European Midday Briefing: Investors Await ECB Rate Decision; Stocks Rise

Economic

Summary:

European stocks rose ahead of the ECB decision, expected to hold rates. Markets focus on U.S. inflation’s impact on Fed policy. Oil, metals steady; fintech M\&A grows; global geopolitical tensions escalate.

MARKET WRAPS

Stocks:

European stocks built on Wednesday's session, ticking higher Thursday ahead of the region's central bank decision on interest rates.

The European Central Bank was expected to remain tight lipped as further inflation data was also expected later today from the U.S.

"The ECB is highly likely to hold and offer little steer over the policy outlook, repeating the 'deliberately uninformative' approach from July," Citi said.

The bank added that the effect of U.S. consumer price index data on the Federal Reserve was arguably more important, and that the ECB was unlikely to change tack unless forced.

"We think the ECB is on hold now for the foreseeable future and its policy rate will remain at 2%," RBC Capital Markets said.

Meanwhile, Europe's oil stocks posted gains despite a slight decline in the price of crude oil.

Stocks to Watch

BP led the risers while Shell, TotalEnergies, Repsol and Eni managed more modest gains.

It comes as Brent rallied Wednesday on heightened geopolitical tensions after Russian drones entered Poland.

Market Insight

Fintech deal activity in the year to the end of June stayed high, according to a new report compiled by law firm White & Case, and M&A activity was expected to accelerate as companies opt for inorganic growth amid fragile fundraising markets.

"What has been lost in fundraising appetite has been more than compensated for in consolidation activity. Those fintechs which embrace the drive for profitability will pull through to exit."

Since the second-half of 2024, acquisitions have grown by 50% compared with the previous 12 months, while strategic partnerships doubled.

U.S. Markets

Stock futures pointed to a higher open Thursday as investors waited to scrutinize CPI inflation data. Wednesday's producer price index for the month of August showed an unexpected slowdown in wholesale inflation.

Forex:

The dollar rose modestly against a basket of currencies, and was flat against the euro, ahead of data expected to show U.S. inflation accelerated last month.

There was a risk that inflation would be higher than expected and that the Fed would implement a smaller cut to rates next week than anticipated, Commerzbank said.

U.S. inflation data was likely to have a stronger influence on the euro-dollar exchange rate than the ECB's decision on interest rates, TD Securities said.

"U.S. CPI will be a bigger driver of foreign exchange, where we are cautious of dollar strength on a stronger report and signs of inflation passthrough."

Bonds:

Eurozone government bond yields were little changed as investors waited on the ECB's interest-rate decision and U.S. CPI inflation data.

That said, ING considered that the two-year Schatz yield has room to fall given current geopolitical risks.

Treasury yields traded higher, ahead of consumer price inflation data.

"Last month's U.S. CPI figures stand as the calendar highlight, though again seem unlikely to move the needle either in terms of what the Federal Reserve will do next week, or beyond that," Pepperstone said.

The 10-year Treasury yield rose slightly but was anticipated to move toward, and likely fall past, the 4% level, according to ING. It maintained the view that the neutral yield level was in the 4.24%-4.50% area.

"The current inflation environment...suggests we should or could trend back up there."

Yields on U.K. government bonds , were little changed, tracking moves in their eurozone counterparts.

Metals:

Gold prices slipped but remained above $3,600 a troy ounce as safe-haven demand continued, driven by geopolitical tensions and economic uncertainty, ANZ said.

Copper prices stayed elevated and hovered just above $10,000 a metric ton in London due to concerns related to Freeport's Grasberg mine closure in Indonesia coupled with the prospect of stronger Chinese demand.

"A prolonged disruption could tighten the market further," ANZ said separately.

Energy:

Oil prices ticked downward but were steady after a three-day rally triggered by geopolitical tensions in Europe and the Middle East.

Crude is caught between concerns regarding oil supply and a rise in U.S. inventories, according to MUFG and Swissquote Bank .

EMEA HEADLINES

The ECB and the Fed Are Trading Playbooks. What It Means for Markets.

The European Central Bank has been much more aggressive than the Federal Reserve in cutting interest rates this year. That's about to change.

The ECB kept borrowing costs steady at its last meeting in July, having lowered interest rates four times already in 2025. Traders are pricing in a 99.7% chance that it will hold again on Thursday, according to data from LSEG.

Israel Is Straining Its Hard-Won Ties in the Gulf

Israel's airstrike on Hamas leaders in Qatar has piled fresh strain on its relations with Persian Gulf states, countries that just a few years ago were the cornerstone of its hopes to secure its future by winning diplomatic acceptance in the Middle East.

The attack in a quiet embassy district of Doha, which killed several Hamas officials and a member of the Qatari security forces, punctuated an already growing realization that Israel has made a strategic decision to secure itself through force of arms even at the expense of its diplomatic ties.

Oil Giant Saudi Arabia Is Emerging as a Solar Power

The world's ultimate petrostate is turning to solar power.

Saudi Arabia is building some of the world's biggest solar farms, along with giant arrays of batteries to store their electricity till after dark. The rapid rollout is making the country into one of the fastest-growing markets for solar power from a near-standing start.

'Block Everything' Protest Rocks France: What to Know

Thousands of people staged demonstrations across France on Wednesday, disrupting traffic and public transportation for a day of nationwide action under the banner "Block Everything." Authorities responded by deploying 80,000 police, who detained more than 300 protesters. Demonstrations were mostly peaceful, but some protesters clashed with police in Paris and Rennes, a city in western France, where a bus was set on fire.

GLOBAL NEWS

Oracle Surge Lifts S&P 500 to New Record

A breakneck rally in Oracle shares helped power the S&P 500 to another record, while a slide in Apple dragged down the Dow Jones Industrial Average.

Shares of Oracle soared 36% on Wednesday, their best one-day percentage gain since 1992, after the database-software giant said that it won several billion-dollar artificial intelligence deals in its latest quarter. The Wall Street Journal reported Wednesday afternoon that OpenAI and Oracle signed a $300 billion computing deal, among the biggest cloud contracts ever signed.

August CPI will be the most crucial data for stock-market investors this week. Here's what to watch

Investors are looking ahead to an August consumer-price index report on Thursday that has the potential to curb the Federal Reserve's enthusiasm for interest-rate cuts beyond September.

A 100% likelihood is currently being attached to a Fed rate cut next Wednesday, particularly after an unexpected decline in producer prices for August and a deterioration in U.S. job growth. The only questions now are how big this rate cut will be and what officials will have to say about more reductions this year if tomorrow's CPI report comes in hotter than expected. Meanwhile, businesses are absorbing part of the tariff costs associated with the Trump administration's trade policies, taking some of the bite out of inflation.

Wholesale Inflation Proved More Muted in August

Wholesale inflation unexpectedly slowed in August, as higher tariffs are proving slow to work their way through the pipeline. But while the volatility of producer prices may raise some eyebrows, the latest data don't forestall the Federal Reserve from lowering interest rates next week.

The producer price index for total final demand edged down 0.1% in August, putting the annual rate at 2.6%, the Bureau of Labor Statistics reported Wednesday morning.

The Bizarre Sprint Ahead of Next Week's Fed Meeting

President Trump's unprecedented bid to wrest greater control of the Federal Reserve barreled toward a suspense-filled conclusion Wednesday amid two parallel efforts to decide who will be able to participate at next week's interest-rate meeting.

Late Tuesday, a federal judge granted Fed governor Lisa Cook an injunction that temporarily halted Trump's attempt to remove her. The decision was a crucial legal victory for Cook-and the central bank's independence more broadly-because it allows her to remain in her job, at least for now. It clears the path for her to vote at a consequential Fed meeting next week, when officials are expected to make their first interest-rate cut of the year.

How the Shooting of Conservative Activist Charlie Kirk Unfolded

OREM, Utah-Charlie Kirk was among friends and in his element.

On Wednesday afternoon, the political activist and author who vaulted to the heights of the MAGA world by mobilizing a new generation of young conservatives on college campuses was on stage at Utah Valley University, and squarely in Trump country.

Trump Has Heated Call With Netanyahu Over Israeli Strike on Qatar

WASHINGTON-President Trump held a heated call with Israeli Prime Minister Benjamin Netanyahu on Tuesday, senior U.S. administration officials said, conveying deep frustration at being blindsided by Israel's strike on Hamas representatives in Qatar.

Trump told Netanyahu that the decision to target Hamas political leaders in Doha, Qatar's capital, wasn't wise. He was angry to learn about the attack as it was occurring from the U.S. military-rather than from Israel-and that it struck the territory of another U.S. ally that was mediating negotiations on ending the Gaza war, the officials said.

Source: morningstar

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Michelle

Political

Palestinians in the relatively unscathed Nasser area of Gaza City were having to decide whether to stay or go on Thursday after the Israeli military dropped leaflets warning that troops would take control of the western neighbourhood.

Israel has ordered the hundreds of thousands of people living in Gaza City to leave as it intensifies its all-outwaron the Palestinian militant group Hamas, but with little safety, space and food in the rest of Gaza, people face dire choices.

"It has been almost two years, with no rest, no settling down, not even sleep," said Abu Ahmed, a father, as he and his family prepared to flee the city in a truck pulled by a motorcycle, laden with some of their belongings.

"We can't sit with our children just to sit with them. Our life revolves around war," he said. "We have to go from this area to that area. We can't take it anymore, we are tired."

FATAL SEARCH FOR FOOD

Israeli forces killed 18 people across the territory on Thursday, according to medics and local health authorities, including 11 in strikes on various parts of Gaza City, five in a strike on a single location in Beach refugee camp, and two who were searching for food near Rafah in the south.

Israeli ground troops had operated in parts of the Nasser area at the start of the war in October 2023, and the leaflets dropped late on Wednesday left residents fearful that tanks would soon advance to occupy the entire neighborhood.

In the past week, Israeli forces have been operating in three Gaza City neighborhoods further east - Shejaia, Zeitoun, and Tuffah - and sent tanks briefly into Sheikh Radwan, which is adjacent to Nasser. It said last Thursday it controlled 40% of the city.

On Wednesday, the Israeli military said it struck 360 targets in Gaza in what it said was an escalation of strikes that targeted "terrorist infrastructure, cameras, reconnaissance operations rooms, sniper positions, anti-tank missile launch sites, and command and control complexes".

It added that in the coming days, it would intensify attacks in a focused manner to strike Hamas infrastructure, "disrupting its operational readiness, and reducing the threat to our forces in preparation for the next phases of the operation".

Gaza City families continued to stream out of their homes in areas targeted by Israeli aerial and ground operations, heading either westward towards the centre of the city and along the coast, or south towards other parts of the strip.

But some were either unwilling or unable to leave.

"We don't have enough money, enough to flee. We don't have any means to go south like they say," said Ahmed Al-Dayeh, who was attending the funeral of one of the people killed in Thursday's strikes, who was his friend.

The war was triggered by Hamas-led attacks launched from Gaza on southern Israel on October 7, 2023, in which 1,200 people, mostly civilians, were killed, and 251 taken hostage, according to Israel.

Israel's military assault on Gaza has killed over 64,000 people, also mostly civilians, according to local health authorities, caused a hunger crisis and wider humanitarian disaster, and reduced much of the enclave to rubble.

Seven more Palestinians, including a child, have died of malnutrition and starvation in Gaza in the past 24 hours, the territory's health ministry said on Thursday, raising the number deaths from such causes to at least 411, including 142 children.

Israel says it is taking steps to prevent food shortages in Gaza, letting hundreds of trucks of supplies into the enclave though international agencies say far more is needed.

The status of negotiations towards a ceasefire in Gaza that were being hosted and co-mediated by Qatar has been uncertain since Israel attempted to kill the political leaders of Hamas in an airstrike on the Qatari capital Doha on Tuesday.

The airstrike took place shortly after Hamas claimed responsibility for a shooting on Monday that killed six people at a bus stop on the outskirts of Jerusalem.

Source: Reuters

Risk Warnings and Disclaimers

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Glendon

Economic

Forex

The euro is virtually unchanged on Thursday, trading at 1.1692 in the European session.

ECB expected to maintain rates

The European Central Bank meets later on Thursday and the money markets have priced in a hold at close to 100%, which would keep the key deposit rate at 2.0%. The ECB has cut rates by more than half since last July but has hinted that there is no rush to continue lowering rates.

Has inflation in the eurozone become too much of a good thing? Inflation is under control, but there is now a risk of inflation undershooting the 2% target, which would put pressure on the ECB to respond by reducing rates.

There are differing opinions within the ECB with regard to the impact of the US tariffs. The hawks,, who are against more rate cuts argue that the economy has weathered the tariffs well. The doves, who favor more cuts, are concerned that the tariffs are yet to be fully felt and could dampen growth. The money markets are in agreement with the hawks and don’t anticipate another rate cut this year.

All eyes on US CPI

The US releases the August inflation report later on Thursday. CPI is expected to rise to 2.7% y/y from 2.9% y/y in July. Monthly, the market estimate is 0.3%, compared to 0.2% in July. Core CPI is expected to remain unchanged at 3.1% y/y and 0.3% m/m.

The core rate is well above the Federal Reserve’s 2% target but that isn’t expected to stop the Fed from lowering rates next week for the first time since December 2024. Although a rate cut has been fully priced in, we could see downward pressure on the US dollar if the Fed cuts, especially if the Fed’s tone at the meeting is dovish.

The US economy is showing signs of cooling, especially the labor market. The August nonfarm payrolls fell to 22 thousand and annual revisions for the year prior to March 2025 were revised downwards by a massive 911 thousand, much more than expected. The weak nonfarm payrolls report has raised the odds of a half-point cut to 10%, with a 90% chance of a quarter-point reduction.

EUR/USD Technical

EURUSD tested resistance at 1.1703 earlier. Above, there is resistance at 1.1722.
1.1674 and 1.1655 are providing support

Source: ACTIONFOREX

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FXOpen

Economic

Forex

Technical Analysis

The US dollar is showing cautious dynamics: the USD/JPY pair is holding within a range, reflecting the market’s wait-and-see stance, while USD/CAD is gradually approaching August highs. This divergence highlights that investors are carefully allocating positions amid uncertainty over the Federal Reserve’s next steps.The main focus is on a block of US statistics — consumer price indices, jobless claims, and inflation expectations from the University of Michigan. Weak inflation and labour market figures would increase pressure on the dollar, while stronger data could temporarily restore support.Thus, the market remains in search of fresh momentum: whether levels are broken or consolidation persists will depend on whether macro data confirm the scenario of policy easing or, conversely, postpone its implementation.

USD/JPY

Despite disappointing US employment data released at the end of last week, USD/JPY continues to trade within a six-week range of 146.40–148.60. Early this week, sellers attempted to break through the lower boundary of the corridor but have so far been unsuccessful. Technical analysis of USD/JPY suggests a possible strengthening towards 148.00–148.60, as a hammer candlestick has formed following the rebound. A bounce from current levels could also lead to a retest of support at 146.30–146.60.

Events that could influence the direction of USD/JPY:

● Today at 15:30 (GMT+3): US Consumer Price Index (CPI)

● Today at 15:30 (GMT+3): US Initial Jobless Claims

● Today at 21:00 (GMT+3): US Federal Budget Statement

USD/CAD

As expected, following the formation of a bullish engulfing pattern, USD/CAD managed to test the key 1.3800–1.3860 range. Should the dollar receive a positive news driver, the pair might strengthen towards 1.3880–1.3900. The nearest support could be within the 1.3790–1.3830 area.

Events that could influence the direction of USD/CAD:

● Today at 15:30 (GMT+3): Canadian Building Permits

● Today at 17:00 (GMT+3): University of Michigan Consumer Sentiment Index

● Today at 19:00 (GMT+3): US Department of Agriculture (USDA) Report

Source: FXOpen

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Gerik

Economic

Forex

Vietnam’s Economic Pressures: Rising Credit, Exchange Rate, and Interest Rates

As of late August 2025, Vietnam’s credit growth has been strong, reaching 17.14 trillion VND (about 17.14 million VND), reflecting an 11.08% increase from the previous year. With expectations for credit growth to reach 20.19% this year, it remains one of the highest growth rates in recent years, exceeding the average of 14.5%.

While the average interest rate for new loans stands at 6.38%, nearly 0.6% lower than the previous year, the rising credit and exchange rate pressures are expected to influence interest rate trends toward the end of the year.

Exchange Rate and Currency Demand Concerns

In August 2025, the exchange rate of the Vietnamese đồng came under pressure, resulting in a shift towards foreign currency due to lower interest rates in Vietnamese đồng. The demand for foreign exchange is expected to rise due to the delayed disbursement of foreign loans and the increase in foreign debt obligations.

Despite expectations that the U.S. Federal Reserve might reduce interest rates by the end of the year, local challenges, including higher import demand as tariffs on goods from the U.S. have been reduced, are expected to keep the exchange rate "hot," putting pressure on the local currency.

Rate Predictions and Economic Impact

The market expects the exchange rate to range between 26,600 and 26,750 VND/USD by the end of 2025, reflecting a 4.5% to 5% increase compared to earlier in the year. The country’s credit growth continues to outpace capital mobilization growth, which adds further pressure on interest rates, particularly for private commercial banks competing for deposits.

By the end of July 2025, 12-month deposit rates for private commercial banks had risen slightly to 4.89%, a 2 basis point increase compared to the previous month. In contrast, the state-owned commercial banks have maintained a stable rate of 4.7%.

Policy Measures and Future Adjustments

The State Bank of Vietnam (SBV) has consistently emphasized stabilizing both interest rates and exchange rates, alongside efforts to manage inflation. To this end, the SBV is encouraging a more flexible and efficient monetary policy to balance interest rates and currency exchange, while maintaining control over the foreign exchange market.

In the upcoming period, the SBV will also focus on improving the efficiency of credit programs aimed at supporting housing, infrastructure, and digital technology development. These efforts aim to keep inflation in check and ensure stable growth while accommodating the country’s growing credit needs.

Vietnam’s economic strategy for the remainder of 2025 involves managing a delicate balance between stimulating growth and addressing inflationary pressures. High credit growth, exchange rate concerns, and increased tariffs could push interest rates higher, but with the SBV’s targeted policy measures, the country aims to stabilize its economy while managing external challenges.

To stay updated on all economic events of today, please check out our Economic calendar

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FXOpen

Economic

Stocks

Today at 15:30 GMT+3, the Consumer Price Index (CPI) report will be released.

In anticipation of the figures, traders remain optimistic – the S&P 500 index (US SPX 500 mini on FXOpen) reached a new all-time high yesterday, climbing above 6,560 points.

The bullish sentiment is driven by:
→ Expectations of an interest rate cut in September, which is believed to provide a positive boost to the US economy (and increase corporate profits).
→ A sharp rally in Oracle (ORCL) shares. The company announced it had signed four multibillion-dollar contracts with three different clients.

Technical Analysis of the S&P 500

On the 4-hour chart of the S&P 500 index (US SPX 500 mini on FXOpen), the price continues to move within an ascending channel, shown in blue.

From a bearish perspective:
→ the price is near the upper boundary of the channel, which has acted as resistance for several weeks;
→ the RSI indicator is close to the overbought zone, which may discourage buyers from entering at higher prices;
→ yesterday’s candle had a long upper shadow (marked with an arrow), indicating increased selling pressure.

From a bullish perspective:
→ the local level of 6,520, after being broken, has switched from resistance to support;
→ in September, the price has followed a steep upward trajectory (marked with orange lines), with the lower line showing signs of support.

Taking this into account, we could assume that the market is in a short-term state of balance while awaiting the release of inflation data – arguably the key event of the week in the economic calendar.

Favourable figures could encourage the bulls to attempt a breakout above the upper boundary of the channel, lifting the S&P 500 to a new all-time high. Be prepared for spikes in volatility.

Source: FXOpen

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Gerik

Economic

Germany's Export Struggles Amid U.S. Tariffs

Germany's exports to the United States in July 2025 fell to €11.1 billion (around $13 billion), a decline of 7.9% compared to June 2025. This marks the fourth consecutive month of decline, signaling a sustained negative trend in trade with the U.S., which remains Germany's largest export market despite the setbacks. These figures represent the lowest monthly exports to the U.S. since 2021, a period that coincides with the imposition of tariffs by the U.S. under former President Trump's administration.

The tariff policy, which has targeted various goods, has dealt a heavy blow to Germany’s economy, which is heavily reliant on exports. With the trade war between the U.S. and Europe intensifying, Germany's exporters are grappling with rising energy costs and weakening demand.

Trade Balance and Economic Outlook

In addition to the decline in exports, Germany's overall trade figures showed a slight decrease in imports, down 0.1% from the previous month to €115.4 billion, leaving a trade surplus of €14.7 billion. However, the reduction in the trade surplus highlights the challenges facing Germany's export-oriented economy. The broader economy has also been affected, with concerns growing about a slowdown in industrial production and further erosion of economic confidence.

The Sentix Investor Confidence Index for the Eurozone, which reflects investor sentiment, revealed a drop to its lowest level since April 2025. In particular, Germany's index saw the steepest decline, highlighting investor concerns about the economic outlook amidst the ongoing trade tensions and uncertainty.

Challenges for German Industry

In addition to tariffs, Germany's large manufacturers are dealing with escalating energy costs, which have further strained their ability to maintain profitability. The global demand for German goods is weakening, and the cumulative effects of these economic pressures are weighing on investor sentiment. Despite these challenges, Germany continues to focus on maintaining its position as a key player in the global export market, although it faces increasing competition from other global economic centers.

In conclusion, the long-term impact of U.S. tariffs on German exports could have significant repercussions for the country's economic growth, especially as the country strives to recover from recent challenges.