The Japanese Yen was the pips king in the Forex market once again, posting its third consecutive day in the green with a solid performance.
In contrast, US stocks suffered sharp losses due to a broad sell-off in technology stocks, while commodities also declined.
Here are the market headlines you need to know:
headlines:
- Japan Manufacturing PMI in July: 49.2 (FY 50.5, PY 50.0)
- German GFK Consumer Climate Index in July: -18.4 (expected -21.1, previous reading raised from -21.8 to -21.6)
- French Manufacturing PMI July: 44.1 (45.8 expected, 45.4 previous)
- French Services PMI in July: 50.7 (expected 49.7, previous reading raised to 49.6 from 48.8)
- German Manufacturing PMI July: 42.6 (44.1 expected, 43.5 previously)
- German Services PMI July: 52.0 (53.2 expected, previous reading revised down to 53.1 from 53.5)
- Eurozone Manufacturing PMI In July: 45.6 (46.0 expected, 45.8 prior)
- Eurozone Services PMI July: 51.9 (52.9 expected, 52.8 prior)
- UK Manufacturing PMI Fast July: 51.8 (expected 51.1, previous reading down from 51.4 to 50.9)
- UK Spot Services PMI July: 52.4 (expected 52.5, previous reading raised to 52.1 from 51.2)
- The U.S. goods trade deficit narrowed to $96.8 billion from $99.4 billion, versus an expected deficit of $98.8 billion.
- Bank of Canada cuts interest rates by 0.25% as expectedHe pointed to “additional cuts” amid downside risks from oversupply.
- Bank of Canada cuts 2024 growth forecast, keeps inflation estimates unchanged
- The US Energy Information Administration reported that crude oil inventories fell by 3.7 million barrels, compared to an expected decrease of about 2.6 million barrels, and the previous decrease of about 4.9 million barrels.
- US Manufacturing PMI In July: 49.5 (51.7 expected, 51.6 prior)
- US Services PMI July: 56.0 (54.7 expected, 55.3 previously)
Price movement in the broad market:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Treasury Yield, Bitcoin Chart by TradingView
Market correlations appeared to break down again on Wednesday, as asset classes responded to their own individual driving factors.
Commodities and cryptocurrencies mostly performed well, with Bitcoin maintaining its rally and only pulling back when testing resistance near the $67,000 level.
Crude oil posted some early losses, but managed to stay in positive territory as the U.S. Energy Information Administration report showed a larger-than-expected draw in inventories. Gold also remained mostly in the green, before joining U.S. stocks in the decline.
As it turns out, the decline in US stocks was mostly driven by tech companies, with earnings reports from big names like Alphabet and Tesla failing to impress. Even semiconductor stocks fell, led by Nvidia and Broadcom, while luxury goods giant LVMH also reported disappointing quarterly sales data.
Forex Market Behavior: US Dollar vs Major Currencies:
US Dollar Overlay Against Major Currencies Chart by TradingView
Price action among the dollar pairs was also a bit choppy, with USD/JPY posting another strong gain for the third day in a row. The Swiss franc also made significant gains on the day, with USD/CHF ending the day down 0.68%.
Risk aversion appeared to have already weighed on commodity currencies the Australian and New Zealand dollars early in the day, but these higher-yielding currencies managed to pare their losses before the US session resumed. Global PMI reports were released, although the results were mixed as the figures confirmed a general slowdown in manufacturing (excluding the UK) and some green shoots in the services sector.
The Bank of Canada announced a 0.25% interest rate cut as expected, leading to some gains for the USD/CAD pair, although the greenback made its biggest gains against the Australian and New Zealand dollars as risk-off flows took hold later in the session.
Potential catalysts coming up on the economic calendar:
- German Ifo Business Climate Index at 8:00 am GMT
- US GDP Report 12:30 PM GMT
- US Weekly Initial Jobless Claims 12:30 PM GMT
- US Headlines and Core Durable Goods Orders at 12:30 PM GMT
- ECB President Lagarde’s testimony at 3:00 pm GMT
- Tokyo Core CPI at 11:30 PM GMT
- G20 meetings continue
The spotlight is likely to turn again to US economic data today, as GDP Report Q2 2024 Quarterly price index data is expected, along with data that could tip the balance when it comes to monetary policy easing by the Federal Reserve.
Stay up to date with US weekly initial jobless claims data Which tends to spark dollar moves during the day, as well. Key Earnings Reports Which is likely to impact overall market sentiment again.