General Daily Market Recap – October 7, 2024

No big data? No problem!

Markets started the week at a high after Friday’s NFP report, but it wasn’t long before concerns over Middle East tensions, chances of a Fed rate cut and upcoming US CPI and PPI data weighed on assets risk.

Here’s how the individual assets performed:

Titles:

• Japan’s foremost currency diplomat Atsushi Mimura said they would monitor currency movements, including speculative trading “with a sense of urgency”
• factory orders from Germany fell 5.8% m/m in August (-1.9% expected, 3.9% previously)
• House price in Halifax UK index for September: 0.3% m/m (0.2% expected, 0.3% previous)
• Hezbollah fired rockets into Israel’s third largest city, Haifa
• Sentix Investor Confidence in the Eurozone index improved from -15.4 to -13.8 (-14.6 expected) in October
• Retail sales in the euro area accelerated from 0.0% m/m to 0.2% m/m as expected in August
• Conference Board US Employment Trends Index fell from 109.54 to 108.48 in September, suggesting slower hiring
• Non-voting FOMC member Alberto Musalem such subsequent gradual reductions are “appropriate” but do not have a predetermined size or schedule for future adjustments
• Non-voting FOMC member Kashkari sees the neutral Fed funds rate at 3%, the balance of risks has shifted to unemployment

Broad Market Price Action:

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

With no major catalysts, volatility remained low across most assets early in the week. Bitcoin (BTC/USD) stood out, breaking Friday’s highs and pushing towards $64,000 as the ‘Uptober’ buzz among HODLers gained momentum.

Things got more interesting as the European session began, with news of Hezbollah rockets hitting Haifa, Israel’s third-largest city, and talk of expanding Israel’s offensive in Lebanon. Risk appetite took another hit with a weaker-than-expected report from Germany.

WTI crude saw some action during the European and US sessions, climbing steadily to close just below $77.50 at its intraday high.

In the US, attention turned to the diminishing chances of aggressive Fed rate cuts after Friday’s solid NFP report. The CME FedWatch tool now shows 25 bps cuts expected in both November and December, but the odds of no change in November have risen to 12.7%.

Less dovish Fed talk pushed 10-year US Treasury yields above 4.00% for the first time since August. Meanwhile, the US dollar index held strong near its post-NFP highs, while gold – often seen as an alternative to the greenback – fell, closing near intraday lows of $2,642. US stock indexes were also hit, dragged down by uncertainty over bank earnings and the upcoming CPI and PPI reports, ending the day in the red.

Currency Market Behavior: US Dollar vs. Majors:

USD Overlay vs. Major Currencies Chart by TradingView

The US dollar started the week near its post-NFP highs, but retreated a bit against the Japanese yen after a verbal intervention from Japanese officials.

Weak German factory orders and rising tensions in the Middle East sparked bearish vibes during the European session, pushing the greenback higher against “risky” currencies such as the commodity dollar and sterling, while it slipped against other safe havens such as the yen and Swiss franc.

That trend continued as the US session got under way, leaving the dollar with mixed results by the end of the day.

Future potential catalysts for the economic calendar:

• German Industrial Production at 6:00 GMT
• France’s trade balance at 6:45 GMT
• FOMC member Adriana Kugler will speak at 7:00 GMT
• US trade balance at 12:30 GMT
• Canada’s trade balance at 12:30 GMT
• FOMC member Raphael Bostic will deliver a speech at 16:45 GMT
• Bundesbank President Nagel will give a speech at 17:00 GMT
• FOMC member Susan Collins will deliver a speech at 20:00 GMT
• FOMC member Philip Jefferson will deliver a speech at 23:30 GMT

We’ll see a bit more mid-level data releases as Germany drops an industrial production report, while the US and Canada print their latest trade data.

If we don’t see geopolitical headlines, the focus may shift to central banks and Fed policy speculation during US sessions. Keep an eye in your pocket for voting FOMC members who could give us clues about the central bank’s moves in November and December!

Don’t forget to check out our new Forex Correlation Calculator!