General Daily Market Recap – August 21, 2024

Just when it looked like the Greenback was in recovery mode, it spent another day in the red thanks to a few major catalysts.

How did the rest of the markets fare?

Here are the headlines and economic updates you need to know:

Titles:

• Japan’s July trade deficit narrowed from 0.82T JPY to 0.76T JPY versus an expected deficit of 0.72T JPY as exports rose 10.3% y/y while imports rose 16, 6%
• Australia’s leading MI index posted another flat reading in July
• New Zealand credit card spending in July: -3.8% y/y (-3.1% previously)
• UK public sector net borrowing in July: £2.2bn (£0.5bn estimate, previous reading revised from £13.6bn to £12.6bn)
• Canada’s industrial product price index was flat in July (-0.3% est., -0.1% previous), raw material price index showed a rebound of 0.7% m/m (-0.7% estimate, -1.7% previously)
• EIA crude oil inventories: -4.6 million barrels (-2.0 million est., +1.4 million previous)
• US NFP Annual Review for the year ending March 2024: -818K (-185K estimated) as the professional and business services sector saw a reduction of 385K
• FOMC minutes for the July 30-31 meeting revealed that the “vast majority” of policymakers agreed that it would “probably be appropriate” to cut in September

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, US 10-Year Yield, Bitcoin Overlay Chart by TradingView

Major asset classes remained tight in their range during Asian market hours as investors were likely biting their nails ahead of the release of the FOMC meeting minutes. Volatility rose around the start of the London session, particularly for gold and crude oil.

While the energy commodity was able to take some gains from a larger-than-expected cut in EIA crude inventories, it eventually resumed its decline after the US Bureau of Labor Statistics released its annual NFP revisions for the year ending March 2024.

As it turned out, employment gains for the period were downgraded by 818,000, a monthly increase of 174,000 jobs from the previously reported average of 246,000. Rumors of these revisions were already circulating minutes before the actual numbers were printed, leading to heavy price action for stock indexes and Treasury yields.

July’s FOMC minutes allowed crude oil and U.S. bond yields to take a break from their slide as the document showed most Fed policymakers are leaning toward tapering in September.

Currency Market Behavior: US Dollar vs. Majors:

USD chart overlay against major currencies by TradingView

The dollar appeared to start the day in recovery mode, especially against the Japanese yen, as it fell, then recovered against the franc and kiwi, while gradually rising against most of its peers except the Canadian dollar.

USD/CAD edged lower on higher crude oil prices, followed by stronger-than-expected Canadian core inflation data and a bigger-than-expected decline in EIA inventories.

USD/JPY also stopped climbing after testing the 146.00 handle, then extended its decline when the annual US NFP revisions were released. The dollar was weaker against the rest of its peers as well, after posting its biggest annual payrolls cut since 2009.

While the minutes of the FOMC meeting caused further losses for the US currency on further confirmation that a September tapering is likely, the greenback managed to pull back before the end of the session in New York, ending with only marginal losses against of the yen, Australian and kiwi.

Future potential catalysts for the economic calendar:

• Japanese manufacturing PMI flash at 12:30 GMT
• French manufacturing and services PMI at 7:15 GMT
• German manufacturing and services PMI at 7:30 GMT

• Eurozone manufacturing and services PMI at 8:00 GMT

• UK manufacturing and services PMI at 8:30 GMT
• UK CBI industrial orders expectations at 10:00 GMT
• Accounts of the ECB monetary policy meeting at 11:30 GMT
• US manufacturing and services PMI at 13:45 GMT
• US Consumer Confidence Index at 14:00 GMT
• New Zealand Retail Sales at 22:45 GMT
• Japanese national core CPI at 23:30 GMT
• The Jackson Hole Symposium will begin

It’s PMI day, ladies and gentlemen!

Market focus could return to global growth concerns as major economies are set to print their manufacturing and services PMI survey results throughout the day. Keep an eye out for potential swings in overall risk sentiment as these numbers could either ease or fuel recession fears!