The US dollar experienced further depreciation on Tuesday, as reflected by a 0.14% decrease in the USDX on the iFOREX trading platform, bringing it to levels last recorded in October 2024. Investors are eagerly anticipating the outcome of the Federal Reserve's policy meeting, where rates are likely to stay unchanged. Due to concerns about a potential recession, the Federal Reserve's analysis of trade policies, particularly the tariffs implemented during the Trump administration, will be a key point of interest.
Elsewhere, the Bank of Japan decided to keep its benchmark interest rate unchanged at 0.5%, aligning with market predictions. Although the BOJ did not provide immediate indications of future rate adjustments, its commentary suggested that rising wages and a resilient economy could lead to increased inflation, potentially prompting rate hikes in the coming months. Following the announcement, the Japan 225 index moved moderately lower while the Japan 100 saw minor gains.
Heightened tensions in the Middle East, following the collapse of the Israel-Hamas ceasefire drove haven demand, pushing gold to record highs. The precious metal crossed the $3,040 per ounce mark early on Wednesday over renewed geopolitical instability in the Middle East and persistent worries related to trade tariffs.
In other news, following a proposal by U.S. President Donald Trump, Russian President Vladimir Putin agreed to a 30-day ceasefire on Ukrainian energy sites. This agreement, intended to de-escalate tensions and protect critical energy assets, potentially opening the door to broader peace talks and has introduced new supply dynamics into the global oil market. These developments further pressure WTI and Brent, which have been trending downwards for the past two trading days.
Wall Street had a rather negative session on Tuesday, as the US 500 was down by more than 1%, the US 30 lost 0.6% of its value and the US tech 100 dropped by a staggering 1.59%. Losses were largely driven by technology stock sell-offs, following Nvidia's AI conference that offered limited new information, coupled with ongoing worries about increased trade tariffs under President Trump and speculation of slowing economic growth, fueled the losses. Later in the day, quarterly earnings reports are anticipated Tencent ADR, Lufax and Five Below.
On Wednesday, attention will likely turn to the FOMC interest rate announcement and the subsequent press conference, where any remarks regarding trade policies and tariffs will be closely monitored. Some price action could also be seen upon the release of U.S. TIC Long-Term Purchases and weekly crude oil inventories.