Daily Broad Market Recap – September 17, 2024

Markets still look uneasy ahead of this week’s FOMC decision, with correlations between markets appearing to be in disarray even as the US dollar welcomed the bullish surprise in core retail sales.

Crude oil prices were volatile while gold prices retreated from their all-time highs. Meanwhile, stock indexes closed almost flat as investors awaited a big announcement from the Federal Reserve.

What other factors are driving price action lately? Check out the latest headlines and economic updates:

Headlines:

• Chinese banks remain closed for Mid-Autumn Festival holiday
• Japan’s tertiary industry activity index rose 1.4% on-month in July, compared with an expected 0.8% rise and a previous 1.2% decline.
• German ZEW Economic Sentiment Index September: 3.6 (17.1 expected, 19.2 previous)
• Eurozone ZEW Economic Sentiment Index September: 9.3 (16.3 expected, 17.9 previously)
• Housing starts in Canada slowed to 217,000 in August from 280,000 expected
• Canada’s headline monthly CPI for August: -0.2% (0.0% expected, +0.4% previously); Annual reading slowed from 2.5% y/y to 2.1% – lowest reading since February 2021
• Canada Monthly Core CPI Down 0.1% (previously up +0.3%); YoY reading down from 1.7% to 1.5% as expected
• US Retail Sales Headlines for August: +0.1% m/m (-0.2% expected, previous reading revised up from 1.0% to 1.1%); Core Retail Sales up 0.1% m/m (0.2% expected, previous reading 0.4%)
• US Industrial Production in August: 0.8% MoM (FX: 0.2%, previous reading revised down from -0.6% to -0.9%); Capacity Utilization at 78% (FX: 77.9%, previous reading revised to 77.4%)
• The National Housing Association’s U.S. Housing Market Index rose to 41 from 39 as expected in August.
• Australia’s CB Leading Index rose 0.1% month-on-month in July versus the previous 0.2% decline.
• New Zealand’s GDT auction saw dairy prices rise 0.8% after earlier falling 0.4%
• Westpac Bank New Zealand’s consumer confidence index improved from 82.2 to 90.8 in Q3 2024

Price movement in the broad market:

Although volatility was slightly higher compared to the previous day’s Asian trading session, major asset classes still seemed to struggle to find a clear direction based on sentiment.

Treasury yields continued to fluctuate as traders weighed the possibility of a 0.25% Federal Reserve rate cut versus a 0.50% cut in borrowing costs at the upcoming FOMC decision, before rallying after upbeat US retail sales data.

US stock indexes, which had surged in the previous trading session, struggled to stay afloat during the first few hours of the New York session before eventually ending the day mostly flat.

Bitcoin started to rise steadily early today, then recorded a sharp rise to test the $61,000 level before retreating to the $60,000 level. On the other hand, gold retreated further from its all-time highs while the US dollar returned to strength.

After a volatile run during the London session, crude oil prices also rose after seeing mostly positive US consumer spending figures, which could be an indicator of stronger demand for energy commodities in the future.

Forex Market Behavior: US Dollar vs Major Currencies:

US Dollar Overlay Against Major Currencies Chart by TradingView

After trading mostly sideways during Asian market hours and early London session, the US dollar managed to make some gains against most of its counterparts during the US retail sales release.

The headline reading for August came in better than expected with a 0.1% monthly increase versus expectations for a 0.2% decline while the consumer spending figure for July was raised to 1.1% from 1.0%. Meanwhile, the core reading came in below estimates with a meager 0.1% monthly increase instead of the expected 0.2% increase.

The dollar made its strongest gains against the yen, with the USD/JPY pair continuing to rise and closing up more than 1% on the day, followed by the British pound, the Swiss franc and the New Zealand dollar.

Weaker-than-expected Canadian CPI readings also pushed the Canadian dollar lower against the greenback, but the losses were likely short-lived as higher crude oil prices helped keep the dollar-pegged Canadian currency afloat. Only the Australian dollar ended the day higher against the greenback, despite a drop in gold prices.

Potential catalysts coming up on the economic calendar:

• UK CPI Report 6:00 AM GMT
• UK PPI figures at 6:00am GMT
• Final Eurozone headlines and core CPI at 9:00am GMT
• US Building Permits and Housing Starts at 12:30 AM GMT
• US crude oil inventories according to the US Energy Information Administration at 2:30 pm GMT
• Summary of the Central Election Commission deliberations at 5:30 pm GMT
• FOMC Statement and Economic Outlook 6:00 PM GMT
• Federal Open Market Committee Press Conference 6:30 PM GMT
• New Zealand GDP 10:45 PM GMT

It will be a big day for the markets, as investors prepare for the main event: the FOMC decision in September!

Will they cut interest rates by the standard 0.25% or offer a massive 0.50% cut? See Event Guide to the September FOMC Statement Let’s see what analysts are predicting and how USD pairs might react.

Before all that, UK CPI Release This report could also have an impact on GBP pairs, as the inflation report is due out a day before the Bank of England’s monetary policy decision.

Don’t forget to check out our new Forex Correlation Calculator!