Eurozone CPI drops ahead of ECB meeting, as ASML helps allay tech fears

• ECB in focus after surprise CPI decline
• TSMC earnings expected to lift tech-heavy Nasdaq
• Gold hits record high as it continues to ignore dollar strength

Mainland European markets are playing catch up on the FTSE 100 this morning, following yesterday’s session that saw a welcome slump in UK CPI. Instead, today looks to be dominated by the ECB’s interest rate decision, with markets viewing a 25-basis point cut as largely a foregone conclusion. This morning has seen eurozone inflation revised down to 1.7%, in a surprise move that sees CPI for the region match the September metric released in the UK yesterday.

Despite the widespread confidence that we will see the likes of the ECB, FOMC, and BoE all slash rates in the coming months, the ongoing recovery for the dollar highlights an element of underlying concern amid a trio of risks from the Middle East, US earnings, and election. With the ECB expected to ease, it should come as no surprise to see EURUSD under pressure once again today, with the pair falling into a fresh two-month low.

Early earnings from semiconductor manufacturing giant TSMC has allayed fears over a potential slowdown in demand for chips signalled by Tuesday’s dour ASML data. The ongoing strength seen for semiconductors helped lift the earnings and forecasts for the Taiwanese supplier to Mag7 names Apple and Nvidia, with the TSMC CEO noting that if Nvidia state that demand is ‘insane’ then it is more likely to be the beginning rather than the end for this huge semiconductor boom. The strength of ASML’s numbers does help allay recent tech jitters, with the Nasdaq on track for a strong open. Coming in a week that saw Nvidia shares slump 6% a day after surging to a record high, today looks to cast those fears aside and see the AI giant push back towards a fresh high once again.

The ongoing strength seen for the US dollar has done little to dampen demand for gold, with the precious metal striking a fresh record high in early trade today. Notably, we have seen any correlation between gold and the dollar or US treasury yields fail as the precious metal pushes higher irrespective of the market environment. In part this appears to be driven by substantial stockpiling from central banks, with China and Russia in particular providing a huge source of demand.