Daily Broad Market Recap – May 21, 2024

Major financial assets saw relatively light volatility as traders waited for expected reports scheduled for later this week.

Crude Oil fell on concerns about the impact of “higher for longer” global interest rates while Ethereum (ETH/USD) got a boost from optimism over ETF approval.

Most major forex currencies were in tight ranges with the exception of the Canadian dollar which saw downward pressure after the weaker than expected April CPI.

Read on to see how your favorite financial assets are trading!

Titles:

• Reserve Bank of Australia May meeting minutes It showed that members discussed the possibility of raising interest rates, but the hurdle to doing so remained high.
• Producer prices in Germany In April: 0.2% mo (0.3% expected, 0.2% previous) due to lower energy prices
• President of the European Central Bank Lagarde “We are confident that inflation is under control” and sees a “strong possibility” of a rate cut on June 6
• Eurozone trade surplus In March: €17.3 billion (€19.9 billion expected, €16.7 billion previously)
• API: US crude oil inventories Increased by 2.48 million barrels in the week ending May 17 (versus a decline of 3.104 million barrels in the previous week)
• Canada monthly consumer price index For April: 0.5% monthly (0.4% expected, 0.6% previous); Core CPI: 0.2% (vs. 0.4% expected, 0.5% previous); Annual CPI slowed from 2.9% to 2.7% (vs. 2.8% expected); Annual core CPI fell from 2.0% to 1.6% (vs. 2.0% expected)
• FOMC voting member Rafael Bostic 'In no rush to cut interest rates' One rate cut in the last quarter of 2024 is believed to be appropriate
• FOMC Voting Member Loretta Mester He needs “a few more months of inflation data” to be more confident in its decline
• Basic machinery orders in Japan Up 2.9% m/m in March (vs. -1.8% expected, 7.7% previous)
• Japan's trade deficit shrinks From JPY 0.68 trillion to JPY 0.56 trillion in April as exports (+0.9% m/m) exceeded imports (-0.5% m/m)

Broad market price movement:

Major financial assets once again received signals from individual catalysts while traders will likely wait for higher level reports to drive broader market themes.

The spot price of gold tried to rise again to the $2,430 area before falling to $2,420. US crude oil prices fell after a surprise increase in US oil inventories and on concerns that a “higher for longer” interest rate environment will impact global demand.

Meanwhile, Bitcoin (BTC/USD) rose to the $71,000 area likely with traders anticipating a possible immediate approval from the Ethereum ETF.

US 10-year bond yields fell from their levels of 4.450% to trade near 4.405%, and the US dollar traded in ranges ahead of the release of the Federal Open Market Committee meeting minutes today.

Forex market behavior: US dollar against major currencies

Overlay of the US dollar against major currencies Chart by TradingView

The US dollar rose at the beginning of the Asian session before reversing its movements and moving in narrow ranges for the rest of the day. Although there are no direct catalysts for this rally, concerns about the Chinese economy likely boosted demand for Asian traders early in the day.

FOMC members continued to express their preference to wait a few more months before seriously considering a rate cut, but that did not help demand for the US dollar much in the US session.

Instead, traders are holding the dollar in tight ranges while they wait for expected data such as FOMC minutes and US PMI reports.

Potential catalysts coming on the economic calendar:

• UK Consumer Price Index and Producer Price Index reports At 6:00 AM GMT, UK Public Sector Borrowing will be released at 6:00 AM GMT
• UK house price index at 8:30am GMT
• Bank of England Deputy Governor Sarah Breeden will participate in a panel discussion at 12:45pm GMT
• US Existing Home Sales at 2:00 PM GMT
• US crude oil inventories at 2:30 pm GMT
• Minutes of the Federal Open Market Committee meeting 6:00 PM GMT
• Government of the Reserve Bank of New Zealand Orr To speak at 8:10pm GMT
• New Zealand quarterly retail sales 10:45 PM GMT
• The Australian Manufacturing and Services PMI will be announced at 11:00pm GMT
• Japan Manufacturing PMI at 12:30 AM GMT (May 23)

Market indicators will thicken in the coming trading sessions with the release of UK inflation data and minutes from the Federal Reserve's May meeting.

Furthermore, Purchasing Managers' Index (PMI) reports from Australia and Japan will trigger business and services sector updates from major economies. Don't even think about missing these events!

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