Market Analysis - 13/08/25

US Stocks Rally After Inflation Data – Nasdaq up 1.4%

US stock indices rallied strongly in trading yesterday after inflation data came in largely as expected, locking in a September Fed rate cut for the market. The Dow rose 1.10% to 44,458, and the S&P and Nasdaq hit fresh highs, up 1.13% to 6,445 and up 1.39% to 21,681, respectively. The dollar took a tumble after the data, the DXY dropping 0.43% to 98.10, while Treasury yields were more muted, the shorter-dated 2-year falling 3.7 basis points to 3.731%, while the 10-year held steady, up 0.4 of a basis point to 4.289%. Oil prices fell again as traders priced in US demand decreases and a positive meeting between Trump and Putin on Friday, Brent down 0.72% to $66.12, and WTI down 1.32% to $63.06. Gold prices remained relatively steady in recent ranges, closing the day up just 0.08% at $3,346.64 an ounce.

Aussie Traders Preparing for Moves After the RBA Cut

Aussie dollar traders are preparing for a bit more volatility in the market following yesterday’s well-anticipated interest rate cut from 3.85% to 3.60%. There are a couple of key data updates still to come this week from the Australian Bureau of Statistics, and traders will be watching the numbers closely to see if they back up forward guidance from the RBA that the growth outlook is not particularly great. The Quarterly Wage Price Index data was released this morning, showing a 0.8% q/q increase, dead on expectations, which ties in with RBA thinking moving forward. However, tomorrow’s employment numbers are likely to have more impact on the currency, with the market expecting to see a 25k increase in jobs over the last month and the unemployment rate decrease from 4.3% to 4.2%. This has been a much more volatile data set in the last several months, and any significant deviation from those expectations will see some strong moves in the currency. Additionally, there are some large option expiries due to roll-off today, and their expirations could lead to a drop in liquidity, potentially opening the way for larger moves.

Quieter Trading Day Ahead for Investors

The macroeconomic calendar is pointing to a quieter trading day ahead, with little in the way of tier 1 data scheduled and only some minor central bank updates. The Asian session will see another strong focus on Australian markets after yesterday’s RBA rate cut, with the Quarterly Wage Price Index data due out (exp. 0.8% q/q increase). There are no notable events scheduled in the London session today; however, a couple of updates are scheduled in the New York session that could spark some market activity. The oil market will be paying very close attention to the US Crude Oil Inventory data as we approach the end of the US holiday season, and traders are expecting moves in contracts and petro-related products on the back of the print. We are also set to hear from Fed members Thomas Barkin and Austan Goolsbee later in the day, and traders will be looking closely at any mentions of yesterday’s inflation numbers.