A lack of fresh market catalysts kept major assets in ranges early in the day, before central bank speculation and positioning ahead of US CPI reports increased volatility in the US session.
Which assets have seen the most movement?
We discuss yesterday’s market headlines and price reactions!
Titles:
- The Reserve Bank of New Zealand cuts interest rates by 50 basis points, signaling further easing to come
- Initial machine tool orders in Japan fell by 6.5% year-on-year in September (-3.5% previously)
- German trade surplus The reading widened from 16.9 billion to 22.5 billion in July (18.9 billion expected) as exports rose by 1.3% and imports decreased by 3.4%.
- EIA crude oil inventories rose by 5.8 million barrels (est. 2.0 million, forecast 3.9 million)
- US federal prosecutors have charged cryptocurrency companies Gotbit, ZM Quant, CLS Global and 15 people with fraud and widespread market manipulation.
- Seized cryptocurrencies related to the PlusToken fraudulent scheme have been moved to exchanges, raising fears of a possible sell-off.
- Minutes from the September FOMC meeting showed that members considered a 25 basis point rate cut, rejecting the previously determined policy path.
- Voting Member of the Federal Open Market Committee Collins He said a 0.50% cut was prudent given the risks, likely adding more adjustments
- Voting member of the Federal Open Market Committee Daly He says one or two more cuts are likely this year, raising concerns about the labor market in stocks
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
With no new catalysts, major assets remained range-bound during the Asian session. Chinese stocks lost momentum as gains from stimulus announcements faded, while Asian and European stocks rose on a lack of escalation in tensions in the Middle East and hopes for more Chinese stimulus on Saturday.
Traders turned their focus to central banks, with members of the European Central Bank and the Federal Open Market Committee signaling a more gradual pace of easing. Minutes from the Federal Open Market Committee meeting showed that a “large majority” supported a 50 basis point rate cut in September, with some favoring a smaller cut. The larger cut was not due to economic concerns, and the Fed rejected a firm path, which helped push US stocks higher.
The Dow Jones and Standard & Poor’s 500 indexes hit record highs, 10-year US bond yields reached 4.07%, and the dollar saw broad gains. Gold fell to weekly lows near $2,608, and Bitcoin fell to $60,400, possibly due to news of fraud charges against three cryptocurrency companies, before recovering to $60,700.
US crude oil prices fell below $72.00, weighed down by easing concerns in the Middle East and a surprise rise in US oil inventories, before settling below $73.50.
Forex market behavior: US dollar against major currencies:
Overlay of the US dollar against major currencies Chart by TradingView
The US dollar started the day as a counter currency, rising against the New Zealand dollar after the Reserve Bank of New Zealand’s “cautious downgrade”, but gave up some points to both the Australian and New Zealand dollars when the Chinese Ministry of Finance announced a press conference on Saturday, raising hopes for further fiscal stimulus. .
In the absence of important data, the dollar remained in a limited range during early European trading. Attention then turned to stabilizing Fed rate cut expectations and traders settling in ahead of the US CPI and PPI reports.
The dollar’s gains lost some momentum after London markets closed, but the dollar maintained its gains as Federal Open Market Committee meeting minutes confirmed that the Fed is not following a predetermined path.
Potential catalysts coming on the economic calendar:
- The US CPI will be released at 12:30 PM GMT
- Initial US unemployment claims at 12:30 PM GMT
- Cook, a member of the Federal Open Market Committee, will speak at 1:15 pm GMT
- FOMC Member Barkin will deliver a speech at 2:30 PM GMT
- FOMC member Williams will deliver a speech at 3:00 PM GMT
- Swiss National Bank member Antoine Martin will speak at 3:30pm GMT
- BusinessNZ Industrial Index at 9:30pm GMT
The US will continue to attract market attention, this time with September inflation data and further speeches by FOMC members. Don’t sleep on weekly unemployment claims and scheduled speeches from FOMC members, as they could also impact expectations for the next Fed rate cuts.
Keep your eyes glued to the tube especially if you are trading USD in the following trading sessions!
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