Daily Broad Market Recap – August 21, 2024


Just when it seemed that the Greenback was in recovery mode, it chalked up another day in the red thanks to a couple of major catalysts.

How did the rest of the markets fare?

Here are the headlines and economic updates you need to know:

Headlines:

  • Japanese July trade deficit narrowed from 0.82T JPY to 0.76T JPY vs. expected 0.72T JPY shortfall as exports jumped 10.3% y/y while imports rose 16.6%
  • Australia’s MI leading index chalked up another flat reading in July
  • New Zealand credit card spending in July: -3.8% y/y (-3.1% previous)
  • U.K. public sector net borrowing in July: 2.2B GBP (0.5B GBP estimate, previous reading revised from 13.6B GBP to 12.6B GBP)
  • Canada’s industrial product price index in July stayed flat month-on-month (-0.3% estimate, -0.1% previous), raw materials price index showed 0.7% m/m rebound (-0.7% estimate, -1.7% previous)
  • EIA crude oil inventories: -4.6M barrels (-2.0M estimate, +1.4M previous)
  • U.S. NFP annual revision for the year ending March 2024: -818K (-185K expected) as professional and business services sector saw a 385K reduction
  • FOMC minutes for July 30-31 meeting revealed that “vast majority” of policymakers agreed “it would likely be appropriate” to cut in September

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Major asset classes were sitting tight in their ranges during Asian market hours, as investors were likely biting their nails ahead of the release of the FOMC meeting minutes. Volatility picked up around the start of the London session, particularly for gold and crude oil.

While the energy commodity was able to rake in some gains from a larger than expected reduction in EIA crude oil inventories, it eventually resumed its slump after the U.S. Bureau of Labor Statistics published its annual NFP revisions for the year ending March 2024.

As it turned out, hiring gains for the period were downgraded by a whopping 818K, translating to 174K in monthly jobs growth versus the previously reported average of 246K. Rumors about these revisions were already circulating minutes before the actual numbers were printed, leading to jumpy price action for equity indices and Treasury yields as well.

The July FOMC minutes allowed crude oil and U.S. bond yields to take a break from their slide, as the document revealed that most Fed policymakers are leaning towards cutting in September.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Major Currencies Chart by TradingView

Overlay of USD vs. Major Currencies Chart by TradingView

The dollar seemed to start the day off in recovery mode, most notably against the Japanese yen, as it dipped then bounced versus the franc and Kiwi while gradually edging higher versus majority of its peers, with the exception of the Canadian dollar.

USD/CAD crawled lower thanks to a pickup in crude oil prices, followed by stronger than expected underlying inflation data from Canada and a larger than expected drop in EIA inventories.

USD/JPY also paused from its climb upon testing the 146.00 handle then extended its drop when the U.S. annual NFP revisions were released. The dollar found itself on weaker footing against the rest of its counterparts as well upon seeing the largest reduction to annual payrolls since 2009.

While the FOMC meeting minutes sparked further losses for the U.S. currency on additional confirmation that a September cut is likely, the Greenback managed to pull up before the end of the New York session, closing with only marginal losses against the yen, Aussie and Kiwi.

Upcoming Potential Catalysts on the Economic Calendar:

  • Japanese flash manufacturing PMI at 12:30 am GMT
  • French manufacturing and services PMI at 7:15 am GMT
  • German manufacturing and services PMI at 7:30 am GMT
  • Eurozone manufacturing and services PMI at 8:00 am GMT
  • U.K. manufacturing and services PMI at 8:30 am GMT
  • U.K. CBI industrial order expectations at 10:00 am GMT
  • ECB monetary policy meeting accounts at 11:30 am GMT
  • U.S. manufacturing and services PMI at 1:45 pm GMT
  • U.S. consumer confidence index at 2:00 pm GMT
  • New Zealand retail sales at 10:45 pm GMT
  • Japanese national core CPI at 11:30 pm GMT
  • Jackson Hole Symposium to kick off 

It’s PMI day, ladies and gents!

The market focus could shift back to global growth concerns, as major economies are scheduled to print their manufacturing and services PMI survey results throughout the day. Keep an eye out for potential swings in overall risk sentiment since these figures could either ease or stoke recession fears!