Daily Broad Market Recap – October 7, 2024

No big data? No problem!

Markets started the week higher after Friday’s non-farm payrolls (NFP) report, but it wasn’t long before concerns about tensions in the Middle East, diminishing chances of a Fed rate cut, and upcoming US CPI and PPI data weighed on risk assets. .

Here’s how individual assets performed:

Titles:

• Japan’s highest currency diplomat Atsushi Mimura They said they would monitor forex movements including speculative trading with a “sense of urgency.”
• German factory orders Down 5.8% m/m in August (-1.9% expected, 3.9% previously)
• House prices in Halifax UK Index for September: 0.3% monthly (0.2% expected, 0.3% previous)
• Hezbollah fired rockets at Haifa, Israel’s third-largest city
• Investor confidence in the Eurozone Sentix The index improved from -15.4 to -13.8 (-14.6 expected) in October
• Retail sales in the euro area It accelerated from 0.0% m/m to 0.2% m/m as expected in August
• US Conference Board Employment Trends Index It fell from 109.54 to 108.48 in September, indicating a slowdown in hiring
• A non-voting member of the Federal Open Market Committee (FOMC). Alberto is a Muslim He said further gradual cuts were “appropriate” but had no pre-determined size or timeline for future adjustments
• A non-voting member of the Federal Open Market Committee (FOMC). Kashkari He sees the federal funds rate neutral at 3%, and the balance of risks has shifted toward unemployment

Broad market price movement:

With no major catalysts, volatility remained low for most assets early in the week. Bitcoin (BTC/USD) fared the best, surpassing its highs on Friday and pushing toward $64,000 as “Uptober” hype among HODLers grows.

Things became more interesting as the European session got underway, with news of Hezbollah rockets falling on Haifa, Israel’s third-largest city, and talk of Israel expanding its attack on Lebanon. Risk appetite took another hit after a weaker than expected German factory report.

WTI saw some movement during the European and US sessions, rising steadily to close just below $77.50 at its intraday high.

In the US, attention turned to the diminishing chances of significant interest rate cuts by the Federal Reserve following Friday’s strong non-farm payrolls report. the CME FedWatch tool It now shows expected cuts of 25 basis points in both November and December, but the odds of no change in November have risen to 12.7%.

Less dovish talk from the Federal Reserve pushed 10-year US Treasury yields above 4.00% for the first time since August. Meanwhile, the US dollar index remained strong near its highs after the non-farm payrolls report, while gold – often seen as an alternative to the dollar – fell to close near intraday lows at $2,642. US stock indices also took a strong hit, affected by uncertainty about bank earnings and upcoming CPI and Producer Price Index reports, ending the day in the red zone.

Forex market behavior: US dollar against major currencies:

Overlay of the US dollar against major currencies Chart by TradingView

The US dollar started the week near its highs after the non-farm payrolls report, but eased slightly against the Japanese yen after some verbal interventions by Japanese officials.

Weak German factory orders and escalating tensions in the Middle East sparked a risk-off atmosphere during the European session, pushing the dollar higher against “risk” currencies such as the commodity dollar and the British pound, while falling against other safe havens such as the yen and the Japanese yen. Swiss franc.

This trend continued as the US session began, leaving the dollar with mixed results at the end of the day.

Potential catalysts coming on the economic calendar:

• German industrial production at 6:00 AM GMT
• French trade balance at 6:45 am GMT
• FOMC member Adriana Kugler will speak at 7:00 a.m. GMT
• US Trade Balance at 12:30 PM GMT
• Canada Trade Balance at 12:30 PM GMT
• FOMC Member Rafael Bostic will deliver a speech at 4:45 PM GMT
• Bundesbank President Nagel will deliver a speech at 5:00 PM GMT
• FOMC Member Susan Collins will speak at 8:00 PM GMT
• Federal Open Market Committee member Philip Jefferson will deliver a speech at 11:30 PM GMT

We will see more intermediate data releases as Germany releases its industrial production report while the US and Canada print their latest trade data.

Unless we see geopolitical headlines, the focus may shift to central bankers and Fed policy expectations during US business sessions. Stay tuned for votes from FOMC members who may give us clues about the central bank’s moves in November and December!

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