General Daily Market Recap – September 11, 2024

Major assets were all over the place on Wednesday as traders weighed Fed rate cut bias, US political updates and headline reports from the UK and US

In FX, a hotter-than-expected US core CPI helped the greenback recover some of its intraday losses, but capped gains against risk-on currencies.

Which titles dominated the markets yesterday? Let’s discuss the top ones:

Titles:

• The US Presidential Debates led to a US dollar ‘Trump trade’ reversal, bond yields and bitcoin trading lower
• Junko Nakagawa, BOJ member said the Bank would continue to raise rates “if our economic and price forecasts are met” and warned that wage growth was ahead of expectations and inflation was ahead of their target
• Britain’s economic growth Stagnant in July 2024
• A US Core Inflation Hotter The odds of a 50 bps Fed rate cut have been reduced
• EIA: US crude oil stocks rose 0.8 million barrels from the 6.9 million barrels expected and a 0.9 million barrel increase expected in the week ending Sept. 6

Broad Market Price Action:

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

Markets were fairly quiet at the start of the day, with major assets trading in tight ranges, but that changed after the US presidential debate. The odds of a Harris win rose, and that weighed on U.S. 10-year yields, stock futures and the dollar as traders saw less chance of tariff hikes or higher government spending under the Trump administration.

Things took a turn during the European session, with risk assets retreating – likely on the back of some profit-taking after earlier declines in Asia. WTI crude rose from $66.00 to $67.50, gold fell from record highs and bitcoin came off its intraday lows.

In the US, all eyes were on the CPI report. While annual inflation fell to multi-month lows, the core value dampened expectations for a 50 basis point rate cut by the Fed.

The dollar and 10-year yields initially rose after the report, but risk appetite quickly returned. Gold recovered from $2,502 to close near $2,512, bitcoin revised weekly highs and US stock indexes ended the day in the green.

Currency Market Behavior: US Dollar vs. Major:

USD chart overlay against major currencies by TradingView

The dollar started weak as the US presidential debate reduced the chances of a Trump victory, lowering expectations for more government spending and higher tariffs.

USD/JPY faced further downward pressure after Bank of Japan (BOJ) official Junko Nakagawa backed further interest rate hikes. But the greenback found some relief during the European session, likely due to reversals of previous positions by traders ahead of the US CPI reports.

US inflation showed weaker annual numbers, but rising core inflation cooled some expectations of a 50 basis point rate cut.

The dollar rose briefly after the report, but a risk-on mood led to mixed results. It extended gains against safe havens like the Swiss franc and Japanese yen, but lost ground against risk currencies like the British pound, Australian dollar, kiwi and Canadian dollar.

Future potential catalysts for the economic calendar:

• German wholesale prices at 6:00 GMT
• Quarterly unemployment rate in Italy at 8:00 GMT
• ECB policy statement at 12:15 GMT, presser at 12:45 GMT
• Canadian Building Permits at 12:30 GMT
• US PPI reports at 12:30 pm GMT
• SNB President Jordan will deliver a speech at 14:25 GMT
• US Fed budget balance at 18:00 GMT
• BusinessNZ manufacturing index at 22:30 GMT

Markets will have another big day as the European Central Bank (ECB) unwinds its September policies. President Lagarde and her team are said to be likely to cut interest rates in the Eurozone, so don’t even think about missing the announcement!

In the US, producer price updates can support or weaken the themes set by consumer inflation readings. Warmer-than-expected prints would point to a 25bp Fed rate cut next week and likely push the greenback higher against safe havens but lower against risk-on currencies.

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