Traders Brace for Impact: PMI Data and Fed Speeches to Steer Markets After Fed's Bold Rate Cut

European and US stock futures are trading near the flat line as traders catch their breath after the stellar rally that we witnessed last week on the back of the Fed's crisis-level interest rate cut. The German manufacturing PMI data will significantly influence the price in Europe, as it holds the key to any potential rally risk. The current situation is immensely dire for the biggest economy in the Eurozone. Regarding the US, investors will be occupied with sifting through the noise generated by the speeches of FOMC members and the US Manufacturing and Services PMI numbers.

Dust Settling 

The Fed's crisis-level interest rate cut propelled the US stock indices into record territory last week, which may make some traders cautious, but there is plenty in the pipeline that can keep the rally going as well. The question for investors now is whether the Fed will continue to act in a desperate mode, which is the pace of future interest rate cuts.

European Futures and Economic Data 

While the Fed's interest rate action heavily influences price action in Europe, traders primarily concentrate on the significant economic data scheduled for release today. Traders are eagerly anticipating the release of the Manufacturing and Services PMI data, not only for Europe's tier-one economies like France, Germany, and Italy, but also for the entire continent. For many traders, the German manufacturing PMI and services PMI numbers are going to matter the most, as Germany is the largest economy in the Eurozone. The German Manufacturing PMI number is already in deep contraction territory, and with the recent challenges around its car industry, traders are highly likely to act more harshly if the number paints a pessimistic picture. The forecast for the German Manufacturing PMI is 42.4, which is the same reading as the last month. We have set the bar fairly low, only requiring the number to equal the previous month's reading. The German Manufacturing PMI's deep dip into contraction territory has significantly impacted the overall reading of the Eurozone Manufacturing PMI. The forecast for the Eurozone’s manufacturing PMI is for 45.7, while the previous number came in at 45.8.

We do believe that the Services PMI is important for traders and investors, but its overall influence on sentiment will be highly subdued. This means that traders are going to base their trading appetite very heavily on the manufacturing PMI.

UK’s Important Economic Event and Concerns About Bank England 

In the United Kingdom, sentiment is becoming more challenging as the Bank of England hesitated last week in terms of taking further action in cutting the interest rate. It is true that the Bank of England had a better start in comparison to the Fed, but it is now very clear that the Bank of England is well behind the curve and is also way behind in terms of bringing interest rates back to their normal level as compared to the European Central Bank and the Federal Reserve.

Gold Prices 

The shining metal moved sharply to the upside on the back of the steep moves in the dollar index. Today's price action for the yellow metal will also be highly interesting, as traders will pay close attention to a number of speeches by FOMC members. Essentially, these speeches will provide insights into the Fed's future policy and the expectations of market participants. Additionally, traders will closely monitor the US Manufacturing and Services PMI numbers. Expectations are that the manufacturing PMI, which is currently in contraction territory, will display further strength, and we will see more improvement in this number. Gold traders may take some chips off the table if the number comes stronger than the forecast of 48.6, as that leaves less pressure on the Fed.

Gold Chart by Exness 

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