General Daily Market Recap – August 22, 2024

Profit-taking was the name of the game on Thursday as major assets reversed their intraweek trends ahead of Powell’s keynote speech on Friday.

Spot gold and the S&P 500 index continued to trade lower near record highs, while US bond yields and the US dollar rallied despite a mixed US data release.

What themes dominated the markets and how did your favorite assets trade?

Titles:

• Judo Bank Flash Australian manufacturing PMI rose from 47.5 to a three-month high of 48.7 in August; The services PMI jumped from 50.4 to a three-month high of 52.2
• have Jibun Bank Flash Manufacturing PMI in Japan from 49.1 to 49.5 in August; Employment growth has slowed; Selling price inflation fell to its lowest level since November
• HCOB Flash Manufacturing PMI in France fell from 44.0 to an eight-month low of 42.1 in August; The services PMI rose from 50.1 to a 27-month high of 55.0
• HCOB Flash Manufacturing PMI in Germany fell from 43.2 to a five-month low of 42.1 in August; Services PMI expanded at a weaker pace, falling from 52.5 to 51.4
• HCOB Flash Manufacturing PMI in the Eurozone fell from 45.8 to an eight-month low of 45.6 in August; The services PMI rose from 51.9 to a four-month high of 53.3
• S&P Global UK PMI showed solid private sector expansion in August
• Minutes of the ECB meeting noted September as a “good time to reassess” monetary policies with an “open mind”
• Initial US Jobless Claims week ending August 17: 232K as expected (228K previously)
• S&P Global Flash US manufacturing PMI fell from 49.6 to an eight-month low of 48.0 in August; The services PMI improved from 55.0 to a two-month high of 55.2
• Sales of existing homes in the US for July: 3.95 million (3.94 million expected, 3.90 million previously)
• New Zealand Retail for Q2 2024: -1.2% q/q (-1.0% estimated, 0.4% previously); Core retail sales at -1.0% q/q (-0.8% expected, 0.3% previous)
• GfK UK Consumer Trust remained at -13 (-12 expected) in August as confidence improved but economic expectations fell for the first time since February
• Japan’s national core CPI accelerated from 2.6% y/y to 2.7% y/y, in line with expectations in July

Broad Market Price Action:

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

FOMC meeting minutes hinting at a possible interest rate cut in September didn’t exactly give bitcoin (BTC/USD) or crude oil a boost Thursday morning. Bitcoin struggled after hitting a level of technical resistance, while crude oil continued its decline from the previous session.

Most other major assets remained fairly calm at the start of the day, with global PMI reports the main focus. The data was mixed, but outside of the UK launch, it didn’t move the needle much for the major markets.

U.S. 10-year bond yields started to rise in the first European session, likely as investors shied away from U.S. bonds ahead of Powell’s big speech on Friday.

The cautious mood carried over into the US session, where the data was also a mixed bag. Initial jobless claims came in higher than expected, but the US services PMI surprised higher. All in all, the labor market appears to be cooling, but it’s still hot enough to keep the Fed on its toes.

Bitcoin fell to $60,200, the S&P 500 took a sharp turn lower after nearing mid-July highs, and gold extended its retreat after hitting new record highs earlier this week. WTI crude bucked the trend, jumping from $71.60 to $73.45, possibly due to short covering and optimism around a Fed rate cut.

Currency Market Behavior: US Dollar vs. Majors:

USD chart overlay against major currencies by TradingView

The US dollar took a break from weekly losses, rallying in what looked like a round of profit-taking that boosted demand for dollars.

Traders in the Asian session followed the lead from the previous US session, pushing the greenback higher despite the release of the FOMC meeting minutes. However, as the European session drew to a close, the dollar gave back some gains as traders awaited European PMI reports.

As expected, French private sector PMIs received a boost from the Summer Olympics in Paris. Meanwhile, German PMIs came in much weaker than expected, but talk that an interest rate cut by the European Central Bank (ECB) was already ripe helped limit the euro’s losses after the reports.

The focus then shifted to US data during the US session. Initial weekly jobless claims came in higher than expected, but new home sales improved and the S&P Global Services PMI showed a faster-than-expected expansion.

With Uncle Sam’s job market looking relatively strong, speculation grew that Powell might deliver a keynote speech on Friday. That speculation, combined with the profit-taking environment, helped push the greenback to close the day above opening levels.

Future potential catalysts for the economic calendar:

• BOJ Governor Ueda will give a speech at 4:00 GMT
• FOMC member Raphael Bostic will deliver a speech at 12:00 GMT
• Canadian Retail Sales at 12:30 GMT
• Canadian quarterly corporate earnings at 12:30 GMT
• Fed Chairman Powell will deliver his keynote address in Jackson Hole at 14:00 GMT
• US New Home Sales at 2:00 pm GMT
• BOE Governor Andrew Bailey will deliver a speech at 15:00 GMT
• FOMC member Austan Goolsbee will deliver speeches at 16:30, 17:45 and 18:15 GMT

Central bankers will take center stage as the Jackson Hole symposium heats up. JPow’s keynote will be the main attraction, although speeches by BOE Governor Bailey and FOMC members Bostic and Goolsbee could also inspire reassessments of interest rate biases.

Meanwhile, Canada will release its June retail sales data, where we could see slightly slower declines in retail activity compared to May.

Don’t miss these potential last-minute catalysts that can affect your weekly trades!