Daily Broad Market Recap – August 29, 2024

Financial markets have been eagerly awaiting the release of the preliminary US GDP data for most of the day, and the numbers did not disappoint!

Upgrades to growth and inflation figures were announced, sparking risk-on flows and some gains for Treasury yields and the dollar as well.

Read on for other headlines that impacted asset classes during recent trading sessions:

Headlines:

• ANZ Business Confidence Index in New Zealand Jumped from 27.1 to 50.6 in August
• Australian private capital spending fell 2.2% quarter-on-quarter in Q2 2024 versus an expected 0.9% rise, and the previous reading was revised up from 1.0% to 1.9%.
• Japan Consumer Confidence Index It settled at 36.7 versus an expected rise to 36.9.
• Spanish Consumer Price Index Growth slowed from 2.8% year-on-year to 2.2% in July, compared to an estimated 2.4%.
• Germany’s preliminary consumer price index It showed a decline of 0.1% on a monthly basis in July, compared to an expected rise of 0.2%, and a previous rise of 0.3%.
• US GDP forecast for Q2 2024 raised From the advanced reading of 2.8% q/q to 3.0% thanks to stronger consumer spending, the price index was revised up from the initial 2.3% to 2.5% q/q
• The U.S. goods trade deficit widened from $96.6 billion to $102.7 billion versus an expected deficit of $97.7 billion.
• US initial jobless claims hit 231K For the week ending August 22, vs. 232K expected, 233K previously
• US Pending Home Sales It fell sharply by 5.5% month-on-month in July to its lowest level since 2001, as high borrowing costs weighed on sentiment.
• SNB chief Jordan says weak eurozone demand is weakening Swiss export activity
• European Central Bank official and German Bundesbank President Nagel They suggested not to rush to cut interest rates again because inflation has not reached the 2% target.

Price movement in the broad market:

Major asset classes started the day on a quiet note as investors are likely to await the release of the second US GDP report. Volatility picked up slightly at the start of the London session, sending both crude oil and US bond yields lower while Bitcoin continued its steady rise.

Upgrades in both the US growth figure and the Q2 2024 price index lifted risk assets such as crude oil and stocks, as the figures appeared to allay slowdown fears, and the dollar and Treasury yields rose on upbeat expectations for the release of the core PCE index on Friday.

On the other hand, gold prices were affected by the preliminary GDP report, although the precious metal managed to maintain its stability as it quickly rebounded after the initial decline. On the other hand, the BTC/USD pair reached a ceiling at the $61,000 level and retreated to near $59,000 before the end of the US trading session.

U.S. stocks also struggled to hold onto gains made after the GDP report was released before the closing bell, with the S&P 500 and Nasdaq ending the day almost flat.

Forex Market Behavior: US Dollar vs Major Currencies:

US Dollar Overlay Against Major Currencies Chart by TradingView

Most major pairs saw a generally slow start, with the exception of NZD/USD which rose significantly early in the Asian session thanks to a notable improvement in New Zealand’s business confidence index for August.

The dollar gradually declined against most of its counterparts during most of the Asian trading session, except for the Japanese yen, which was likely affected by the lack of improvement in the country’s consumer confidence index for July.

Weaker-than-expected inflation data from eurozone economies, particularly Germany and Spain, sent the single currency, along with other European currencies, lower at the start of trading in London.

Further consolidation followed, before the dollar posted a broad intraday gain on the back of upgrades to the preliminary US GDP reading for Q2 2024. Initial jobless claims also came in slightly better than expected at 231K versus 232K expected.

However, the US currency pared most of its gains after the GDP data later, as the pending home sales report reversed a sharp fall to record lows due to higher borrowing costs. However, the US dollar managed to close the day in the green against the yen and European currencies, as well as the Canadian dollar.

Potential catalysts coming up on the economic calendar:

• Australia Retail Sales at 1:30am GMT
• German Retail Sales and Import Prices at 6:00 AM GMT
• French Preliminary GDP and CPI at 6:45 AM GMT
• KOF Swiss Economic Index at 7:00 am GMT
• Germany Unemployment Rate at 7:55 AM GMT
• Eurozone CPI Estimates 9:00 AM GMT
• Canadian GDP at 12:30 PM GMT
• US Core Personal Consumption Price Index 12:30 PM GMT
• Chicago PMI at 1:45 PM GMT
• Revised U.S. Consumer Confidence Index from the University of Michigan at 2:00 PM GMT

The day could be all about inflation updates, as the eurozone prepares to print its preliminary headlines and core CPI readings for July, which could influence the ECB’s policy outlook.

Uncle Sam is also due to release the core PCE price index, which is said to be the Fed’s preferred inflation gauge, so you better stay prepared for more financial market volatility and profit-taking activity at the end of the month!

If you are trading several major currency pairs at the same time, be aware of the correlations between currencies to avoid accidentally exposing your trading account to greater risk than expected.