Daily Broad Market Recap – June 11, 2024

It was a choppy day for most asset classes, with Treasury and Bitcoin yields falling while commodities and stocks largely rebounded later.

However, the safe-haven US dollar managed to keep its head afloat, despite some risk flows in the latter part of the New York session.

Read on to find out what catalysts drove the financial markets earlier:

Titles:

• Major Chinese state-owned banks sold USD/CNY in a coordinated yuan intervention, after the currency fell to its weakest level since November 2023.
• Australian NAB Business Confidence Index in May: -3 (previous reading upgraded from +1 to +2)
• Initial Japanese machine tool orders rebounded 4.2% year-on-year in May from a previous decline of 8.9%.
• UK claimants change in May: 50.4k (10.2k forecast, previous 8.4k)
• The UK unemployment rate rose from 4.3% to 4.4%, versus expectations of no change
• Average UK income index over the three-month period ending April: 5.9% y/m (5.7% forecast, previous reading upgraded from 5.7% to 5.9%)
• NFIB US Small Business Index in May: 90.5 (expected 89.8, previous 89.7)
• The Energy Information Administration raised its forecasts for global oil demand for 2024 and 2025
• The World Bank raises global GDP growth forecast for 2024 to 2.6% from 2.4%
• Building permits in Canada in April: 20.5% mom (4.9% expected, -12.3% prior)
• The US Treasury bond auction resulted in strong demand for 10-year bonds with a high yield of 4.438%.
• New Zealand visitor numbers fell by 9.4% month-on-month in April, the previous reading was raised from 9.1% to 9.7%
• Japan Producer Price Index in May: 2.4% y/y (2.0% expected, previous reading upgraded from 0.9% to 1.1%)

Broad market price movement:

Market volatility was already impactful for Bitcoin, gold and crude oil early on, as these risk assets took hits during the Asian trading session before stabilizing with the London market hours.

US bond yields also fell and moved sideways, followed by a sharp pullback around a Treasury auction that resulted in a $39 billion sale in 10-year bonds, with strong investor demand suggesting they were willing to settle for lower yields.

WTI crude oil was able to rise during the New York session, thanks to the Energy Information Administration's positive revision of global oil demand forecasts for this year and next. Risk appetite is also likely to have gotten a boost from the World Bank increasing its global GDP forecast from 2.4% to 2.6% in 2024.

Forex market behavior: US dollar against major currencies

Overlay of the US dollar against major currencies Chart by TradingView

The majors had a mixed start, with the US dollar advancing strongly against the Australian dollar while giving up some ground against the euro and British pound early. News of the yuan's intervention among Chinese state banks is likely to put the Australian dollar on shaky footing, coupled with a decline in the NAB Business Confidence Index.

From there, the dollar is still struggling to establish a clear direction against its counterparts as the data has been light and traders are likely trading it safe ahead of the US CPI and FOMC statement today.

The pound took some hits during the mixed UK jobs report but eventually pared those losses to end slightly higher against the dollar while the euro remained on par due to political uncertainty from the early French elections.

Potential catalysts coming on the economic calendar:

• UK monthly GDP at 6:00 AM GMT
• UK Goods Trade Balance and Industrial Production at 6:00 AM GMT
• US headlines and core CPI at 12:30pm GMT
• US crude oil inventories from the US Energy Information Administration at 2:30 PM GMT
• FOMC Monetary Policy Statement at 6:00 PM GMT
• FOMC Economic Outlook at 6:00 PM GMT
• FOMC press conference at 6:30 PM GMT
• Bank of Canada Governor Macklem's testimony at 7:15 PM GMT

All eyes and ears are on the US CPI report and FOMC decision today, with market participants likely scrutinizing every detail of the inflation numbers to gauge their potential impact on the Fed's announcement and outlook on borrowing costs.

Don't forget to take a look at the Fed's updated growth and inflation estimates, as well as interest rate chart forecasts, as these will likely shape USD trends!

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