General Daily Market Recap – October 10, 2024

All eyes and ears were on the US CPI release…which didn’t cause much of a stir in the markets.

Still, crude oil posted a massive 3% gain for the day. Read on to find out why!

Titles:

• Japan’s producer prices rose 2.6% to 2.8% year-on-year in September, instead of falling to an expected 2.3%
• Japan’s top currency diplomat, Kanda, noted that markets remain “extremely sensitive” to economic developments and the outlook for monetary policy in major economies.
• The People’s Bank of China has talked about more stimulusas it said it would set up the 500 billion yuan Securities, Funds and Insurance Companies Swap Facility (SFISF) to help firms pledge assets in exchange for liquidity
• BOJ Vice Governor Ryozo Himino says the BOJ is not on a set course and is in favor of raising interest rates if the board has “higher confidence” that its forecasts will be realized
• Australian inflation expectations for the next 12 months to September eased from 4.4% to 4.0%
• German retail sales rose 1.6% month-on-month in August, after a previous increase of 1.5%
• Israeli Defense Minister Gallant said their response to Iran’s missile attack “will be deadly, precise and above all surprising”, while Iran said it was ready to launch thousands of missiles at Israel if needed.
• Accounts of the ECB’s monetary policy meeting hinted at another 0.25% cut in October, as ECB member Schnabel reiterated “We cannot ignore the headwinds to growth. With signs of diminishing labor demand and further progress in disinflation…”
• SNB Vice President Antoine Martin cites low inflation and promising economic growth as reasons to favor lower interest rates
• Britain’s Chancellor of the Exchequer, Rachel Reeves is considering raising capital gains tax to 39%, as The Guardian reported
• Hurricane Milton knocked out power to more than 3.4 million US homes and businesses, while nearly a quarter of the state’s gas stations ran out of gas
• September US CPI report saw an increase of 0.2% w/at headline inflation (forecast of 0.1%, 0.2% previously) and an increase of 0.3% w/at core inflation (forecast of 0.2%, 0.3% previously), decreasing headline CPI from 2.5% to 2.4% y/y (forecast 2.3%)
• Initial US Jobless Claims at 258K (231K forecast, 225K previous) for the week ending Oct. 3
• Chicago Fed President Austan Goolsbee noted that “most” Fed policymakers expect rates to “gradually decline well to something well below current levels.”
• Atlanta Fed President Raphael Bostic said he was “certainly open” to skipping a rate cut in November

Broad Market Price Action:

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

Markets were cautious for most of the Asian and London trading sessions as traders braced for Uncle Sam’s inflation report due later in the day.

Only crude oil enjoyed notable gains as investors closely watched the geopolitical conflict in the Middle East. As it turned out, Israel warned of a “deadly, precise and above all surprising” crackdown on Iran and ordered an evacuation to Lebanon, keeping traders on notice of major disruptions to oil production in the region .

It didn’t help that Hurricane Milton in the US caused widespread power outages and left nearly a quarter of gas stations in Florida without gas, adding to supply concerns.

Meanwhile, US Treasury yields started to rise until the release of the US CPI report, which was then followed by a decline as traders also saw a weaker-than-expected initial jobless claims figure.

US stocks also edged lower as the odds of another 0.50% Fed rate cut eased after inflation data surprised higher.

Currency Market Behavior: US Dollar vs. Majors:

USD chart overlay against major currencies by TradingView

The US dollar got off to a mostly quiet start against its peers, with the exception of the Kiwi and Aussie, which edged higher towards the latter part of the Asian trading session on talk of more stimulus from China.

Volatility intensified during London trading hours as the greenback acted as a counter to euro weakness on the back of a relatively dovish ECB meeting minutes and a sell-off in the Loonie. Sterling began to find itself on shaky ground as traders appeared to factor in political uncertainty in the UK and the increasing chances of another BOE cut.

USD/JPY and USD/CHF were already in a weaker position, leading to US CPI and the initial release of jobless claims, which then extended the declines in these pairs before sideways price action. Mixed rhetoric from Fed officials also appeared to contribute to the greenback’s net weakness toward the end of the session in New York.

Future potential catalysts for the economic calendar:

• UK GDP at 6:00 GMT
• UK Merchandise Trade Balance and Industrial Production at 6:00 GMT
• Canada Employment Report at 12:30 GMT
• US PPI report at 12:30 GMT
• Speech by FOMC member Goolsbee at 13:45 GMT
• The US UoM revised its consumer sentiment index at 14:00 GMT
• Speech by FOMC member Logan at 14:45 GMT
• Speech by FOMC member Bowman at 5:10 pm GMT

The US will continue to grab the market’s attention, this time with September inflation data and a few more speeches from FOMC members. Don’t sleep on weekly jobless claims and scheduled FOMC members’ speeches, as they could also influence expectations for future Fed rate cuts.

Keep your eyes glued to the tube, especially if you are trading the US Dollar in the following trading sessions!

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