General Daily Market Recap – August 8, 2024

Markets took a step back from pricing in their recession fears, leading to gains for many major assets on Thursday.

What headlines helped drive market sentiment yesterday?

We break them down for you:

Titles:

• RICS: A measure of UK house prices are rising it reached -19% in July, more negative than the -17% reading in June
• Japan’s bank lending rate held steady at 3.2% y/y in July, as expected
• Summary of BOJ views showed that members discussed further interest rate hikes and painted a picture of a more dovish central bank bias
• Japan’s current account surplus fell from JPY 2.41M to JPY 1.78M (2.34M surplus expected) in June
• In a speech, RBA Governor Bullock said the central bank “will not hesitate to raise rates if necessary“
• Fortified Kiwi as New Zealand Jobs Quarterly Report surprised up
• Economic sentiment in Japan improved from 47.0 to 47.5 in July
• Initial weekly US jobless claims fell from 250,000 to 233,000 (241,000 expected) in the week ended August 3
• Tom Barkin, FOMC Voting Member said elements of inflation “appear to be stabilizing” but that the Fed has “some time” to figure out its policy path

Broad Market Price Action:

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

With not many major data releases or game-changing news, financial markets moved in wide ranges during the early Asian and European sessions.

Bitcoin (BTC/USD) had a bit of a wild run, breaching the $56,000 support level and sparking an intraday uptrend that pushed the initial crypto close to $63,000 by the end of the day. Meanwhile, WTI oil prices had a solid day, finding support around $74.75 during the European session – likely due to growing concerns about tensions in the Middle East.

Mood turned more positive during the US session after the latest weekly initial jobless claims report showed a 17,000 drop from the previous week. The data highlighted the strength of the US labor market, prompting some traders to start pricing in a slowdown rather than an outright recession.

This upbeat news from the labor market helped push 10-year US Treasury yields higher and sent US stocks higher. The S&P 500 climbed to new weekly highs, marking its strongest day since November 2022, while US 10-year yields rose from 3.89% to 4.02%.

Currency Market Behavior: US Dollar vs. Majors:

USD chart overlay against major currencies by TradingView

The US dollar had a mixed start to the day, reacting to some volatility in the JPY after the Bank of Japan released a summary of views.

The USD also gave up pips against the AUD. See Reserve Bank of Australia (RBA) Governor Bullock dismissed calls for a rate cut, saying she does not expect inflation to return to the target range until late 2025. She also stressed that “they will not hesitate to raise rates’ if necessary. Yes!

The greenback didn’t make any major moves until the US session kicked off with the initial jobless claims report. Signs of continued strengthening in the US labor market helped the dollar recover some losses against other safe-haven currencies such as the CHF and JPY. However, the more risk-friendly environment that followed hurt the dollar against “riskier” currencies such as AUD, NZD, CAD and GBP.

Future potential catalysts for the economic calendar:

• Final Germany CPI at 6:00 GMT
• SECO consumer climate in Switzerland at 7:00 GMT
• Italy’s trade balance at 9:00 GMT
• Canadian labor market data at 12:30 GMT

The euro and Canadian dollar could get more attention in the next few hours as Germany releases its final CPI reading during the European session and Canada releases its July employment data during the US session.

Canada’s job market numbers can influence Bank of Canada (BOC) biases, so make sure you’re glued to the tube during the release if you don’t want to miss any changes in CAD appetite!