Daily Broad Market Recap – October 22, 2024

There was no significant data, leaving major assets exposed to current market issues and growing concerns about the US economy.

How have your closely watched assets traded in recent trading sessions?

Let’s discuss it below:

Titles:

• Member of the European Central Bank Olly Wren He said the eurozone slowdown was “on track”, but growth expectations had weakened and deflationary pressures could increase
• Member of the European Central Bank Robert Holzman “The deflationary process has been much faster than we thought,” he noted, adding that subsequent interest rate cuts would follow “not too far” into the future.
• Member of the European Central Bank Mario Centeno He called for a “gradual, steady and predictable reduction in interest rates” but did not rule out deeper cuts if the labor market weakens
• European Central Bank President Lagarde Confident that inflation will reach target in 2025, he noted that the policy direction is “clear” but the pace of further cuts and the neutral rate are not.
• Member of the Bank of England, Megan Green He believes interest rates will stabilize “slightly above” pre-pandemic levels
• Canada industrial product price index For September: -0.6% m/m (-0.4% expected, August reading was revised down from -0.8% -0.9%); Raw Material Price Index decreased by 3.1% m/m (-1.7% expected, -3.0% previously)
• Richmond US Industrial Index For October: -14 (-19 expected, -21 previous); Employment rate improved from -22 to -17; Prices received increased from 1.57 to 1.71
• API: US crude oil inventories It rose by 1.643 million barrels, compared to an increase of 0.7 million expected for the week ending October 18.
• The International Monetary Fund left its growth forecast for 2024 unchangedGDP estimates for 2025 were slightly lowered. It also raised forecasts for the United States and the United Kingdom, while lowering growth forecasts for China, the eurozone and Japan

Broad market price movement:

With no new catalysts on the horizon, major assets are left to ride the waves of current market themes and concerns about the US economy.

US 10-year bond yields fell to 4.17% but bounced back to a weekly high of 4.20% as the market tried to balance the Fed’s rate cut timeline with concerns about the US deficit ahead of the presidential election. Meanwhile, the US dollar took a breather from its recent rally, which is likely to give gold a boost. Prices recorded a new all-time high, approaching $2,750, driven by tensions in the Middle East and expectations of lower global interest rates.

US stock futures took an early hit, but the mood eventually changed, and they closed mostly flat. Bitcoin, on the other hand, remained stuck below $67,750.

In oil markets, crude oil got a boost from optimism over China’s recent interest rate cut and lower chances of a ceasefire in Gaza, even after US Secretary of State Anthony Blinken’s visit to Israel. WTI rose above $70.00, testing $72.00 before settling at $71.30.

Forex market behavior: US dollar against major currencies:

Overlay of the US dollar against major currencies Chart by TradingView

The US dollar held near weekly highs, thanks to a lack of fresh catalysts, rising US bond yields, and persistent concerns about global growth and geopolitical risks, keeping demand for safe havens strong. The dollar also received support as Japanese officials remained calm, even as the USD/JPY pair approached the 151.00 level.

The US dollar could have finished the day stronger across the board, but it lost some strength against the Australian and New Zealand dollars during the Asian session. Optimism over China’s recent stimulus measures has lifted risk appetite, leaving the US dollar in the red against the Australian and New Zealand dollars, and slightly lower against stronger currencies such as the Swiss franc and the Canadian dollar.

Potential catalysts coming on the economic calendar:

• Bank of England Member Breeden will speak at 1:00pm GMT
• Federal Open Market Committee (FOMC) Member Bowman will speak at 1:00 PM GMT
• Bank of Canada policy decision at 1:45pm GMT; To follow at 2:30 pm GMT
• ECB President Lagarde will deliver a speech at 2:00 PM GMT
• US Existing Home Sales at 2:00 PM GMT
• EIA crude oil inventories at 2:30 PM GMT
• FOMC Member Barkin will deliver a speech at 4:00 PM GMT
• Reserve Bank of New Zealand Governor Orr will deliver a speech at 5:00pm GMT
• Bank of England Governor Bailey will deliver a speech at 6:45pm GMT
• The Australian Manufacturing and Services PMI will be announced at 10:00pm GMT

Traders are in for a busy day as the Bank of Canada (BOC) releases its policy statement for October! And if that’s not enough central bank activity for you, central bankers Lagarde, Bailey and Orr will also take center stage and share potential market-moving sentiments.

Meanwhile, the US Existing Home Sales report and speeches by FOMC Members Bowman and Parkin may increase volatility as traders eye the recent strength of the US Dollar.

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