General Daily Market Recap – September 12, 2024

It was a risky day for financial markets as crude oil closed up nearly 3% while gold hit new highs.

US equity traders also cheered as the S&P and Nasdaq marked their fourth straight day in the green.

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• Japan producer price index slowed from 3.0% year-on-year in July to 2.5% in August versus the forecast of 2.8%
• Japan’s BSI manufacturing index improved from -1.0 to +4.5 versus the forecast of +2.5 in August
• Australian inflation expectations for August fell from 4.5% to 4.4% over the next 12 months
• The ECB cut its main deposit rate by 0.25%, in line with expectationsdowngraded growth forecasts while improving estimates for core inflation
• During press time, ECB chief Lagarde emphasized their data-driven approachsaid it was looking at a broad range of inflation indicators and intended to keep rates “fairly tight”
• Canadian building permits rose 22.1% month-over-month in July, versus forecasts of 6.5%, the previous reading rose from -13.9% to -13.0%
• The IEA cut its demand growth forecast for 2024 on top of weaker Chinese and global demand
• Crude oil prices are rising as Hurricane Francine weighs on production along the Gulf of Mexico
• US title PPI rose 0.2% m/l in August (0.1% expected, previous figure downgraded to flat reading); Core PPI rose 0.3% m/m (0.2% expected, previous reading fell from 0.0% to -0.2%)
• Initial US Jobless Claims for week ending September 6: 230K (227K est., 228K previous)
• Oracle shares rose to record highs on AI demand estimates, extending post-earnings rally; Tech giants (Nvidia, Metal and Alphabet) rose around 2%

Broad Market Price Action:

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

Most asset classes got off to a sluggish start, with the exception of bitcoin and crude oil, which started the day in rally mode.

The energy commodity was strongly supported by resurgent supply concerns as Hurricane Francine disrupted more than 40% of production operations along the US Gulf of Mexico, dropping the IEA’s downbeat forecasts for global demand.

Meanwhile, U.S. stock futures moved mostly sideways during the first two trading sessions, but remained in the green throughout the day. Stronger-than-expected US PPI numbers led to a slight decline, but growth in the technology sector led by companies such as Oracle, Nvidia and Meta allowed the indices to record their fourth consecutive day in positive territory.

Gold prices also rose sharply, hitting new all-time highs at $2,556.86 an ounce, likely supported by hopes of a Fed rate cut in September, as FOMC officials could still debate between a 0.25% cut or 0.50% of US borrowing costs.

Currency Market Behavior: US Dollar vs. Major:

USD chart overlay against major currencies by TradingView

Volatility was already in play for the dollar pair early on as traders likely continued to adjust positions following the previous session’s US CPI release.

USD/JPY started the day off with a strong rally and continued to remain in the green through London market hours, before taking a lower turn during the US session. AUD/USD and NZD/USD also grabbed some risk-on gains during the Tokyo session, but pulled back from those rallies before gaining momentum for the rest of the day.

The ECB decided to cut borrowing costs by 0.25% as expected, while downgrading growth forecasts, but this dovish announcement did not derail EUR/USD from its ongoing rally. After all, the central bank also made slight improvements to its core inflation estimates, while ECB chief Lagarde reiterated her data-driven approach.

The stronger-than-expected headline and core PPIs from the US economy could not save the dollar from selling, although USD/JPY and USD/CHF still struggled before finally succumbing to dollar weakness.

USD/CAD still managed to stay in positive territory, perhaps as the Bank of Canada’s (BOC) inclination for more easing prevented the Canadian currency from taking advantage of rising crude oil and risk appetite.

Future potential catalysts for the economic calendar:

• Euro zone industrial production at 9:00 GMT
• Canadian wholesale sales and capacity utilization rate at 12:30 GMT
• US import prices at 12:30 GMT
• Preliminary US UoM Consumer Sentiment Index at 2:00 pm GMT
• Chinese industrial production, retail sales and fixed asset investment at 2:00 GMT (September 14)

Markets could get off to a quiet start due to lack of data flow towards the end of the week, but Preliminary US UoM Consumer Sentiment Index aka the leading spending indicator could still trigger big moves between dollar pairs and the stock market.

Be sure to keep an eye on China’s data download over the weekend as these numbers could affect market sentiment early next week.

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