Daily Broad Market Recap – October 31, 2024

Profit taking was the name of the game on Thursday, as traders prepared for high-level US data releases, the US elections, and the end of the trading month.

What are the major headlines that dominated the price movement in recent trading sessions?

We break them down for you:

Titles:

• China Manufacturing PMI For October: 50.1 (49.8 expected and previous); Services PMI improved from 50.0 to 50.2 (50.4 expected)
• The Bank of Japan kept its policies steady as expectedGovernor Ueda hinted at future interest rate hikes and the growing impact of foreign currency movements on wages and prices
• France’s preliminary CPI accelerated 0.2% m/m as expected in October after a 1.2% decline in September.
• German retail sales for September: 1.2% m/m (-0.7% expected, 1.6% previously)
• European Central Bank member Fabio Panetta He favors further interest rate cuts and shifting the central bank’s focus to slower economic growth
• President of the European Central Bank Lagarde He said inflation could slow to a 2% target by 2025
• Consumer Price Index (CPI) in the Eurozone Estimate for October: 2.0% y/y (1.9% expected, 1.7% previous); Core CPI at 2.7% (2.6% expected, 2.7% previous)
• Challenger Report Job Cuts It decreased from 75,891 in August to 72,821 in September; Employment plans showed the lowest hiring rate since 2011
• Canada monthly GDP Recession as expected in August after a downwardly revised 0.1% increase in July
• US core personal consumption expenditures price index It accelerated from 0.2% month/month to 0.3% month/month as expected in September; August reading was revised from 0.1%
• US Employment Cost Index Q3 2024: 0.8% QoQ (0.9% expected and prior)
• US initial jobless claims fell from 228k to 216k (229k expected) in the week ending October 26
• The US Chicago PMI fell from 46.6 to 41.6 in October; Employment fell 5.5 points to 41.9; Prices paid fell 7.0 points after hitting a 13-month high in September

Broad market price movement:

Thursday saw a broad pullback as traders prepared for key US data releases and next week’s elections, with some also taking profits to close out the month.

European and US stocks took a hit, likely due to rising global bond yields, profit-taking at the end of the month, and recent alerts from Microsoft and Meta about rising AI costs.

Bitcoin (BTC/USD) fell after failing to breach the $73,000 level on Wednesday, falling to around $70,000.

On the energy front, US crude oil prices continued to rebound on Wednesday, supported by a surprise drop in EIA inventories, OPEC+ members considering delaying a production increase beyond December, and looming concerns about a potential major strike from Iran against Israel. WTI rose from lows of $68.50, ending the day near $70.50.

In the US, the monthly increase in the core PCE price index initially boosted US bond yields and the dollar. However, with the annual reading remaining high and the unemployment claims report stronger than expected, expectations of a rate cut from the Fed continued, ultimately pulling 10-year yields and the dollar back to where they started the session.

Gold, a popular alternative to the US dollar, started near record highs at $2,790 before falling to close at $2,745.

Forex market behavior: US dollar against major currencies:

Overlay of the US dollar against major currencies Chart by TradingView

The Japanese yen caught early attention after the Bank of Japan unanimously called for its policies to remain unchanged.

While the move was widely expected, BOJ Governor Ueda’s comments about closely monitoring the effects of currency market fluctuations on wages and prices – and even hinting at the possibility of raising interest rates – pushed the yen higher during the Asian session.

With the start of the European session, focus shifted to the upcoming US data, which kept the major currencies in a holding pattern.

Later, a rise in the monthly core personal consumption expenditures price index, coupled with stronger-than-expected unemployment claims, initially lifted the dollar. But with the continued rise in annual readings and caution ahead of the presidential elections scheduled for next week, the dollar fell back to where it started the session.

Potential catalysts coming on the economic calendar:

• UK House Price Index at 7:00 AM GMT
• Swiss CPI at 7:30 AM GMT
• Retail sales in Switzerland at 7:30 am GMT
• Swiss Manufacturing PMI at 8:30 AM GMT
• Final UK Manufacturing PMI at 9:30am GMT
• The US NFP report will be released at 12:30 PM GMT
• Canadian Manufacturing PMI at 1:30pm GMT
• Final S&P US Manufacturing PMI at 1:45pm GMT
• US ISM Manufacturing PMI at 2:00 PM GMT

All eyes will be on Uncle Sam’s October employment numbers, which may inspire changes in expectations about the Federal Reserve’s upcoming policy decisions.

Before that, the Swiss CPI and PMI report from the UK during the European session may lead to a rise in short volatility between European currencies.

Make sure you stay tuned to releases so you don’t miss out on potential short-term trading opportunities!

Don’t forget to check out our brand new Forex Correlation Calculator when making any trades!