,000 annual H-1B visa fee, and South Korea’s financial concerns over a $350 billion investment deal with the U.S., add volatility to the global environment. All these factors could ultimately influence investor expectations about inflation, capital flows, and Fed policy credibility.

Markets often judge monetary policy with the benefit of hindsight. For the Fed, that moment of truth arrives Friday. If the PCE lands at 2.8% or below, Chair Powell’s quarter-point cut will appear measured and timely. Anything higher, however, could spark questions about the Fed’s foresight and whether it traded long-term stability for short-term market relief.

Source: CNBC

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Economic

Cautious Confidence: RBA Balances Resilient Domestic Economy with Global Uncertainty

In a testimony before lawmakers on Monday, Reserve Bank of Australia (RBA) Governor Michele Bullock affirmed the central bank’s cautious stance amid a complex mix of steady domestic data and a turbulent global backdrop. While recent economic indicators have largely met or slightly exceeded the central bank’s expectations, Bullock emphasized the need for continued vigilance over possible shifts in the economic outlook.

Since the RBA’s August policy meeting, Australian economic data have been “broadly in line… or slightly stronger,” Bullock noted, citing consumer spending improvements and unexpected inflation upticks in July. These figures suggest momentum in the domestic economy, particularly as annual GDP growth for Q2 marked the fastest pace in nearly two years.

At the same time, Bullock warned that global conditions remain “uncertain and unpredictable,” implying that any deterioration abroad could pose downside risks to Australia's recovery.

RBA’s Dual Mandate Nearing Achievement

Bullock reiterated that Australia is approaching both components of the RBA’s dual mandate: price stability and full employment. Inflation is on track to return to the midpoint of the central bank’s 2-3% target, while the labor market continues to operate close to full capacity.

This supports the RBA’s gradual approach to easing, which has included three rate cuts this year in February, May, and August bringing the cash rate down to 3.6%. Unlike more aggressive central banks, the RBA has emphasized data-dependence, choosing to wait for quarterly inflation releases before acting.

Market Reaction: Odds of Further Cuts Reassessed

Markets have responded by reassessing the path of future rate cuts. Following the recent upside inflation surprise, expectations for a cut on September 30 have diminished, and the probability of a November cut has dropped from 100% to 75%. Swaps now imply a total of 48 basis points of easing by mid-2026, equating to fewer than two additional cuts.

The RBA’s stance remains one of measured optimism confident in domestic fundamentals but cautious of external shocks. With inflation not fully subdued and global risks rising, the central bank appears content to stay patient and assess incoming data, rather than commit to an aggressive easing path. Investors and analysts alike will closely watch next week's meeting for further clarity on how the RBA plans to balance short-term resilience with longer-term uncertainty.

Source: Reuters

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Economic

Trump’s $100K Visa Hike Jolts Tech, While Fed Uncertainty Keeps Asian Markets Cautious

Asian equity markets saw a hesitant start to the week on Monday, with gains tempered by fresh political risks and investor uncertainty surrounding U.S. monetary policy. The MSCI Asia-Pacific ex-Japan index ticked up just 0.09%, while Japan’s Nikkei rose 1%, partially recovering from Friday’s losses.

Investor anxiety was stirred by U.S. President Donald Trump’s announcement that his administration would raise fees for new H-1B worker visas to $100,000 per year. The move, framed as part of his broader immigration crackdown, delivers a major blow to tech companies heavily reliant on skilled labor from India and China. The decision is particularly damaging for India’s $283 billion IT industry, which earns over half its revenue from the U.S.

Trump’s policy shift follows his earlier decision to double tariffs on Indian imports to as much as 50%, exacerbating already strained ties between Washington and New Delhi. These protectionist measures could erode corporate margins and force tech firms to consider offshoring despite potential U.S. penalties.

“It’s a risk to operating costs and margins… and companies may face punitive measures if they resort to offshoring,” said Kyle Rodda, analyst at Capital.com.

Fed in Focus as Markets Eye Inflation Clues

The broader market tone remained cautious, shaped by lingering questions over the Federal Reserve’s rate trajectory. Although the Fed cut rates last week, it hinted at a gradual easing path ahead. Roughly 44 basis points of cuts are still priced in by year-end, and investors are awaiting core PCE inflation data due Friday, forecasted to rise 0.2% monthly, keeping the annual rate at 2.9%.

A series of Fed speeches this week including from Chair Jerome Powell and Governor Stephen Miran could sway rate expectations and influence U.S. Treasury yields, in turn impacting global currency and equity markets.

Dollar Steady, Yen Softens on BOJ Tensions

The U.S. dollar index held near 97.716, staying on a modest upward path. Chris Weston of Pepperstone noted that while the greenback’s near-term direction remains debated, rising Treasury yields and supply could support continued USD strength.

The Japanese yen softened to 148.20 per dollar following Friday’s Bank of Japan decision, in which two board members unexpectedly voted for a rate hike to 0.75%, signalling a growing internal push toward normalization. OCBC’s Vasu Menon described the move as “a signal the BOJ is gradually turning hawkish,” potentially raising JGB yields and weighing on Japanese equities.

Commodities: Oil and Gold Inch Up

In commodities, Brent crude edged 0.3% higher to $66.89, while WTI crude rose 0.35% to $62.90, buoyed by geopolitical tensions in Europe and the Middle East. Gold climbed 0.24% to $3,692.79, hovering near last week’s record high as investors maintained a risk-hedging posture amid global uncertainties.

The intersection of U.S. immigration policy, trade friction, and uncertain monetary signals continues to test global investor confidence. Asian markets, while technically higher, reflect deep underlying caution as tech supply chains, labor mobility, and cross-border investments face fresh headwinds in an already fragile economic recovery.

Source: Reuters

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Samantha Luan

Commodity

Stocks

Forex

Economic

Markets moved sideways early in the week as traders waited for key central bank decisions. U.S. retail sales were stronger than expected, while U.K. inflation stayed high at 3.8%. The Bank of England met first, kept rates unchanged as expected, and said any future cuts would depend on clear signs that inflation is falling steadily.The U.S. Federal Reserve then cut interest rates by 0.25% and suggested there could be two more cuts before the end of 2025. The Fed noted slower job growth and a weaker labor market but also said inflation is still somewhat high. The U.S. dollar dipped at first but soon recovered, finishing the week strong. U.S. stock markets hit new record highs, helped by the rate cut and strong gains in technology shares.

The Bank of Japan also kept rates unchanged but surprised markets by saying it will slowly start selling some of its large holdings of exchange-traded funds (ETFs) and real estate trusts (J-REITs). The Nikkei index fell briefly but rebounded after the BoJ promised the sales would be very gradual. Two board members voted for a 0.25% rate hike, and Governor Kazuo Ueda said gradual tightening is possible if the economy and inflation stay on track, leading markets to expect a possible rate increase later this year.

Markets This Week

U.S. Stocks

U.S. equities saw profit-taking early last week ahead of the FOMC announcement, but the selling was brief as buyers stepped in near the 10-day moving average. The Dow then climbed to fresh record highs after the Fed’s 0.25% rate cut and guidance for two more cuts in 2026. With the FOMC maintaining a bullish tone, the uptrend has resumed, making buying on dips toward the 10-day moving average the preferred strategy. Key resistance is now at 46,500, 47,000, and 48,000, while support lies at 45,700, 45,000, 44,000, and 43,000.

Japanese Stocks

The Nikkei 225 surged after the FOMC announcement, extending its recent strong gains. However, the Bank of Japan’s surprise plan to begin selling its ETF and J-REIT holdings caused a sharp drop on Friday before the market recovered into the close. With the BoJ moving closer to a possible rate hike and starting asset sales, further gains may be harder to achieve, so a sideways-to-lower move is expected this week. Resistance is at 46,000円 and 47,000円, while support is at 45,500円, 45,000円, and 44,000円.

USD/JPY

USD/JPY again tested the lower end of its recent range last week after the U.S. rate cut and dovish comments from Fed Chair Powell. Surprisingly, strong support held near 146, and the pair finished the week firmly as the market had been positioned for deeper losses. The rebound is notable and could attract more buying this week, but range trading between 146 and 149 remains the preferred strategy. Key resistance is at 148, 149, and 150, with support at 146 and 145.

Gold

Gold had a volatile week, posting new record highs again after the U.S. interest rate cut. The uptrend remains very strong, with prices holding above the 10-day moving average as buyers stay aggressive. In the short term, following the uptrend can be profitable, but waiting for a break below the 10-day moving average to sell may offer the best near-term trading opportunity given how far the market has already climbed. Resistance is at $3,700 and $3,800, while support stands at $3,600, $3,500, and $3,450.

Crude Oil

WTI crude stayed under pressure last week, failing to hold above the key $65 level after an early rise. Concerns about a slowing U.S. economy and the potential for weaker demand kept sellers in control, limiting any upward momentum. For short- and medium-term traders, selling into strength or waiting for a decisive break below $60 remains the preferred strategy as the market struggles to find support. Key resistance is at $65, $70, and $75, while support is at $60 and $55.

Bitcoin

Bitcoin had a quiet week, consolidating earlier gains and briefly rising on the U.S. interest rate cut before sellers pushed prices back below the 10-day moving average, signaling an end to September’s uptrend. The market is now expected to test lower and provide range-trading opportunities between $112,000 and $120,000 in the near term. Key levels remain unchanged, with resistance at $120,000, $125,000, and $150,000, and support at $112,000, $105,000, and $100,000.

This Week’s Focus

● Monday: U.K. BoE Gov Bailey Speaks

● Tuesday: E.U. HCOB Eurozone Manufacturing PMI, U.K. S&P Global Manufacturing PMI, U.S. Current Account and S&P Global Manufacturing PMI

● Wednesday: Japan au Jibun Bank Services PMI and BoJ Core, U.S. Building Permits and New Home Sales

● Thursday: Japan Monetary Policy Meeting Minutes, U.S.Initial Jobless Claims, Durable Goods Orders, GDP and Existing Home Sales

● Friday: Japan Tokyo Core CPI, U.S. Core PCE Price Index and Michigan Consumer Sentiment

This week the market will continue to forecast the next moves in U.S. and Japanese interest rates as traders digest last week’s central bank meetings. A busy economic calendar includes manufacturing data from Europe, the U.K., and the U.S., with Thursday’s U.S. durable goods orders and GDP, and Friday’s U.S. Core PCE Price Index and Michigan Consumer Sentiment all likely to create volatility and trading opportunities. FX markets remain range-bound but look ready for a breakout, while traders will watch closely to see if equities and gold can extend their strong uptrends.

Source: ACTIONFOREX

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Economic

Forex

Dollar Stable as Traders Brace for Fed Commentary, Global Currencies Under Pressure

The U.S. dollar maintained a firm footing in early Asian trading on Monday, as investors turned their attention to a busy week of Federal Reserve speeches that may provide insights into the central bank’s policy trajectory. The calm in currency markets follows a volatile week marked by rate decisions from the Fed, the Bank of England (BoE), and the Bank of Japan (BOJ).

Following the Fed’s unexpected resumption of its easing cycle last week, the dollar initially dipped but quickly found support as traders reassessed the long-term path of interest rates. The U.S. Dollar Index rebounded modestly to 97.75, reflecting renewed confidence in the greenback's near-term stability. With approximately ten Fed speakers scheduled this week including Chair Jerome Powell traders are hoping to gain clarity on the Fed's balance between cutting rates and maintaining inflation discipline.

Market interest is especially high in the upcoming remarks from Fed Governor Stephen Miran, who dissented in favor of a more aggressive 50 basis-point cut during the September meeting. Miran's explanation, expected later Monday, could signal deeper divisions within the Fed or potential political pressures on its independence.

BOJ and BoE Divergence Adds to Currency Complexity

The Japanese yen, which rallied last week on a hawkish shift in BOJ rhetoric, gave back some of its gains on Monday, slipping 0.16% to 148.22 per dollar. Speculation about a near-term rate hike continues to simmer, but profit-taking and caution have re-entered the market.

Meanwhile, sterling fell to a two-week low of $1.3458, weighed down by worsening UK fiscal conditions and growing investor skepticism about the BoE’s ability to manage both inflation and economic stagnation. Public borrowing surged in the UK, adding pressure on policymakers already seen as unlikely to resume tightening. Rabobank now projects the next BoE rate cut to be delayed until 2026, though this is already priced in.

According to Jane Foley of Rabobank, “GBP investors remain focused on fiscal concerns, which may keep the pound under pressure into the autumn.”

Euro and Aussie Drift Lower in Cautious Trading

Elsewhere, the euro edged down 0.07% to $1.1738, continuing a slow grind lower, while the Australian dollar eased 0.02% to $0.6589, showing muted reaction to broader risk sentiment as global demand concerns remain elevated.

In Asia, the People’s Bank of China (PBOC) kept its benchmark lending rates unchanged for the fourth straight month, in line with market expectations. The offshore yuan reacted modestly, rising 0.06% to 7.1151 per dollar. While Beijing’s wait-and-see stance maintains financial stability, it also signals limited near-term stimulus despite sluggish post-COVID growth recovery.

With the Fed’s policy pivot fresh in memory, this week’s deluge of speeches will serve as a crucial guide for traders recalibrating expectations for U.S. monetary policy. While the dollar remains buoyant for now, the path forward hinges on how clearly Fed officials articulate their rate strategy, inflation outlook, and the balance between political influence and central bank independence.

Source: Reuters

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Economic

Commodity

Geopolitical Tensions Push Oil Prices Higher, but Supply Pressures Linger

Oil markets opened the week with modest gains, as escalating geopolitical tensions in both Europe and the Middle East injected fresh risk premiums into Brent and WTI prices. Brent crude climbed by 0.42% to $66.96, while WTI rose 0.32% to $62.88 during early trading on Monday. Yet, any rally remains capped by the weight of oversupply and trade-related concerns about global fuel demand.

Russia’s recent military maneuvers including missile strikes near Poland’s border and a violation of NATO airspace over Estonia have revived fears about European energy security. The NATO-member Poland responded swiftly by deploying aircraft to secure its airspace, and a UN Security Council meeting has been called in response to Estonia’s complaint.

This regional instability, coupled with Ukraine’s stepped-up drone attacks on Russian refineries and terminals, underscores the fragile nature of energy infrastructure in Eastern Europe a dynamic that continues to influence market psychology.

Middle East Risk Returns as Diplomatic Shifts Stir Tensions

Meanwhile, in the Middle East, new political rifts have emerged. The recognition of Palestinian statehood by four Western countries has triggered a sharp backlash from Israel, adding a layer of geopolitical uncertainty in the oil-rich region. These developments come as energy traders remain wary of any disruptions in key supply arteries across the Middle East.

Despite these risks, the oil market’s upside is limited by strong supply fundamentals. Iraq, a major OPEC+ member, has increased exports, reporting an August average of 3.38 million barrels per day (bpd). The state oil marketer SOMO expects this to rise further in September to 3.4–3.45 million bpd, following the easing of voluntary output cuts.

Additionally, rising output from the United States, OPEC+, and even Russia as oil-producing nations respond to falling revenues is adding to the perception of a supply-heavy market.

Muted Demand Outlook Amid Tariff Fears and Mixed Sentiment

Concerns about global demand persist, especially amid fears of new trade tariffs that could dampen global growth and reduce fuel consumption. While some analysts had hoped the U.S. Federal Reserve’s anticipated rate cuts would stimulate demand, last week’s 1%+ drop in both Brent and WTI suggests that these expectations are being overshadowed by broader bearish factors.

As Michael McCarthy of Moomoo Australia & New Zealand noted, the market is navigating conflicting forces: “Rising geopolitical risk is offering support, but there are strong assumptions around increased supply and weaker demand that are holding prices back.”

The near-term trajectory of oil prices will depend on whether geopolitical shocks escalate further or if the market continues to be dominated by supply-side pressures. For now, traders appear cautiously bullish but the rally remains fragile, easily susceptible to shifts in either direction.

Source: Reuters

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FastBull Featured

Daily News

[Quick Facts]

1. The U.S. Government faces a shutdown crisis on October 1st.

2. Israeli Airstrike on Yemeni Newspaper Office marks deadliest attack on media in 16 years.

3. Wall Street optimistically bets: Interest rate cuts will far exceed Fed forecasts.

4. The EU's 19th round of sanctions against Russia does not include new measures on oil imports.

5. Russia: Forcing the restoration of sanctions on Iran will only escalate tensions.

6. Bullock: Recent economic data slightly stronger than expected.

[News Details]

The U.S. Government faces a shutdown crisis on October 1st

U.S. federal government funding will run out at midnight on September 30th. On the 19th, the U.S. Senate successively rejected short-term funding bills proposed separately by Republicans and Democrats, both aimed at temporarily keeping the federal government running. The two parties blamed each other for creating the deadlock. With Congress about to enter a one-week recess, during which lawmakers from both the House and Senate will leave Washington, time is running out for the two parties to negotiate and reach an agreement. It has almost become a foregone conclusion that the U.S. federal government will shut down in the early hours of October 1st.

Israeli Airstrike on Yemeni Newspaper Office marks deadliest attack on media in 16 years

On September 19, the non-profit Committee to Protect Journalists (CPJ) said that an Israeli airstrike in Yemen earlier this month killed 31 journalists, marking the deadliest single attack on media workers in 16 years. The New York-based CPJ reported that on September 10th, Israel struck the editorial buildings of the September 26th Newspaper and the Yemen Daily in the capital Sanaa, killing 31 journalists and injuring at least 22 others.

Wall Street optimistically bets: Interest rate cuts will far exceed Fed forecasts

Wall Street currently believes that U.S. interest rate cuts will occur faster than the Federal Reserve anticipates. This bet is already boosting the economy and markets by lowering borrowing costs for Americans. Futures market bets indicate that investors expect the U.S. benchmark interest rate to fall from its current level of just over 4% to just under 3% by the end of next year. This expectation represents a significant revision from May, when the market projected rates would drop to around 3.5% by the end of 2026. The forecast is also lower than most Federal Reserve officials' predictions. The latest dot plot shows that officials expect the rate to be 3.4% by the end of next year, two fewer 25-basis-point cuts than what investors are anticipating.

The EU's 19th round of sanctions against Russia does not include new measures on oil imports

European Commissioner for Economy Valdis Dombrovskis stated that no new measures to restrict imports of Russian oil are planned in the 19th round of sanctions against Russia. Last Friday, the European Commission proposed a new package of anti-Russia measures, including a ban on EU countries importing Russian liquefied natural gas (LNG) by 2027. EU member states will begin deliberating the proposal on September 26. Dombrovskis noted that the 19th round of energy sanctions not only involves oil but also LNG. In essence, it amounts to banning the import of Russian LNG and setting a timeline for gradually phasing out such imports.

Russia: Forcing the restoration of sanctions on Iran will only escalate tensions

On the 20th, the Russian Foreign Ministry issued a statement saying that the actions of the European signatories to the Iran nuclear deal to push forcibly for the restoration of sanctions on Iran are provocative and illegal, "and lead exclusively to a further escalation of tensions surrounding the Iranian nuclear program". The ministry emphasized in the statement that the United States and relevant European countries must clearly answer whether they are prepared to resolve the Iranian nuclear issue through political and diplomatic means, or whether they are ready, as seen in the Israeli and U.S. airstrikes on Iranian nuclear facilities in June this year, to plunge the Middle East into a new abyss of tragedy.

Bullock: Recent economic data slightly stronger than expected

In a speech on Monday, Reserve Bank of Australia (RBA) Governor Michele Bullock said that since the last meeting, the economy has continued to expand, with growth in economic activity picking up, driven by a recovery in private demand. Labour market conditions have eased a little, with unemployment rising slightly, but some tightness remains. The RBA has made real progress in bringing inflation down. In addition, inflation has fallen "significantly," and the labor market is close to full employment. Economic data have been in line with or slightly stronger than expectations. Economists expect the central bank to keep interest rates unchanged next week.