Profit-taking was the name of the game on Thursday, as traders braced for top-tier U.S. data releases, the U.S. elections, and the end of a trading month.
Which headlines dominated price action in the last trading sessions?
We’re breaking them down for ya:
Headlines:
- China manufacturing PMI for October: 50.1 (49.8 expected and previous); Services PMI improved from 50.0 to 50.2 (50.4 expected)
- BOJ kept policies steady as expected, Gov. Ueda hinted at future rate hikes and the increased impact of FX moves on wages and prices
- France preliminary CPI accelerated by 0.2% m/m as expected in October after a 1.2% downtick in September
- Germany retail sales for September: 1.2% m/m (-0.7% expected, 1.6% previous)
- ECB member Fabio Panetta favors further rate cuts and shifting the central bank’s focus to sluggish economic growth
- ECB President Lagarde said inflation could slow to the 2% target by 2025
- Euro Area flash CPI estimate for October: 2.0% y/y (1.9% expected, 1.7% previous); Core CPI at 2.7% (2.6% expected, 2.7% previous)
- Challenger Report job cuts declined from 75,891 in August to 72,821 in September; Hiring plans showed the lowest YTD hiring since 2011
- Canada monthly GDP stagnated as expected in August following a downwardly revised 0.1% increase in July
- U.S. core PCE price index accelerated from 0.2% m/m to 0.3% m/m as expected in September; August reading revised from 0.1%
- U.S. employment cost index for Q3 2024: 0.8% q/q (0.9% expected and previous)
- U.S. initial jobless claims eased from 228K to 216K (229K expected) in the week ending October 26
- U.S. Chicago PMI dropped from 46.6 to 41.6 in October; Employment decreased 5.5 points to 41.9; Prices paid fell 7.0 points after hitting 13-month highs in September
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Thursday saw a broad pullback as traders geared up for key U.S. data releases and next week’s elections, with some also cashing in profits to wrap up the month.
European and U.S. stocks took a hit, likely pressured by rising global bond yields, month-end profit-taking, and recent alerts from Microsoft and Meta about climbing AI costs.
Bitcoin (BTC/USD) took a dive after failing to break above the $73K mark on Wednesday, sliding down to around $70K.
On the energy front, U.S. crude oil prices continued Wednesday’s rebound, buoyed by a surprise EIA inventory drop, OPEC+ members considering holding off on production hikes beyond December, and looming concerns about a possible major strike from Iran against Israel. WTI rose from lows of $68.50, finishing the day near $70.50.
In the U.S., a monthly increase in the core PCE price index initially boosted U.S. bond yields and the dollar. Still, with an annual reading staying high and a stronger-than-expected jobless claims report, expectations for Fed rate cuts lingered, eventually pulling 10-year yields and the dollar back to where they started the session.
Gold, a popular alternative to the USD, kicked off near its record highs around $2,790 before dipping to close at $2,745.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The Japanese yen grabbed attention early on after the Bank of Japan’s (BOJ) unanimous call to keep its policies unchanged.
While this move was widely expected, BOJ Governor Ueda’s comments on closely watching the effects of FX swings on wages and prices—and even hinting at a possible rate hike—pushed the yen higher during the Asian session.
As the European session rolled in, the spotlight shifted to upcoming U.S. data, which kept major currencies in a holding pattern.
Later, a bump in the monthly core PCE price index, along with stronger-than-expected jobless claims, initially lifted the dollar. But with annual readings still running high and caution ahead of next week’s presidential election, the dollar slid back to where it began the session.
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. nationwide house price index at 7:00 am GMT
- Switzerland CPI at 7:30 am GMT
- Switzerland retail sales at 7:30 am GMT
- Switzerland manufacturing PMI at 8:30 am GMT
- U.K. final manufacturing PMI at 9:30 am GMT
- U.S. NFP reports at 12:30 pm GMT
- Canada manufacturing PMI at 1:30 pm GMT
- U.S. S&P final manufacturing PMI at 1:45 pm GMT
- U.S. ISM manufacturing PMI at 2:00 pm GMT
All eyes will be on Uncle Sam’s October employment figures, which may inspire changes in expectations around the Fed’s next policy decisions.
Before that, Switzerland’s CPI and a PMI report from the U.K. during the European session may inspire short volatility spikes among the European currencies.
Make sure you’re glued to the tube around the releases so you don’t miss potential short-term trading opportunities!
Don’t forget to check out our brand new Forex Correlation Calculator when taking any trades!