Daily Broad Market Recap – May 7, 2024

The absence of new major market themes encouraged the asset's price action on Tuesday.

What major assets saw volatility and how did the US dollar trade on a data-light trading day?

Titles:

• The Reserve Bank of Australia kept interest rates unchanged At 4.35%, he noted that the interest rate path “remains uncertain.”
• Final Purchasing Managers' Index (PMI) for Au Jibun Bank Services in Japan April rose from 54.1 in March to 54.3 in April, the highest level since August 2023.
• Unemployment rate in Switzerland It remained at 2.3%, as expected in April
• German factory orders For March: -0.4% (vs. 0.4% expected, -0.8% previous)
• S&P Global UK Construction Purchasing Managers' Index (PMI). For April: 53.0 (50.4 expected, 50.2 previous); “The overall rate of cost inflation was only modest,” “Another marginal decline in employment.”
• Retail sales in the euro area For March: 0.8% monthly (0.6% expected, -0.3% previous)
• Canada Purchasing Managers' Index (IPEY). April: 63.0 (58.1 expected, 57.5 previous)
• European Central Bank member Joachim Nagel They noted that factors such as improving supply chain resilience, labor shortages, and the green transition could keep inflation high
• US consumer credit from the Federal Reserve The survey slowed from $15.0 billion to $6.3 billion in March as consumers pulled back on credit card use

Broad market price movement:

It was a mixed trading day for major financial assets, as the lack of new market catalysts encouraged price action for the assets.

Spot gold lost more strength after rejecting its highest levels reached in May at $2,330, and due to renewed expectations of a peace agreement between Israel and Hamas. The same goes for US crude oil prices, which also weakened as the perception of abundant global supplies outweighed improving geopolitical concerns.

The S&P 500 managed to rise slightly, supported by hopes for a Federal Reserve rate cut and some very strong earnings reports. Meanwhile, US 10-year bond yields fell slightly to their lowest levels since early April, as market watchers eye the upcoming $125 billion in new bonds this week.

Forex market behavior: US dollar against major currencies

Overlay of the US dollar against major currencies Chart by TradingView

The US dollar traded in tight ranges for most of the day except for a bullish rally against the Australian dollar following a less hawkish than expected Reserve Bank of Australia policy decision.

The dollar weakened slightly during the European session but saw an improvement in demand during the American session.

While there were no direct catalysts for this move, the dollar may have found support from lower concerns about intervention in USD/JPY and traders' pricing in FOMC members' speeches this week which were not too dovish. Of course, it may also help that US 10-year bond yields rose during the trading session and encouraged demand for the US dollar.

Potential catalysts coming on the economic calendar:

• German industrial production at 6:00 AM GMT
• Retail sales in Italy at 8:00 am GMT
• Final US wholesale inventories at 2:00 PM GMT
• Crude oil inventories released by the EIA at 2:00 PM GMT
• FOMC voting member Philip Jefferson will deliver a speech at 3:00 PM GMT
• FOMC voting member Lisa Cook will deliver a speech at 5:30 PM GMT
• UK RICS house price balance at 11:01pm GMT
• Average cash dividends in Japan at 11:30 PM GMT
• Chinese trade imbalance during the Asian session (May 9)

We have another calendar of light data, increasing the potential for tight ranges and higher volatility around data releases. Watch the EIA Crude Oil Inventories report as it may move crude oil prices. Chinese trade data due in the upcoming Asian session may also impact overall risk sentiment, so make sure to stay glued to the tube in case you see intraday trends!

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