A parade of closely-watched economic data and positioning ahead of a U.S. bank holiday and end of the month sent the major assets all over the charts on Wednesday.
Can you guess which catalysts caused some of the biggest moves in the last trading sessions?
We’re breaking them down for ya:
Headlines:
- Australia’s annual CPI steady at 2.1% (2.5% expected) in October
- China industrial profits fell 4.3% in the year to October, faster than the 3.5% decline in the year to September
- RBNZ cut its rates by 50bps to 4.25% in November; Gov Orr hinted at another 50bps rate cut in February
- GfK: German consumer climate plummeted from -18.4 to -23.3 in November as income expectations and willingness to buy declined
- U.S. Q3 preliminary GDP confirmed at 2.8% as expected; Price index accelerated from 1.8% q/q to 1.9% q/q
- U.S. weekly initial jobless claims eased from 215K to 213K (215K expected) in the week ending Nov 23; Continuing claims rose to its highest since Nov 2021
- U.S. durable goods orders in October: 0.2% m/m (0.4% expected, -0.7% previous); Core durable goods eased from 0.5% to 0.1% (0.2% expected)
- U.S. goods trade deficit shrank from $108.7B to $99.1B ($102.2B expected) in October
- U.S. core PCE price index remained at 0.3% m/m as expected in October
- U.S. pending home sales in October: 2.0% m/m (-2.1% expected, 7.5% previous)
- U.S. personal income accelerated from 0.3% to 0.6% (0.3% expected) in October; Personal spending slowed from 0.6% to 0.4% as expected
- EIA: U.S. crude oil inventories fell by 1.8M barrels in the week ending Nov 22 (-1.3M expected, 0.5M previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
China’s softer industrial profits report started the day on a bearish note, but uncertainty ahead of Wednesday’s U.S. data dump and some end-of-month flows likely kept a lid on demand for the USD and safe havens.
Gold climbed to $2,658, while U.S. crude oil prices, caught between the Israel-Hezbollah ceasefire news and rising U.S. crude inventories, extended Tuesday’s gains to test $69.30 before losing steam.
In the U.S., a batch of economic reports pointed to solid economic growth, strong consumer spending, and stubbornly high inflation. Still, markets are betting the Fed will cut rates by at least 25bps in December.
The rate cut chatter, along with some end-of-month positioning, put pressure on U.S. 10-year yields and the dollar. It could also explain why gold and oil prices cooled off during the U.S. session. U.S. equities, meanwhile, took a step back, as sticky high core PCE data weighed on sentiment, trimming some of the week’s gains ahead of the holiday break.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar traded in tight ranges early on after losing ground late Tuesday. NZD/USD and USD/JPY bucked the trend—Kiwi priced in the RBNZ’s 50bps rate cut, while USD/JPY extended its slide from earlier this week.
Fresh selling hit the dollar during early European trading, likely as traders unwound USD positions ahead of the upcoming U.S. data dump and month-end adjustments.
The Greenback found some footing during the U.S. session after a string of reports highlighted resilient growth, solid consumer spending, and stubbornly high core price pressures. Still, the data didn’t shake expectations for a Fed rate cut in December.
Around the London close, the dollar took another dip before settling into a choppy range against major counterparts by the end of the day.
Upcoming Potential Catalysts on the Economic Calendar:
- Spain flash CPI at 8:00 am GMT
- RBA Gov. Bullock to give a speech at 8:55 am GMT
- Germany preliminary CPI at 9:00 am GMT
- U.S. markets out on bank holiday
- Canada current account at 1:30 pm GMT
- Tokyo core CPI at 11:30 pm GMT
- Japan unemployment rate at 11:30 pm GMT
- Japan preliminary industrial production at 11:50 pm GMT
- Japan retail sales at 11:50 pm GMT
Forex traders should gear up for a busy European session, with Germany’s preliminary CPI and Spain’s flash CPI setting the tone early.
As the U.S. session kicks off, volatility may be subdued due to the U.S. bank holiday, leaving traders to focus on Canada’s current account report and Japan’s late-night economic releases.
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!