*In today’s meeting, the European Central Bank (ECB) surprised by raising the policy rate by 25 basis points to 4.50%, contrary to the expected 4.25%. This decision was made to address persistently high inflation, tightening financing conditions, and reduced consumer demand. While growth expectations were revised downward, there was a slight upward adjustment in the expected inflation for the year. ECB President Lagarde indicated that they had not yet determined whether interest rates had peaked and would monitor the situation based on data.

*Following the ECB statement, the EURUSD exchange rate dropped sharply below 1.07, and the price of gold approached 1900 during the day. The German 10-year bond interest rate initially decreased to 2.58% but rose to 2.61% as the evening approached. In her post-decision speech, ECB President Lagarde emphasized that inflation is expected to remain high for an extended period, economic growth will face pressure, and interest rates will stay in the tightening zone as needed.

*In the United States, the Producer Price Index (PPI) for August exceeded expectations, with a 0.7% monthly increase and a 1.6% annual increase. Core PPI increased by 0.7% monthly and remained at 2.2% annually. Additionally, Weekly Unemployment Claims increased by 220 thousand people, while Retail Sales rose by 0.6% monthly and 2.47% annually. As a result, the likelihood that the Federal Reserve (FED) will not raise interest rates at its upcoming meeting increased from 96% to 97%.

Agenda of the Day;
17:30 (GMT+3) US Natural Gas Stocks
19:00 (GMT+3) Speech by ECB Member Enria