With not a lot of fresh catalysts on tap, traders mostly played on Monday’s themes, and the major assets either extended their moves or pulled back ahead of this week’s awaited calendar events.
How did your favorite assets trade in the last trading sessions?
We have the deets!
Headlines:
- NAB: Australian business confidence fell 8 points to -3 in November; Business conditions fell 5 points to 2; Employment slipped from 5 to 2; Retail Price Growth slowed from 1.1% to 0.6%
- China trade surplus widened from $95.7B to $97.4B ($94.0B expected) in November as imports shrank 3.9% y/y following a 2.3% decline in October and exports slowed from 12.7% to 6.7%
- RBA maintained its interest rates at 4.35% as expected in December, but a shift in tone made for a “dovish hold” event
- Japan machine tool orders climbed 3.0% y/y in November after a 9.4% y/y jump in October
- Germany final CPI confirmed at 0.2% m/m and 2.2% y/y in November
- U.S. NFIB small business index for November: 101.7 (94.6 expected, 93.7 previous); More firms plan for increased hiring, higher compensation, and higher prices
- U.S. final nonfarm productivity confirmed at 2.2% (2.3% expected) in Q3 2024; Unit labor costs revised lower from 1.9% q/q to 0.8% q/q (1.3% expected)
- New Zealand manufacturing sales fell by 0.1% q/q in Q3; Q2 uptick revised higher from to 0.9%
- Israel conducted air strikes across Syria while ground forces advanced beyond the demilitarized zone on the Israel-Syria border
- EIA revised its global demand and output forecasts for 2025
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
With no major fresh catalysts, markets kept following yesterday’s trends.
Gold hit fresh two-week highs just shy of $2,700, supported by escalating violence in Syria, expectations of more PBOC buying, and rising bets that the FOMC will cut interest rates next week. WTI crude oil briefly dipped to $67.80 before bouncing back to $69.00, fueled by optimism over China’s stimulus efforts. Meanwhile, the U.S. 10-year Treasury yield climbed to 4.24%, recovering from Friday’s sell-off, helped by a stronger-than-expected U.S. small business sentiment report.
Equities had a tougher time. European indices snapped their winning streaks, and U.S. stocks extended yesterday’s declines as traders took profits ahead of the U.S. CPI reports. Even bitcoin rook hits, dipping to $94,550 before stabilizing near $97,000.
While upcoming CPI data likely won’t stop the Fed from cutting rates next week, it could shape how the FOMC frames its tone and plans for rate cuts heading into early 2025.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar started the day on the back foot, tracking weaker 10-year Treasury yields, but gained ground against the Aussie and Kiwi after a disappointing Chinese trade report and a “dovish hold” from the Reserve Bank of Australia (RBA). The RBA acknowledged inflation remains elevated but sounded a bit more optimistic about its outlook.
By the European session, the dollar found broader support, likely as traders squared positions ahead of the U.S. CPI reports. It extended its gains into the U.S. session, especially against AUD and NZD, while holding steady or making modest moves against other currencies.
By the end of the day, the Greenback was broadly higher, posting its biggest wins against the Aussie and Kiwi, though it still traded lower against the pound.
Upcoming Potential Catalysts on the Economic Calendar:
- U.S. CPI reports at 1:30 pm GMT
- BOC interest rate decision at 2:45 pm GMT
- BOC press conference at 3:30 pm GMT
- U.S. Crude Oil Inventories at 3:30 pm GMT
- U.S. Federal Budget Balance at 7:00 pm GMT
Traders in Europe and the U.S. will have their eyes on the U.S. CPI reports, which could shed light on inflation trends and hint at the Fed’s next move ahead of the FOMC decision next week.
Meanwhile, the Bank of Canada’s (BOC) is widely expected to cut its interest rates by another 50bps, which could lead to increased volatility around the statement and the presser. The EIA crude oil inventories due around the same time may also influence broader oil intraday trends.
Make sure you’re glued to the tube in case we see increased volatility during their events, and don’t forget to check out our Currency Correlation tool when taking any trades!