The capital markets are currently experiencing significant fluctuations. The yen's powerful short-covering rally and the unwinding of carry trades are ongoing, leading to considerable market movements.
For the second time this week, the People's Bank of China (PBOC) has unexpectedly cut interest rates. This has contributed to a broad decline in equities, following sharp losses in the US markets yesterday.
Concurrently, gold is extending its retreat after setting a record high near $2,484 last week, now trading approximately $110 lower. Nearby support for gold is seen around $2,350.
September WTI crude oil is also under pressure, having approached $76 earlier today, its lowest level since early June.

Asia Pacific Markets
The yen's surge continues to dominate the Asia Pacific markets. Initially triggered by covert intervention, the yen's rally has gained independent momentum. In the last six weeks of 2023, the dollar fell nearly 7.7% against the yen. Over the past three weeks, it has declined about 6.1% against the yen. The unwinding of long Australian dollar positions against both the US dollar and the yen pushed the exchange rate to slightly below $0.6580 yesterday and nearly $0.6525 today, meeting the 61.8% retracement of the rally from the year's low in mid-April near $0.6365. The Australian dollar is now below its 200-day moving average for the first time since early May.

European Markets
In Europe, the markets are reacting to disappointing economic data. Following a lackluster July PMI report, Germany's IFO index revealed a further decline in investor confidence today. The business climate measure fell to 87.0 from 88.6, marking the third consecutive decline and the weakest reading since February. Both current assessments and future expectations have deteriorated. Next week, the eurozone will report Q2 GDP.
Currently, the euro is trading within yesterday's range, with movements in the $1.0875-$1.0900 area potentially crucial for the near-term technical outlook.
The British pound made a marginal new low today near $1.2875, meeting the 38.2% retracement objective of the rally from the June 2 low of approximately $1.2615.

American Markets
In the US, today's highlight is the first estimate of Q2 GDP. The Atlanta Fed's GDP tracker slipped to 2.5% from 2.7% in its latest iteration yesterday, while the median forecast in Bloomberg's survey stands at 2.0% (with a range of 1.2% to 3.0%). Bloomberg's monthly survey indicates a median forecast for Q3 and Q4 GDP slowing to 1.5%. Weekly jobless claims may also draw attention today.
Meanwhile, the Bank of Canada delivered a widely expected quarter-point rate cut. Following this dovish move, the greenback has extended its gains, approaching CAD 1.3840 today.