Daily Broad Market Recap – September 12, 2024

It was a risky day for financial markets, with crude oil closing up about 3% while gold hit new record highs.

US stock traders also enjoyed a great deal, with the S&P and Nasdaq recording their fourth consecutive day in the green.

Check out the latest headlines!

Headlines:

• Japan Producer Price Index Growth slowed from 3.0% year-on-year in July to 2.5% in August, versus an expected 2.8%.
• Japan’s BSI Manufacturing Index improved from -1.0 to +4.5 vs. +2.5 expected in August
• Australia’s inflation expectations fell in August from 4.5% to 4.4% for the next 12 months.
• The European Central Bank cut its main deposit rate by 0.25% as expected.Growth forecasts cut, core inflation estimates raised
• During the press conference, ECB President Lagarde stressed their data-driven approach.They noted that they are looking at a broad range of inflation indicators and plan to keep interest rates “sufficiently restrained.”
• Canada building permits rose 22.1% month-on-month in July versus expectations of 6.5%, the previous reading was revised up from -13.9% to -13.0%.
• IEA cuts 2024 demand growth forecast Due to weak Chinese and global demand
• Crude oil prices rise With Hurricane Francine impacting production along the Gulf of Mexico
• US Core Producer Price Index It rose 0.2% m/m in August (0.1% expected, previous downgraded to flat); core PPI rose 0.3% m/m (0.2% expected, previous downgraded to -0.2% from 0.0%)
• Initial unemployment claims in the United States For the week ending September 6: 230K (estimated 227K, previous 228K)
• Oracle shares hit record highs on AI demand, extending post-earnings rally; tech giants Nvidia, Metallica, Alphabet up about 2%

Price movement in the broad market:

Most asset classes had a slow start, with the exception of Bitcoin and crude oil which started the day in bullish mode.

The energy commodity was strongly supported by renewed supply concerns, as Hurricane Francine disrupted more than 40% of production along the U.S. Gulf of Mexico, defying the International Energy Agency’s lowered forecast for global demand.

Meanwhile, U.S. stock futures were mostly sideways during the first two trading sessions, but remained in the green throughout the day. Stronger-than-expected U.S. producer price index numbers led to a slight decline, but a rally in the technology sector led by companies such as Oracle, Nvidia and Meta allowed the indexes to post their fourth straight day in positive territory.

Gold prices also rose sharply, hitting a record high of $2,556.86 an ounce, likely supported by hopes of a Federal Reserve rate cut in September, as FOMC officials continue to debate whether to cut U.S. borrowing costs by 0.25% or 0.50%.

Forex Market Behavior: US Dollar vs Major Currencies:

US Dollar Overlay Against Major Currencies Chart by TradingView

Volatility was already present for the USD pairs from the start, as traders are likely to continue adjusting their positions after the US CPI release in the previous session.

The USD/JPY pair started the day on a sharp rise and remained in the green until the London market hours, before turning lower during the US session. The AUD/USD and NZD/USD pairs also made some gains during the Tokyo session, but gave back these highs before gaining momentum for the rest of the day.

The European Central Bank decided to cut borrowing costs by 0.25% as expected and lowered growth forecasts, but the dovish announcement did not stop the EUR/USD pair from continuing its upward trend. After all, the central bank also made slight upgrades to its core inflation estimates while ECB President Lagarde reiterated the bank’s data-driven approach.

Stronger-than-expected headline data and core PPI from the US economy could not save the dollar from selling, although USD/JPY and USD/CHF continued to resist before eventually capitulating to the dollar’s ​​weakness.

The USD/CAD pair managed to stay in positive territory, although the Bank of Canada’s dovish bias prevented the Canadian currency from benefiting from higher crude oil and risk appetite.

Potential catalysts coming up on the economic calendar:

• Eurozone Industrial Production at 9:00 am GMT
• Canada Wholesale Sales and Energy Utilization at 12:30 PM GMT
• US Import Prices at 12:30 PM GMT
• University of Michigan Preliminary Consumer Confidence Index in the United States 2:00 PM GMT
• China’s industrial production, retail sales and fixed asset investment 2:00 AM GMT (September 14)

Markets may see a quiet start due to the lack of data flow towards the end of the week, but University of Michigan Preliminary Consumer Confidence Index in the United States The leading spending indicator could still cause big moves between the dollar and stock market pairs.

Be sure to keep an eye on Chinese data due out over the weekend, as these numbers could impact market sentiment early next week.

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