General Daily Market Summary – September 19, 2024

It was another busy day as traders digested the Fed’s latest rate cut, the BOE’s decision to hold off, better-than-expected US data and developing stories in the Middle East.

Which assets benefited from Thursday’s headlines?

We discuss them below!

Titles:

• GDP of New Zealand contracted 0.2% in Q2 2024 (-0.4% forecast, previous reading fell from 0.2% to 0.1%)
• August labor market data from Australia showed strength despite high interest rates
• Trade surplus Switzerland eased from CHF 4.1 billion to CHF 3.9 billion in August, the lowest since April, as exports (-1.2% l/m) fell faster than imports (-0.1% l/m it)
• SECO continues to predict 1.2% Swiss GDP growth in 2024, unchanged from June
• Current account of the euro area surplus narrowed from €50.5 billion to €39.6 billion (€40.3 est.) in July
• BOE kept rates at 5.00% and emphasized his “gradual” approach to relief
• Member of the ECB and President of the Bundesbank Joachim Nagel urged patience and said the central bank’s stance “needs to remain sufficiently tight for sufficient time” to achieve its inflation target
• Initial US Jobless Claims fell from 231K to 219K (230K expected) in the week ending September 14
• Philadelphia Fed Manufacturing Index rose from -7.0 to 1.7 (-0.8 est.) in September; The employment index increased from -5.7 to 10.7; Prices rose to 34.0, the highest since December 2022
• US current account deficit widened from $241 billion to $267 billion ($259 billion expected) in Q2 2024, mainly due to a widening goods deficit
• Sales of existing homes in the US fell from 3.96 million to 3.86 million (3.92 million expected) in August
• US Conference Board Leader Index it improved from -0.6% to -0.2% (-0.3% expected) in August
• Japan’s national core CPI rose from 2.7% to 2.8% y/y in August, as expected
• The PBOC kept the 5-year and 1-year lending rates unchanged in September, dashing hopes for imminent monetary policy support

Broad Market Price Action:

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

Thursday’s session in Asia began with a 50bp rate cut by the Fed, fueling interest in “risky” assets. US stock futures rose and Bitcoin (BTC/USD) broke above $62,000. The Fed’s move initially supported the US dollar, sending spot gold lower ahead of the Hong Kong market open.

But the dollar lost momentum after strong Australian jobs data and a risk-on mood prevailed. US 10-year yields and the dollar index fell, while WTI crude oil, gold and US stock futures gained through the European session.

Gold found additional support due to rising tensions in the Middle East over the explosion of Hezbollah devices, and crude oil prices received an additional boost from the decline in EIA oil inventories.

In the US session, the dollar bounced back briefly on strong initial jobless claims and a solid Philly Fed report, with US 10-year yields hitting 3.77% and gold retreating from highs of $2,590.

However, the dollar’s gains were short-lived as traders returned to riskier assets. Bitcoin ended the day near $63,000, WTI crude remained around $71.00, and the Dow and S&P 500 closed at new highs.

Currency Market Behavior: US Dollar vs. Major:

USD chart overlay against major currencies by TradingView

The US dollar had a wild ride on Thursday, starting with broad gains following a bigger-than-expected interest rate cut by the Fed, which was seen as positive for the US economy.

However, the greenback quickly reversed course after the Hong Kong open as stronger-than-expected New Zealand GDP and Australian jobs data sparked a risk-friendly, anti-USD mood during the Asian session . The dollar saw a steady decline that persisted into the London session.

In Europe, traders were more supportive of the greenback, with positive mid-level reports from the US helping to trigger a bullish pullback. The dollar briefly lost ground against the British pound after a not so dovish BOE decision, with GBP/USD hitting levels not seen since March 2022 before retreating.

By the end of the session in London, the greenback faced renewed selling pressure, capping the day just above its intraday lows against most major peers.

The dollar’s biggest losses were against risk-sensitive currencies such as the AUD, NZD and GBP, but it maintained gains against the JPY and CHF. In particular, USD/JPY, after being rejected twice in the 143.75 area, extended its decline to 142.55.

Future potential catalysts for the economic calendar:

• German PPI reports at 6:00 GMT
• UK retail sales data at 6:00 GMT
• UK Public Borrowing at 6:00 GMT
• BOE MPC member Catherine Mann will give a speech at 9:00 GMT
• BOC Governor Tiff Macklem will deliver a speech at 12:15 GMT
• Canadian retail sales data at 12:30 GMT
• Euro zone consumer confidence at 14:00 GMT
• ECB President Lagarde will give a speech at 15:00 GMT

Sterling could see some volatility as UK retail sales and government borrowing data drop, plus a speech from the BOE’s Catherine Mann.

Later, Bank of Canada Governor Macklem speaks just ahead of July’s Canadian retail sales report, which could show stronger numbers than June. Meanwhile, ECB President Lagarde will be in the spotlight with a central bank speech in DC

Stay tuned with GBP, CAD and EUR trades and watch for any changes in overall market sentiment!

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