General Daily Market Recap – September 25, 2024

The lack of fresh catalysts drew pullbacks and potential profit-taking among major assets on Wednesday.

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Titles:

• Inflation in Australia is generally lower but still high in August
• BOJ core CPI remained at 1.8% y/y as expected in August
• Switzerland UBS Economic Expectations it fell from -3.4 to -8.8 in August
• Megan Greene, BOE member favors a “gradual” approach to rate cuts as services inflation remains high and upside risks point to a higher long-term neutral rate
• China CB Leading Economic Index fell 0.2% m/m in August after a steady increase in July; “Headwinds to growth remain but have not worsened”
• US New Home Sales for August: 716K (expected 699K, previously 751K)
• EIA crude oil stocks fell 4.5 million barrels in the week ended September 20 (expected to draw 1.3 million barrels, down 1.6 million barrels previously)
• Adriana Kugler, FOMC voting member “strongly supported” a 50bp rate cut in September and favors further cuts as the Fed rebalances its focus from inflation to growth
• PBOC reduced interest rates on the one-year Medium Term Lending Facility (MLF) from 2.3% to 2.0%
• Minutes of the July BOJ meeting showed that at least two of the nine members saw the possibility of raising interest rates further

Broad Market Price Action:

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

The day started fairly flat, with Asian traders still digesting China’s latest monetary policy moves.

Volatility rose in the London session as markets doubted whether China’s monetary changes would have much of an impact without serious fiscal stimulus. In addition, reports that Israel is preparing for a ground invasion of Lebanon are likely to dampen the sense of risk.

Meanwhile, investors already worried about weak US consumer confidence data and disappointing European PMIs appeared to use record asset prices as a chance to lock in profits before the end of the quarter.

US stocks ended the day mixed. The Nasdaq hit fresh two-month highs, while the Dow finished in the red. Bitcoin (BTC/USD) could not break past its monthly highs, sliding from $64,800 to $63,200. Gold held steady just below yesterday’s close and US crude prices fell from $71.50 to $69.75.

US 10-year bond yields found support on concerns about global growth and pulling back from yesterday’s declines. Yields rose from a daily low of 3.73% and closed at 3.79%.

Currency Market Behavior: US Dollar vs. Majors:

USD Overlay vs. Major Currencies Chart by TradingView

A combination of worries about global growth and profit-taking helped some of the U.S. dollar’s earlier losses on Wednesday.

The greenback posted modest gains during the Asian session after a decline in the previous session in the US. However, demand for the safe-haven dollar increased in the London session as traders became more concerned about growth prospects in the US, Europe and China.

By the start of the US session, the dollar found fresh bullish momentum – likely as traders closed USD short positions ahead of Thursday’s initial jobless claims report and FOMC members’ speeches and Friday’s PCE price index data basic in the US.

The dollar gave up some of those gains after FOMC member Kugler expressed support for more rate cuts. However, the currency ended the day stronger than most of its major peers.

Future potential catalysts for the economic calendar:

• German GfK Consumer Climate at 6:00 GMT
• SNB policy decision at 7:30 GMT, tap to follow at 8:00 GMT
• ECB economic bulletin at 8:00 GMT
• Final US GDP and GDP Price Index at 12:30 GMT
• US Initial Jobless Claims at 12:30 GMT
• US main durable goods orders at 12:30 GMT
• A host of FOMC voting members, including Collins, Kugler, Bowman, Williams, Barr, Cook and Chairman Powell will deliver speeches starting at 13:10 GMT.
• ECB President Lagarde will give a speech at 13:30 GMT
• US pending home sales at 14:00 GMT
• US Treasury Secretary Yellen will deliver a speech at 15:15 GMT
• Core CPI in Tokyo at 23:30 GMT

Central bankers will remain in the spotlight today, starting with the SNB dropping its September policy decision during the European session.

Later, a number of voting FOMC members (including JPow) will defend their decision to cut interest rates by 50 basis points. ECB President Lagarde will also give an opening speech, which could move EUR pairs.

Meanwhile, later-scheduled US mid-level data releases could either support or counter US growth concerns and weigh on overall risk-taking.

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