Daily Broad Market Recap – September 23, 2024

Major assets were all over the place on Monday, as traders priced in a Federal Reserve rate cut, escalating tensions in the Middle East, and a potential slowdown in global growth.

What headlines have caught traders’ attention during recent trading sessions?

We talk about them below!

Headlines:

• New Zealand trade deficit The budget deficit jumped to NZ$2.20 billion in August, with the July deficit revised up from NZ$963 million to NZ$1.02 billion.
• Judo Bank Australia Manufacturing PMI The services PMI fell from 48.5 to a 52-month low of 46.7 in September; the services PMI fell from 52.5 to a two-month low of 50.6
• HCOB flash France Manufacturing PMI September: 44.0 (44.3 expected, August revised up from 42.1 to 43.9); Services PMI at 48.3 (53.0 expected, 55.0 prior)
• HCOB flash Germany Manufacturing PMI September: 40.3 (42.4 expected, previous); Services PMI at 50.6 (51.1 expected, previous 51.2)
• HCOB flash Eurozone Manufacturing PMI September: 44.8 (45.7 expected, 45.8 prior); Services PMI at 50.5 (52.3 expected, August reading revised down from 53.3 to 52.9)
• S&P World Index UK Manufacturing PMI September: 51.5 (52.3 expected, 52.5 prior); Services PMI at 52.8 (53.5 expected, August reading revised up from 53.3 to 53.7)
• CBI Industrial Orders Forecast Deteriorated from -22 to -35 (expected -23) in September
• Preliminary U.S. PMIs Show Slowing Hiring, Higher Inflation in September
• FOMC Voting Member Raphael Boucek He cited slowing inflation and the labor market outlook as reasons for his support for a 50 basis point rate cut, adding that “I believe that monetary policy normalization will be faster than I thought was appropriate even a few months ago.“
• FOMC Voting Member Austin Goolsbee Interest rates are likely to be cut “significantly in the future” given the potential deterioration in the labor market and the delay in monetary policy changes.
• Canada’s New Home Price Index Stagnant (vs. 0.1% expected and 0.2% prior) in August
• African Union Bank Gibon Japan Manufacturing PMI For September: 49.6 (49.9 expected, 49.8 prior)

Price movement in the broad market:

Markets were mixed on Monday as traders reacted to a Federal Reserve interest rate cut, rising tensions in the Middle East and concerns about slowing global growth.

Crude oil prices started strong, supported by rising geopolitical risks and hurricane threats in the Gulf of Mexico. But weak PMI readings from Europe and the US and growth concerns in China pushed US oil prices from a high of $71.77 to $69.47 before recovering to settle around $70.65.

Gold found support from central bank buying, geopolitical tensions and the Federal Reserve’s latest rate cut. The precious metal briefly fell under the weight of a stronger US dollar during the London session, but ended the day at fresh record highs of $2,628.

Elsewhere, markets reflected broad support among Fed members for a 50 basis point rate cut. The S&P 500 and Dow Jones closed at fresh record highs, while the yield on the 10-year Treasury note touched 3.79% before Goolsbee’s speech helped push it to 3.75%.

Forex Market Behavior: US Dollar vs Major Currencies:

US Dollar Overlay Against Major Currencies Chart by TradingView

The US dollar started the week with modest losses against most of its peers. The only exception was USD/JPY, likely due to Japanese markets being closed for a holiday. On the other hand, AUD/USD posted strong gains after the People’s Bank of China boosted its economy by cutting the 14-day reverse repo rate by 10 basis points.

The US dollar rose ahead of the London open and gained further momentum as weaker-than-expected European PMI data fuelled talk of an interest rate cut by the European Central Bank and raised concerns about global growth.

But for US dollar investors, the rally was short-lived. Speculation of a Fed rate cut soon weighed on the dollar, while weak US employment data in the PMI and FOMC members’ support for a rate cut last week added to the pressure. It was only after the London close that the dollar found some stability, retreating and settling into a range.

Potential catalysts coming up on the economic calendar:

• Reserve Bank of Australia monetary policy decision at 4:30am GMT, followed by press conference at 5:30am GMT
• Bank of Japan Governor Ueda to deliver speech at 5:05 a.m. GMT
• German IfO Business Climate Index at 8:00 am GMT
• S&P US Home Price Index at 1:00 PM GMT
• FOMC Member Michelle Bowman to Speak at 1:00 PM GMT
• US Consumer Confidence Index at 2:00 PM GMT
• US Richmond Manufacturing Index at 2:00 PM GMT
• ECB member and Bundesbank President Nagel to speak at 4:00 pm GMT
• Bank of Canada Governor Macklem will deliver a speech at 5:10 p.m. GMT.
• Australian CPI report at 1:30am GMT (September 25)

Central bankers will be at the forefront of attention in the coming trading sessions as the Reserve Bank of Australia reverses its September policy decisions!

Later, FOMC voting member Michelle Bowman — the lone dissenter from last week’s decision — will weigh in at the U.S. session. European Central Bank President Nagel and Bank of Canada Governor Macklem could also move the euro and loonie in their scheduled speeches.

Furthermore, mid-level US data releases could influence dollar trends during the week ahead of the highly anticipated US core PCE price index on Friday.

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