No big data release? No problem!
Pullbacks from the previous week’s moves and positioning ahead of this week’s potential market movers got traders pushing the major assets all over the charts on Monday.
Which headlines dominated market price action anyway? Let’s break them down:
Headlines:
- Japan bank lending slowed from 3.2% y/y to 3.0% in August vs. 3.2% forecast
- Japan current account surplus widened from 1.78T JPY to 2.80T JPY (2.08T JPY forecast)
- Japan final GDP reading for Q2 2024 downgraded from 0.8% q/q to 0.7%; price index upgraded from 3.0% to 3.2%
- Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said the BOJ is ready for further interest rate hikes
- Chinese CPI rose from 0.5% y/y to 0.6% vs. 0.7% forecast in August, PPI fell 1.8% y/y (-1.5% expected, -0.8% previous)
- Sentix: Eurozone investor confidence index fell further from -13.9 to -15.4 in September; “The eurozone is struggling with dangerous recessionary tendencies ‘thanks to Germany’“
- Crude oil prices rose on risk recovery and threats of a hurricane possibly disrupting production and refining along the U.S. Gulf Coast
- U.S. Conference Board Employment Trends Index improved from a downwardly revised 108.71 to 109.04 in August; “The pace of labor market slowdown remains sustainable“
- Westpac: Australian consumer sentiment dipped 0.5% from 85.0 to 84.6 in September; Focus may be shifting from cost of living to job prospects
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
With a light schedule of top-tier data, most major assets reversed some of Friday’s selloff.
Global stocks, in particular, got a lift from bargain hunters and eased fears of a hard landing for the U.S. economy. Bitcoin (BTC/USD) also joined the rally, briefly spiking near $58,000 before settling at $57,100.
Gold, on the other hand, dipped to Friday’s lows during early European trading, but expectations of Fed rate cuts kept the precious metal supported. XAU/USD bounced from $2,485, closing the day just above $2,500. Similarly, cooling talk of a 50-bps Fed rate cut gave U.S. bonds a boost, driving 10-year yields to their lowest levels in over a year.
Oil had a solid day too, as concerns over a potential hurricane in the Gulf of Mexico stirred up demand, with fears that production and refining along the U.S. Gulf Coast might be impacted.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar kicked off the day strong, recovering from Friday’s selloff.
It gained momentum during the European session but lost some steam as U.S. markets opened. This could be due to increased risk-taking, which reduced demand for the safe-haven dollar.
USD saw some sharp drops around the London close but managed to bounce back, ending the day higher against most major currencies—except for the Canadian dollar, which outperformed.
Upcoming Potential Catalysts on the Economic Calendar:
- Germany’s final CPI at 6:00 am GMT
- U.K. jobs reports at 6:00 am GMT
- Japan preliminary machine tool orders at 6:00 am GMT
- Italy industrial production at 8:00 am GMT
- BOE member Sarah Breeden to give a speech at 11:00 am GMT
- BOC Gov. Macklem to give a speech in London at 12:10 pm GMT
- FOMC member Michael Barr to give a speech at 2:00 pm GMT
- FOMC member Michelle Bowman to give a speech at 4:15 pm GMT
- U.S. Presidential candidates Trump and Harris debate at 1:00 am GMT (Sept 11)
European session traders are in for a busy day as Germany prints its final August inflation numbers while the U.K. drops its latest employment reports.
In the U.S., central bankers will be under the spotlight with BOC, BOE, and FOMC members scheduled to give speeches.
Look out for headlines that may influence the markets’ positioning for the major central banks’ biases!
Don’t forget to check out our brand new Forex Correlation Calculator!