Daily Broad Market Recap – September 4, 2024

Market correlations were out of sync on Wednesday, as major asset classes appeared to respond to their individual catalysts.

Forex price action was mostly chaotic as well, although the US dollar was generally weaker throughout the day.

Here are the latest economic updates and headlines that pushed markets higher:

Headlines:

• New Zealand’s ANZ commodity prices rose 2.1% year-on-year in August, compared with a previous decline of 1.7%.
• Australian economy expands 0.2% on quarterly basis As expected in Q2 2024, the previous GDP reading was raised from 0.1% to 0.2%.
• China Services PMI It fell from 52.1 to 51.6 in August, versus an estimated 51.9.
• The Eurozone’s final services PMI was lowered to 52.9 in August from 53.3, versus expectations of no change.
• The UK’s final services PMI rose to 53.7 in August from 53.3, reflecting a faster pace of growth.
• Eurozone producer price index rose from 0.6% month-on-month in June to 0.8% in July versus 0.3% expected
• OPEC+ considers postponing production increase Where Libya will resume production
• The Bank of Canada cut interest rates by 0.25%. From 4.50% to 4.25% and hinted at more easing in the future
• Job opportunities at US JOLTS Down from 7.91 million (8.18 million initially) in June to 7.67 million in July (8.09 million) as expected
• Feed the Beige Book Highlights of “stable or declining” economic activity and a disappointing labor market

Price movement in the broad market:

While most asset classes moved cautiously during Asian market hours, Bitcoin and crude oil started the day in the red, perhaps still following the sell-off in the previous session.

Energy-related commodities rose further after weaker-than-expected Chinese services PMI data added to concerns about demand. Prices turned higher during the London session as investors began talking about a possible delay to the OPEC+ output increase now that Libya is ready to resume oil production, but gains were wiped out by the start of the New York session.

US Treasury yields continued to fall after US jobs data showed a smaller-than-expected decline, while Bitcoin took advantage of the weaker US dollar. US stock indexes took a breather from their previous slide, as the negative employment figures once again reignited talks of a larger interest rate cut by the Federal Reserve later this month.

Forex Market Behavior: US Dollar vs Major Currencies:

US Dollar Overlay Against Major Currencies Chart by TradingView

Major currency pairs traded in wider ranges than usual with the greenback slightly bearish during the Asian session. The Australian and New Zealand dollars started the day on the back foot, with the Australian GDP and Caixin services PMIs doing little to steer these commodity currencies in a clearer direction.

We saw some sideways price action early in the London session, before the dollar pulled back. US job openings for July came in below expectations and were revised negatively from the previous month, raising expectations of a potential miss in the non-farm payrolls report later this week.

The Bank of Canada also announced its monetary policy decision by cutting interest rates by 0.25% as expected and signaling further easing, but this did not really spark more volatility in the USD/CAD pair.

While most of the dollar’s peers resumed their range-trading after the JOLTS report, the USD/JPY pair continued to decline and closed down more than 1% on the day.

Potential catalysts coming up on the economic calendar:

• Reserve Bank of Australia Governor Bullock’s speech at 2:00am GMT
• Unemployment rate in Switzerland at 5:45 am GMT
• Challenger job cuts 11:30 AM GMT
• US ADP Non-Farm Employment Change 12:15 PM GMT
• US Initial Jobless Claims at 12:30 PM GMT
• US ISM Services PMI 2:00 PM GMT
• US Energy Information Administration Crude Oil Inventories at 3:00 PM GMT

We have a new batch of leading US employment indicators today, namely the Challenger Job Cuts, ADP Non-Farm Payrolls Change, and ISM Services PMI. Expect more volatility in the US Dollar as these could contain hints for the highly anticipated Non-Farm Payrolls report due out on Friday.

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