The Grayscale Bitcoin Trust was the only outflow, which bled $7.7 million, bringing the total outflow to $20.1 billion since it converted to a spot ETF in January.

Spot Bitcoin ETF flows. Source: Farside Investors

Source: Cointelegraph

Silver price (XAG/USD) extends its correction to near $31.60 in Friday’s European session after facing selling pressure from fresh highs of $32.70 on Thursday. The white metal comes under pressure as investors turn cautious ahead of the United States (US) Personal Consumption Expenditure Price Index (PCE) for August, which will be published at 12:30 GMT.

Economists estimate the core PCE price index, a Federal Reserve’s (Fed) preferred inflation measure, to have grown by 2.37%, faster than 2.6% in July, with monthly figures rising steadily by 0.2%. Investors keenly await the US inflation data as it will shape market speculation for the Fed’s likely policy action in the final quarter of this year.

According to the CME FedWatch tool, the central bank is expected to reduce its key borrowing rates further by 75 bps in the remaining two meetings this year, suggesting that there will be one 50 bps and one 25 bps rate cut. 30-day Federal fund futures pricing data shows that traders are equally split over a 25 or 50 bps interest rate cut in November.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, surrenders its early gains and hovers above 100.50. 10-year US Treasury yields edge lower to 3.79%.

Silver technical analysis

Silver price falls slightly after posting a fresh decade high near $32.70. The white metal is under pressure ahead of key inflation data. However, its near-term outlook is bullish as all short-to-long-term Exponential Moving Averages (EMAs) are sloping higher.

The 14-day Relative Strength Index (RSI) oscillates in the bullish range of 60.00-80.00, suggesting a strong bullish momentum.

Silver daily chart

Source: FXSTREET

USD: Core PCE should not rock the market

US initial jobless claims came in once again lower than expected (218k versus 223k) yesterday, but continuing claims – which track the speed to re-enter the jobs market – rebounded to 1.834m. Durable goods orders were stronger than expected and the expected revision lower in 2Q GDP from 3.0% to 2.9% didn’t materialise.

Market pricing for year-end Fed rates inched higher by a few basis points over the past couple of sessions, but the dollar was offered again yesterday after some positioning adjustment on Wednesday. Anyway, markets continue to factor in a 50bp cut at any of the next two meetings.

Today, August PCE data will be released. We expect a core 0.2% month-on-month print, in line with consensus, and limited market impact. Even in the case of a small deviation from consensus, the recent shift in the Fed’s focus to the employment side of its mandate means markets are less sensitive to inflation news.

We think DXY can stay around in the 100.0-101.0 range for a few days. The next big move may only happen with a jobs data surprise next week.

EUR: ECB repricing faces inflation test

The first few September CPI prints across the eurozone will be published today. Both French and Spanish inflation is expected to have slowed (to 1.6% and 1.9%, respectively), although Spain’s core measure is seen rising from 2.7% to 2.8%.

German numbers are published on Monday and the eurozone-wide figures on Tuesday. Inflation has the potential to trigger some hawkish repricing in European Central Bank rate expectations given that Governing Council members recently showed reluctance to give in to easing pressure despite a gloomy economic picture.

EUR/USD found some support yesterday, and another break above 1.12 is surely possible into next week’s US payrolls data.

GBP: Strength continues

It’s been a quiet week in the UK calendar, but the weak economic indicators out of the eurozone have dealt a blow to EUR/GBP. We saw the pair test the 0.8320 level earlier this week, and while we continue to see a good case for a rebound beyond the short term as Bank of England easing may be underpriced, we probably need some inflation surprise in the eurozone to prevent 0.8300 to be tested soon.

The EUR:GBP swap rate differential collapsed as markets increased bets the eurozone’s grim outlook will force the ECB into larger cuts than the BoE, and is now at -155bp, the widest since December 2023. That should keep some pressure on the pair in the near term.

In cable, the fresh 1.34+ highs are also justified by the policy rate differential, although expectations for a 50bp Fed cut may be misplaced, and GBP/USD may start to look expensive soon.

CEE: Different country, different implications of rate cuts for FX

Friday's calendar in the region indicates a rather quiet end to the week with a focus on US numbers. Only after the close of trading today will we get a sovereign rating review of Romania from Moody's. Still, CEE currencies have come under pressure over the past two days and we may see some attractive levels across the board. EUR/HUF quickly moved up to 396, which was the level we mentioned in the National Bank of Hungary review following Tuesday's central bank decision to cut rates by 25bp. For now, we see no reason to move to the 400 level, but given the repricing in the rates market in a dovish direction, we remain bearish on the forint and potentially expect more weakness.

On the other hand, EUR/PLN has been moving higher for the last two days, touching 4.280 this morning, with no visible reason to us, and the zloty is showing attractive levels for new buyers, especially ahead of the inflation print and National Bank of Poland meeting next week. On the other hand, EUR/CZK remains steady after the Czech National Bank meeting this week and the end of yesterday's trading suggests a move lower, which we discussed here earlier this week. Despite the dovish market pricing, we believe that even the current rate levels would imply a stronger koruna while a possible repricing may add additional impetus to the CZK. We therefore remain bullish on CZK, however, today's direction will be mainly driven by US data across the region.

EUR/USD slumps below 1.1150 in Friday’s European session. The major currency pair faces sharp selling pressure as the Euro (EUR) declines after the flash French Consumer Price Index (CPI) (EU Norm) and the Spain Harmonized Index of Consumer Prices (HICP) data showed that price pressures grew at a slower-than-expected pace in September.

A sharp deceleration in French and Spanish inflationary pressures has prompted market expectations for the European Central Bank (ECB) to cut interest rates again in the October meeting. This would be the third interest rate cut by the ECB in its current policy-easing cycle, which started in June. The ECB reduced interest rates again in September after leaving them unchanged in July.

Annual CPI in France grew at a pace of 1.5%, sharply lower than estimates of 1.9% and the former release of 2.2%. On month, price pressures deflated at a robust pace of 1.2%, faster than expectations of 0.8%. 

In Spain, the annual HICP rose by 1.7%, slower than estimates of 1.9% and from 2.4% in August. On month, the HICP declined by 0.1%, which was expected to remain flat.

Daily digest market movers: EUR/USD comes under pressure ahead of US core PCE inflation 

EUR/USD faces selling pressure as the US Dollar (USD) rises ahead of the United States (US) Personal Consumption Expenditures Price Index (PCE) for August, which will be published at 12:30 GMT. The inflation data will significantly influence market expectations of the Federal Reserve (Fed) interest rate outlook for the last quarter of the year. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges higher to near 100.65 but has remained inside the 100.20-101.40 range for the past two weeks.

The PCE report is expected to show that core inflation rose at a faster pace of 2.7% year-on-year from 2.6% in June, with monthly figures growing steadily by 0.2%.

Currently, financial markets seem to be confident that the Fed will cut interest rates for the second straight time in November as inflation is on track to return to the bank’s target of 2% and policymakers are concerned over growing risks to labor demand. However, traders remain equally split over the potential rate cut size between 25 and 50 bps, according to the CME FedWatch tool.

Next week, investors will focus on Fed Chair Jerome Powell’s speech on Monday, a slew of labor market data, and the ISM Purchasing Managers’ Index (PMI) to project the next move in the US Dollar.

Technical Analysis: EUR/USD ranges below 1.1200

EUR/USD has consolidated in a 100-pip range since Tuesday as investors look for fresh Fed-ECB interest rate cues. The major currency pair remains firm as it holds the breakout of the Rising Channel chart pattern formed on a daily time frame near the psychological support of 1.1000. 

The upward-sloping 20-day Exponential Moving Average (EMA) near 1.1110 suggests that the near-term trend is bullish.

The 14-day Relative Strength Index (RSI) edges lower below 60.00, suggesting momentum is weakening.

Looking up, a decisive break above the round-level resistance of 1.1200 will result in further appreciation toward the July 2023 high of 1.1276. On the downside, the psychological level of 1.1000 and the July 17 high near 1.0950 will be major support zones.

Source: FXSTREET

The Mexican Peso (MXN) fluctuates between tepid gains and losses in its major pairs on Friday, a day after the Bank of Mexico (Banxico) policy meeting at which the bank decided to cut interest rates by 25 basis points (0.25%), bringing the official cash rate down to 10.50% from 10.75% previously.  

Changes to interest rates can have a high impact on exchange rates. However, the cut was in line with consensus expectations, so the Peso remained relatively stable following the announcement. 

Revisions to Banxico’s forecasts for the economy, however, suggest more interest rate cuts are probably on the way, with potentially negative implications for MXN.  

Mexican Peso weighed by downwardly revised inflation forecasts

The Mexican Peso ended the day little-changed following the Banxico interest-rate decision, closing Thursday close to where it started in its major pairs. 

The bank decided to cut interest rates by 25 bps to 10.50% as expected, with four of the members of the board voting in support of the decision and one dissenter – Jonathan Heath – voting to keep rates unchanged. 

Banxico did, however, revise down its inflation forecasts in light of recent data that showed a cooling in price pressures. It forecast headline inflation (INPC) at 5.1% in Q3 of 2024, down from 5.2% in the August policy statement, and at 4.3% instead of 4.4% in Q4. As for core inflation,  the bank saw it falling to 3.8% in Q4 of 2024, below the 3.9% in the previous forecast, and to 3.5% in Q1 of 2025, down from 3.6% previously. 

The Banxico statement noted that “Mexico’s economy is undergoing a period of weakness” and that the balance of risks to growth remains to the downside.

With lower inflation expected and doubts over economic growth, the forecast revisions suggest a greater likelihood of the Banxico making more cuts to interest rates in the future. 

“We are forecasting two more 25bp cuts this year at the November 14th and December 19th meetings, respectively, bringing the year-end rate to 10.00%. This in addition to a total of 200 bps cuts throughout next year,” said Rabobank in a note. 

Advisory service Capital Economics were of a similar view stating: “Overall, we expect two more 25bp interest rate cuts over the rest of the year, to 10.00%. The easing cycle is likely to be a bit more stop-start next year as it takes time for inflation to fall to the central bank's 2-4% target. Our end-2025 forecast of 8.50% is above consensus expectations,” said Liam Peach, Senior Emerging Markets Economist.

Technical Analysis: USD/MXN continues steady rise within channel

USD/MXN continues to trade within its rising channel as it extends the uptrending bias of recent months. Overall, it is in a short, medium and long-term uptrend. Given the theory that “the trend is your friend”, it’s more likely than not to continue higher.

USD/MXN Daily Chart 

Thursday’s close above 19.63 (September 25 high) provided more bullish certainty of the pair’s near-term upside bias after it recently bottomed out at the base of the rising channel, towards a target at 20.15, the high of the year.

A further break above 19.75 (the September 26 high) would create a higher high and provide yet more proof of an extension of the uptrend.

Source: FXSTREET