Markets rode a wave of risk-on sentiment on Wednesday as Fed rate cut expectations strengthened after Bessent floated a potential 50 bps cut in September.

Stocks hit fresh records, the dollar weakened, oil slid on IEA oversupply warnings, and bitcoin blasted to new highs.

Here are headlines you may have missed in the last trading sessions!

Headlines:

• Japan Reuters Tankan index for August: 9.0 (7.0 forecast; 7.0 previous)
• Japan PPI for July: 2.6% y/y (2.6% y/y forecast; 2.9% y/y previous)
• Australia wage price index for Q2 2025: 3.4% y/y (3.3% y/y forecast; 3.4% y/y previous); 0.8% q/q (0.8% q/q forecast; 0.9% q/q previous)
• US Treasury Secretary Bessent said a 50-bps Fed rate cut should be on the table in September
• Germany inflation rate final for July: 2.0% y/y (2.0% y/y forecast; 2.0% y/y previous); 0.3% m/m (0.3% m/m forecast; 0.0% m/m previous)
• Japan machine tool orders for July: 3.6% y/y (0.0% y/y forecast; -0.5% y/y previous)
• IEA sees record 2026 oil glut as slowing demand and surging OPEC+ output drive inventories to pandemic highs
• U.S. MBA mortgage applications for August 8, 2025: 10.9% (3.1% previous)
• U.S. EIA crude oil stocks change for August 8, 2025: 3.04M (-3.03M previous)
• US President Trump is considering 11 candidates for Fed chair, including David Zervos and Rick Rieder – CNBC
• BOC meeting minutes showed members considered cutting rates in July but opted to wait for more data
• Chicago Fed President Goolsbee said all Fed meetings this fall are “live” meetings, open to rate cuts if upcoming inflation and labor data clearly point to cooling
• Atlanta Fed President Bostic said that one interest rate cut is appropriate for 2025 if jobs stay solid
• U.K. RICS house price balance for July: -13.0% (-8.0% forecast; -7.0% previous)

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Markets extended their risk-on rally on Wednesday as Fed rate cut expectations solidified following Treasury Secretary Bessent’s comments suggesting a potential 50 basis point reduction was possible given weak employment revisions.

The pan-European Stoxx 600 climbed 0.54%, with Germany’s DAX and France’s CAC 40 advancing 0.67% and 0.66% respectively, buoyed by easing trade and geopolitical tensions ahead of Friday’s Trump-Putin summit. Wall Street pushed to fresh records for a second consecutive session, with the S&P 500 gaining 0.32% and the Nasdaq adding 0.14%, while the Dow outperformed with a 1.04% rise as healthcare stocks led gains.

Treasury yields fell sharply across the curve as markets priced in a near-certain September rate cut, with the 10-year dropping 5.5 basis points to 4.24%. Gold edged modestly higher to $3,355, supported by dollar weakness, declining yields, and improved risk sentiment.

Crude oil extended losses, with WTI falling 0.87% to $62.75 amid IEA warnings of potential oversupply and rising US inventories. Bitcoin surged past $123,500 to a new all-time high, breaking July’s record as risk appetite flourished alongside equity markets reaching unprecedented levels.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Majors Chart by TradingView

The dollar traded sideways during Asian hours, initially recovering modestly against the yen before reversing course as European markets opened. Traders likely digested Tuesday’s benign CPI data alongside steady Euro Area inflation expectations that rose to 3.1% for April 2025 versus 2.9% previously, keeping pressure on the Greenback. Sterling led G10 gains with a 0.5% advance, reaching nearly three-week highs as risk appetite flourished across currency markets.

Treasury Secretary Bessent’s comments about a potential 50-basis-point Fed cut amplified dollar weakness midday, with the dollar index slumping 0.25% to its lowest level in nearly three weeks. Markets fully priced in a September rate cut at 99.9% probability, sending the dollar to five-day lows against the yen after failing to sustain an early recovery above 148.00. The Australian dollar found additional support from stronger-than-expected Q2 wage growth of 3.4% year-over-year, matching Q1’s pace and exceeding RBA projections, which tempered expectations for deeper rate cuts.

Some profit-taking emerged around the London close following mixed Fed messaging, with Bostic striking a cautious tone about September easing while Goolsbee remained noncommittal. Nevertheless, the dollar closed broadly weaker against all major currencies.

Upcoming Potential Catalysts on the Economic Calendar

• U.K. GDP reports for June and Q2 2025 at 6:00 am GMT
• U.K. industrial production for June at 6:00 am GMT
• U.K. manufacturing production for June at 6:00 am GMT
• U.K. balance of trade for June at 6:00 am GMT
• U.K. goods trade balance for June at 6:00 am GMT
• Swiss producer & import prices for July at 6:30 am GMT
• France inflation rate final for July at 6:45 am GMT
• U.K. labour productivity for June 30 at 8:30 am GMT
• Euro Area GDP growth rate 2nd est for Q2 2025 at 9:00 am GMT
• Euro Area employment change prel for Q2 2025 at 9:00 am GMT
• Euro Area industrial production for June at 9:00 am GMT
• U.K. NIESR monthly GDP tracker for July at 12:00 pm GMT
• U.S. initial jobless claims for August 9 at 12:30 pm GMT
• U.S. PPI reports for July at 12:30 pm GMT
• U.S. Fed Barkin speech at 6:00 pm GMT
• U.S. Fed balance sheet for August 13 at 8:30 pm GMT

Buckle up! London traders will likely be laser-focused on a flood of U.K. data, with GDP, production figures, and trade balances likely setting the tone for Sterling. Eurozone GDP and industrial output follow, adding fuel for any euro moves before U.S. traders step in.

Then, the U.S. session heats up with PPI and jobless claims, both key in shaping Fed rate cut expectations, so volatility could spike across USD pairs.

As always, look out for global trade developments and geopolitical headlines that could influence overall market sentiment. Stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!