Daily Broad Market Recap – September 30, 2024

Monday was mixed for most asset classes, before dollar pairs were able to find a clear direction during Fed Chairman Powell’s speech.

Commodities found themselves on shaky ground after China published gloomy PMI numbers, however global stocks managed to control losses.

Here are other updates you should know about!

Titles:

• Sunday, The People’s Bank of China (PBOC) announced that it will expand supportive measures to real estate developers until the end of 2026, and advised banks to reduce mortgage rates on existing home loans before October 31.
• The escalation of geopolitical tensions Three Palestinian leaders were also killed in an Israeli raid in Beirut
• Japan Initial Industrial Production for August: -3.3% m/m (-0.5% expected, previous reading was upgraded from 2.8% to 3.1%)
• Japanese retail sales in August: +2.8% y/y (2.6% y/y expected, 2.7% y/y previously)
• Japan Housing Start for August: -5.1% y/y (-3.3% y/y expected, -0.2% y/y previous)
• The ANZ New Zealand business confidence index rose from 50.6 to 60.9 in September
• China’s official manufacturing PMI Improved from 49.1 to 49.8 in September (49.4 forecast); Non-manufacturing PMI fell from 50.3 to 50.1 (expect 50.4)
• China Caixin Manufacturing PMI Decreased from 50.4 to 49.3 in September (50.5 expected); Non-manufacturing PMI fell from 51.6 to 50.3 (expect 51.6)
• German import price change for August 2024: -0.4% m/m (-0.2% m/m forecast; -0.4% m/m previous)
• Preliminary German Consumer Price Index Reading for September 2024: 1.6% on an annual basis compared to 1.9% on an annual basis previously
• Switzerland’s KOF leading economic indicator for September: 105.5 (102.5 forecast; previous 105.0)
• During the European Parliament hearing in Brussels. President of the European Central Bank Lagarde He hinted at a possible rate cut in October
• Chicago September PMI: 46.6 (previously 46.1, 46.1 consensus)
• During a speech he delivered before the National Association for Business Economics, Federal Reserve Chairman Powell He indicated further cuts to come but emphasized that they were “not on any predetermined path.”
• The New Zealand Business Confidence Index (NZIER) rose from -44 to -1 in September

Broad market price movement:

The majority of asset classes started the day on a quiet note, with the exception of Crude Oil which fell from the start and then continued to rise due to geopolitical tensions during the Asian trading session. As it turned out, Israel launched strikes on Beirut and began its ground invasion of Lebanon, reviving concerns about oil production in the region.

Bitcoin woke up on the wrong side of the bed and continued its downward trajectory for the rest of the day, falling from the $66,000 levels to the $63,500 region. Gold traders also appeared to be in a bad mood throughout the day, as the precious metal closed down nearly 1%, likely due to the mostly downbeat PMI readings out of China.

On the other hand, Treasury yields moved into the green zone at the beginning of the London session and got an additional boost from Fed Chairman Powell, who hinted in his testimony that they are in no rush to cut interest rates but will do what it takes to maintain interest rates. The economy is stable.

Meanwhile, US stocks initially fell as investors were disappointed to discover that further interest rate cuts were not in the cards, but some risk flows eventually returned when giants such as Apple, Microsoft and Alphabet posted healthy gains.

Forex market behavior: US dollar against major currencies:

Overlay of the US dollar against major currencies Chart by TradingView

The major pairs had a mixed start, before the US dollar picked up some safe-haven flows when China posted weaker than expected PMI numbers. However, losses for commodity currencies were limited since the Chinese government and central bank distributed massive stimulus packages aimed at boosting the economy.

The USD/JPY pair initially rose after a weaker-than-expected Japanese industrial production report and some profit-taking following the victory of new Japanese Prime Minister Shigeru Ishiba last Friday. However, the yen was able to regain its strength thanks to the strong performance of the Nikkei index.

However, the tide turned at the start of the London session, as the US dollar regained strength against the Australian and New Zealand dollars, the yen and the franc while remaining on shaky ground against the euro and the British pound. A weaker-than-expected German CPI hardly dampened sentiment for the single currency, as traders focused on flat services inflation.

Another round of mixed price action ensued, before the US dollar attracted a strong showing from Powell’s less-than-cautious testimony. After all, he noted that the US economy was still strong but the Fed just wanted to stay ahead of the curve when it came to reducing labor market risks, dashing hopes of bolder easing steps in the near term.

Potential catalysts coming on the economic calendar:

• Chinese banks closed their doors for the holiday
• Swiss retail sales at 6:30 am GMT
• Eurozone Consumer Price Index (CPI) estimates 9:00 AM GMT
• US ISM Manufacturing PMI 2:00 pm GMT
• JOLTS JOBS IN USA 2:00 pm GMT
• The New Zealand GDT dairy auction is coming
• FOMC members Barkin, Bostic and Collins will participate in a panel discussion at 10:15 p.m. GMT.

We have a few high-profile economic releases that could shake things up in the market today!

Among them are the Eurozone flash reading and core CPI readings for September, which could shape the ECB’s policy outlook and influence long-term euro trends. Next, keep an eye on the US ISM Manufacturing PMI and JOLTS jobs report, both of which are likely to influence non-farm payrolls positioning and overall market sentiment.

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