Global financial markets finally got some breathing room after Federal Reserve (Fed) Chairman Kevin Warsh issued a rather ‘dovish’ statement on inflation risks during his speech at the Sintra Forum, Portugal.
Added to the continued fall in world crude oil prices, market sentiment appeared to have stabilized early in the Asian session this morning.
Here is a summary of market impacts that you must put on your radar today:
1. Crude Oil & Gold Take a Chance
Brent Crude Oil: Shrank another 0.8% to around $71 per barrel, the lowest level since late February (before the US-Israel-Iran conflict broke out). The fall in energy costs was the main catalyst that eased global inflation concerns.
Gold (XAU/USD): Managed to defend the gains recorded in the previous session, supported by the fall in the US 2-year Treasury yield which began to level off.
2. Kevin Warsh Signals: No Surprise Rate Hike in July!
In his speech at a gathering of central bank elites in Sintra, Kevin Warsh noted that inflation expectations and price risks have shown signs of easing over the past month.
While he stressed the Fed’s absolute commitment to bringing inflation down to its 2% target, his remarks made it clear that the Fed is in no rush to raise interest rates anytime soon.
Important Note for Traders: Warsh’s statement officially quelled previous wild market speculation that the Fed would unexpectedly raise rates at its meeting in late July.
3. US Manufacturing Sector Resilient, 2026 GDP Forecast to Reach 2.4%
Despite the easing of inflation, the US economy has proven to be resilient. Data showed that the US manufacturing sector expanded for the sixth consecutive month in June as input costs fell, driven by the previous war.
The printing, electrical equipment, and textile sectors led the gains. Overall, this report supports the projection that the US economy is accelerating again with a GDP growth target of around 2.4% for 2026.
4. Today's Main Focus: Mystery NFP Data & World Cup 'Disruption'
Now, the full focus of all global traders is shifting to the US Non-Farm Payrolls (NFP) report to be released tonight (Thursday).
Since Kevin Warsh has placed inflation as the main focus of the Fed, analysts believe that the June employment data alone may be quite difficult to drastically change interest rate expectations. In addition, analysts warn that this month's hiring data may be slightly 'distorted' due to extraordinary hiring activities in conjunction with the FIFA World Cup.
5. Middle East Update: Positive Progress in Peace Talks
From the geopolitical table, the talks between the US and Iran in Qatar show encouraging progress. US envoys, Steve Witkoff and Jared Kushner, reportedly held positive discussions to convert the temporary ceasefire plan into a permanent peace agreement. Iran has also reportedly set up a working group to discuss the implementation of the agreement.
According to Mohit Kumar of Jefferies, the market is now optimistic:
“Whether a full deal is reached or not is another story. As long as the Strait of Hormuz remains open and oil continues to flow, financial markets will eventually become less sensitive to these geopolitical issues.”
Conclusion for Traders: Kevin Warsh’s statement that he did not ‘pour oil’ on the issue of a July interest rate hike gives gold a short-term advantage to breathe. However, the real ‘game’ is tonight when the NFP data is released early.
Have you set up a strategy for tonight’s NFP? As usual, it’s all about the high impact news!
