Daily Broad Market Recap – August 7, 2024

Risk aversion returned to financial markets mid-week, but crude oil still managed to make good gains.

What’s up with that and how did the rest of the asset classes perform?

Here’s a quick summary of the headlines and economic updates that impacted the markets:

headlines:

• China’s trade surplus July: $84.7 billion ($97.5 billion forecast, $99.1 billion previously) as imports and exports rose 6.5% y/y
• German Industrial Production in June: 1.4% m/m (1.0% expected, previous reading revised down from -2.5% to -3.0%)
• The Swiss National Bank’s foreign exchange reserves fell from CHF 712 billion to CHF 704 billion.
• Canadian Ivey PMI In July: 57.6 (60.0 expected, 62.5 prior)
• Crude Oil Inventories from the US Energy Information Administration Down 3.7 million barrels (-1.6 million expected, -3.4 million previously)
• Summary of the deliberations of the Central Elections Committee He revealed that policymakers are concerned that the weak labor market would delay the recovery in consumer spending and that higher interest rates would hinder growth.
• U.S. consumer credit fell in July from $13.9 billion to $8.9 billion, versus $9.8 billion in expectations.
• Bank of Japan Opinion Summary He acknowledged that the Japanese economy has recovered moderately but private consumption has not been very strong.
• Bank of Japan Deputy Governor Uchida They stressed that they would avoid raising interest rates in light of the financial market instability and that they would monitor the impact on prices and the overall economy first.

Price movement in the broad market:

Investors remain in a gloomy mood mid-week, as the risk-off recovery from the previous day did not continue throughout Wednesday’s trading sessions.

Bitcoin briefly traded near $57,000 but pulled back from resistance again to close down just over 2% on the day while gold also struggled to keep its head above water. U.S. stock indexes also closed in the red, dragged down by consumer discretionary and another batch of downbeat earnings data.

In contrast, crude oil performed strongly as geopolitical concerns in the Middle East added to worries about global supplies. The commodity extended its gains when the U.S. Energy Information Administration reported a larger-than-expected draw in inventories, easing concerns about weak demand.

Forex Market Behavior: US Dollar vs Major Currencies:

US Dollar Overlay Against Major Currencies Chart by TradingView

The risk-off from the previous New York session shifted to a positive start for higher yielding currencies such as the Australian and New Zealand dollars, before sideways price action and risk-off flows returned.

The USD/JPY pair pulled away from the rest of the majors once again as dovish comments from Bank of Japan (BOJ) official Uchida forced the yen to give up earlier gains. His comments downplayed the likelihood of further tightening from the central bank in the near term, as he said they would wait for financial markets to stabilize before considering any further policy adjustments.

The Swiss franc also appears to have regained some of its earlier safe-haven gains before heading sideways in the New York session.

Meanwhile, a summary of the Bank of Canada’s deliberations revealed that policymakers are concerned about the impact of higher interest rates on growth and how a weak labour market could further dampen spending, but the release appeared to have had a limited impact on the Canadian dollar.

Potential catalysts coming up on the economic calendar:

• Reserve Bank of Australia Governor Bullock speaks at 2:40am GMT
• New Zealand Inflation Forecast 3:00 AM GMT
• Japan Economy Watchers Sentiment Index at 5:00 AM GMT
• US Weekly Initial Jobless Claims 12:30 PM GMT
• FOMC Member Barkin Speaks at 7:00 PM GMT

The spotlight could once again turn to the strength of New Zealand’s economy as the country issues its bonds. Quarterly inflation expectations The figure during the Asian trading session.

Later today, dollar volatility may rise again as economic data is released. Unemployment complaint rates A number that tends to cause significant movements during the day.