General Market Analysis – 19/08/24

US Stocks Close on Friday to Round Out Best Week of the Year – Dow up 0.25%

US stock markets once again finished the trading day higher on Friday, capping off their best week of 2024. The Dow closed up 0.24%, the S&P added 0.20%, and the Nasdaq ended up 0.21%. US Treasury yields took another step lower, with the 2-year dropping 3.7 basis points to 4.064% and the benchmark 10-year falling 3.6 basis points to 3.890%. The dollar took a significant hit, dropping 0.56% on the index, and falling to its lowest recorded level against gold. Oil prices also declined as demand concerns outweighed potential supply issues in traders’ minds, with Brent losing 1.7% to $79.68 per barrel and WTI dropping 1.9% to $76.05 per barrel. Gold surged through resistance levels to reach a new all-time high of $2,509.60, with little retracement seen on the Asian open this morning.

FX Majors in Focus After Another Drop in the Dollar

FX traders are preparing for further market movements in the sessions ahead as Friday’s dollar decline has left several major currencies trading at critical levels on the Asian open this morning. Currencies have rallied strongly against the greenback since sharp dips a couple of weeks ago, and breaks at key technical levels could see these moves gain even more momentum. The Euro, Kiwi, and CAD are all sitting on key trendline levels against the dollar, with other pairs not far from breaking into new ranges. Traders will closely monitor updates from the Fed this week to determine whether these moves are justified, as any indication of a 50-basis point cut in September could tip the balance.

Another Quiet Monday to Start the Trading Week

The macroeconomic event calendar is relatively sparse this week, especially today, with little scheduled to disrupt current momentum—which, given last week’s moves, will likely cheer investors. There is nothing scheduled in the first two trading sessions of the day; however, we do have our first Fed speaker of the week later in the New York session when Christopher Waller speaks in Washington, D.C. Normally, this would be a tier 2 event, but there is significant focus on Fed updates this week, with the minutes out on Wednesday and Jerome Powell speaking on Friday. Anything deviating from market expectations could trigger exaggerated moves, especially on a ‘slow news’ day.

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