Today features several important financial events to watch. Australia’s quarterly CPI report for Q2 met expectations, showing a trimmed mean of 2.7%. This has increased the chances of a 25 basis points rate cut next month from 84% to 92%. In Europe, we will see preliminary Q2 GDP data for France, Italy, Germany, and the Eurozone, along with inflation figures from Spain for July. These reports will shed light on the region’s economic performance during the quarter.

US Economic Focus

US trading kicks off with ADP employment data and Q2 GDP figures. Next, attention will turn to central banks, particularly the Bank of Canada and the US Federal Reserve, both likely to keep rates unchanged. The focus will be on the Fed, especially on Jerome Powell’s press conference for any signs of division or future guidance. The day wraps up with significant tech earnings, as Microsoft and Meta share their results after the market closes. Their performance will impact tech stocks and could influence market sentiment for the week ahead. The likelihood of a Reserve Bank of Australia rate cut in August is now at 92%. The latest trimmed CPI reading of 2.7% for Q2 places inflation within the RBA’s target range for the first time since early 2022. Derivative traders might consider buying put options on the AUD/USD to hedge against a weaker Australian dollar. Today’s preliminary GDP figures for Europe’s second quarter are crucial, especially after Q1 showed just 0.1% growth. If Germany and the Eurozone report flat or negative growth, it will put more pressure on the European Central Bank. This scenario could prompt traders to buy put options on the EUR/USD or get ready for increased volatility in European indices.

Anticipated Federal Reserve Moves

All attention is now on the Federal Reserve as US Q2 GDP data will shape discussions on a potential rate cut in September. After growth slowed to 1.8% in Q1, another weak reading today would strengthen the case for doves on the committee, especially with ongoing political pressure. Traders are heavily invested in options related to the September Fed meeting, expecting Powell may indicate readiness to act if data continues to decline. Tonight’s earnings from Microsoft and Meta will test the tech sector’s high valuations, which have driven the Nasdaq 100 up over 15% this year. Key points of interest will include their guidance on cloud and AI spending. Traders are using options on the QQQ exchange-traded fund to hedge or speculate on the market’s reaction, as a disappointing report from either tech giant could quickly dampen market sentiment. Create your live VT Markets account and start trading now.

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