General Daily Market Recap – October 9, 2024

A lack of fresh market catalysts kept major assets in ranges early in the day, before central bank speculation and positioning ahead of US CPI reports saw volatility spike in the US session.

Which assets had the most action?

We discuss yesterday’s market headlines and price reactions!

Titles:

• RBNZ cuts interest rates by 50 bps, further easing signals
• Machine tool preliminary orders in Japan fell 6.5% y/y in September (-3.5% previously)
• German trade surplus expanded from 16.9 billion to 22.5 billion in July (18.9 billion forecast) as exports rose 1.3% and imports fell 3.4%
• EIA crude oil inventories rose 5.8 million barrels (2.0 million estimate, 3.9 million forecast)
• US federal prosecutors have charged crypto firms Gotbit, ZM Quant, CLS Global and 15 individuals with widespread fraud and market manipulation
• Seized cryptos linked to the PlusToken ponzi scheme have been moved to exchanges, raising concerns about a potential sale
• Minutes from the FOMC’s September meeting showed members considered a 25bp cut, rejecting a default policy path
• Collins, voting member of the FOMC said a 0.50% cut was prudent given the risks, adds further adjustments likely needed
• FOMC Voting Member, Daly says one or two more cuts likely this year, shares labor market concerns

Broad Market Price Action:

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

With no fresh catalysts, major assets remained range-bound during the Asian session. Chinese shares lost steam as gains from stimulus announcements faded, while both Asian and European shares rose on lack of escalation in Middle East tensions and hopes for May lots of stimulus from china on saturday.

Traders turned their attention to central banks as members of the ECB and FOMC signaled a more gradual pace of easing. Minutes of the FOMC meeting showed that a “substantial majority” supported a 50bp rate cut in September, with some favoring a smaller cut. The larger tapering was not due to economic concerns and the Fed rejected a fixed path, which helped lift US stocks.

The Dow and S&P 500 hit record highs, US 10-year Treasury yields hit 4.07% and the dollar posted broad gains. Gold fell to weekly lows of nearly $2,608 and bitcoin fell to $60,400, possibly due to fraud allegations against three crypto companies, before recovering to $60,700.

US crude oil prices fell below $72.00, weighed down by easing concerns in the Middle East and a surprise rise in US oil inventories, before settling below $73.50.

Currency Market Behavior: US Dollar vs. Majors:

USD chart overlay against major currencies by TradingView

The US dollar started the day as a counter, gaining against the Kiwi after the RBNZ’s “dovish cut”, but giving up some pips to both the Aussie and Kiwi when China’s Finance Ministry announced a briefing on Saturday, raising hopes for May many tax incentives.

With no major data released, the dollar remained limited in early European trading. Attention then turned to setting expectations for a Fed rate cut, and traders positioned themselves ahead of the US CPI and PPI reports.

Dollar gains lost steam after London markets closed, but the greenback held on to gains as the FOMC minutes emphasized that the Fed is not following a set path.

Future potential catalysts for the economic calendar:

• US CPI reports at 12:30 GMT
• US Initial Jobless Claims at 12:30 GMT
• FOMC member Cook will deliver a speech at 13:15 GMT
• FOMC member Barkin will deliver a speech at 14:30 GMT
• FOMC member Williams will deliver a speech at 15:00 GMT
• SNB member Antoine Martin will give a speech at 15:30 GMT
• BusinessNZ manufacturing index at 21:30 GMT

The US will continue to grab the market’s attention, this time with September inflation data and a few more speeches from FOMC members. Don’t sleep on weekly jobless claims and scheduled FOMC members’ speeches, as they could also influence expectations for future Fed rate cuts.

Keep your eyes glued to the tube, especially if you are trading the US Dollar in the following trading sessions!

Don’t forget to check out our new Forex Correlation Calculator!