Markets had plenty to chew on Wednesday as fresh GDP and inflation data collided with a hawkish Fed and Powell’s press conference.
Traders responded with sharp moves across currencies, equities, and commodities as rate cut hopes took a hit.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- An 8.8-magnitude earthquake struck Russia’s Far East coast, prompting tsunami alerts across the Pacific
- New Zealand ANZ Business Confidence for July 2025: 47.8 (48.0 forecast; 46.3 previous)
- AUD Tumbles After Australia’s Q2 2025 CPI Miss Spurred RBA Rate Cut Expectations
- France GDP for Q2 2025: 0.3% q/q (0.2% q/q forecast; 0.1% q/q previous); 0.7% y/y (0.6% y/y forecast; 0.6% y/y previous)
- Swiss KOF leading indicators for July 2025: 101.1 (96.5 forecast; 96.1 previous)
- Germany GDP for Q2 2025: -0.1% q/q (0.1% q/q forecast; 0.4% q/q previous); 0.4% y/y (0.1% y/y forecast; 0.0% y/y previous)
- Euro Area consumer inflation expectations for July: 25.1 (20.0 forecast; 21.2 previous)
- Euro Area selling price expectations for July 2025: 9.2 (6.0 forecast; 5.6 previous)
- Euro Area GDP flash for Q2 2025: 0.1% q/q (0.1% q/q forecast; 0.6% q/q previous); 1.4% y/y (1.2% y/y forecast; 1.5% y/y previous)
- U.S. ADP national employment report for July: 104.0k (20.0k forecast; -33.0k previous)
- U.S. advance core PCE prices for Q2 2025: 2.5% q/q (2.8% q/q forecast; 3.5% q/q previous)
- U.S. advance GDP price index for Q2 2025: 2.0% q/q (2.8% q/q forecast; 3.8% q/q previous)
- U.S. advance GDP growth rate for Q2 2025: 3.0% q/q (2.5% q/q forecast; -0.5% q/q previous)
- U.S. EIA Crude Oil Stocks Change for July 25, 2025: 7.7M (-3.17M previous)
- BOC Holds at 2.75% While Inflation and Trade Risks Cloud Outlook
- USD Rallies After July FOMC Decision, Powell Suggests Tariffs Inflation Short-Lived
- U.S. pending home sales for June 2025: -0.8% m/m (0.5% m/m forecast; 1.8% m/m previous); -2.8% y/y (1.5% y/y forecast; 1.1% y/y previous)
- U.S. President Trump announced 25% tariff on India and unspecified penalties for buying Russian oil
- U.S. President Trump announced 50% tariff on most Brazil goods starting August 6
- U.S. President Trump announced 50% tariff on copper pipes and wiring, but left out key copper input materials such as ores, concentrates and cathodes
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets were all over the place on Wednesday as traders chewed on stronger-than-expected data and the Fed’s hawkish pause. In the Euro Area, second-quarter GDP ticked up 0.1% on the quarter, just a hair better than the flat reading expected. France’s 0.3% growth helped offset Germany’s 0.1% dip. Meanwhile, U.S. GDP came in hot at 3.0% annualized, beating the 2.5% forecast, though a good chunk of that pop came from unwinding the import distortions tied to first-quarter tariffs.
European stocks ended slightly higher, with the Stoxx 600 up just 0.12%. Wall Street couldn’t pick a lane, drifting most of the day before finishing mixed. The S&P 500 slipped 0.12%, the Dow lost 0.38%, and the Nasdaq squeezed out a tiny 0.15% gain.
Over in commodities, gold took a hit as the dollar flexed. It dropped 0.85% to $3,275 after the Fed held rates steady. The real kicker was the rare dissent from both Governors Bowman and Waller. Powell’s press conference cooled September cut talk, with odds falling from 68% to under 50%. Bond yields crept higher, with the 10-year up 4.6 basis points to 4.37%.
Oil kept climbing for a fourth day. WTI rose to $70.30, fueled by global trade negotiations and worries that Trump might slap new sanctions on Russia. Bitcoin stayed in chop mode but managed to close only slightly lower at $117,400.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The US dollar started Wednesday on the defensive as cautious risk-taking dominated early trading, with the currency drifting lower against most majors through the Asian session.
The Greenback found its footing several hours into the European session, gaining ground as the Euro Area saw mixed GDP readings and traders likely squared positions ahead of the FOMC meeting.
Dollar strength accelerated during early New York trading after ADP employment data showed private payrolls jumped 104,000 versus 78,000 expected, while advance GDP surged 3.0% annualized against forecasts of 2.5%, though the headline strength masked tariff-related distortions.
The dollar saw mild pullbacks ahead of the FOMC announcement, but the currency surged following the Fed’s decision to hold rates at 4.25%-4.50% despite dissents from Governors Bowman and Waller.
Powell’s press conference amplified the move as he offered no commitment to a September cut, emphasizing the labor market remains “solid” and inflation elevated. Crucially, Powell noted the Fed would receive two more inflation and jobs reports before the September meeting, which would inform their decision.
Market pricing for September easing plummeted from 68% to below 50%, propelling the Dollar Index up 1% to a two-month high. The Greenback closed higher against all major currencies, with gains ranging from 0.50% to 1.20%.
Upcoming Potential Catalysts on the Economic Calendar
- Japan housing starts for June at 5:00 am GMT
- Japan consumer confidence for July at 5:00 am GMT
- Germany import price index for June at 6:00 am GMT
- Swiss retail sales for June at 6:30 am GMT
- France PPI for June at 6:45 am GMT
- France harmonised inflation rate prel for July at 6:45 am GMT
- Germany unemployment change for July at 7:55 am GMT
- U.S. Challenger job cuts for July at 11:30 am GMT
- Germany harmonised inflation rate prel for July at 12:00 pm GMT
- Canada GDP (preliminary) for June at 12:30 pm GMT
- Canada GDP for May at 12:30 pm GMT
- U.S. employment cost index for June 30 at 12:30 pm GMT
- U.S. initial jobless claims for July 26 at 12:30 pm GMT
- U.S. core PCE price index for June at 12:30 pm GMT
- U.S. personal income for June at 12:30 pm GMT
- U.S. personal spending for June at 12:30 pm GMT
- U.S. Chicago PMI for July at 1:45 pm GMT
- New Zealand ANZ Roy Morgan consumer confidence for July at 10:00 pm GMT
- New Zealand building permits for June at 10:45 pm GMT
- Australia S&P Global manufacturing PMI final for July at 11:00 pm GMT
- Japan unemployment rate for June at 11:30 pm GMT
Traders have another jam-packed session ahead with some big-ticket data on the docket. During London hours, Euro Area inflation and labor numbers could shake things up for EUR and CHF, especially if inflation runs hotter than expected.
Stateside, markets will be locked in on a full plate of inflation and jobs data, with core PCE and jobless claims leading the charge. These could swing Fed expectations and spark some action in USD and CAD. And hey, keep an ear out for any fresh headlines on global trade. One surprise headline and risk sentiment could flip on a dime!
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
