Articles

US MBA mortgage applications: 0.5% vs -10.1% prior

US MBA mortgage market index: 226.9 vs 225.8 prior

US MBA purchase index: 131.8 vs 130.6 prior

US MBA refinancing index: 753.8 vs 754.4 prior

US MBA 30-year mortgage rate: 6.44% vs 6.50% prior

This article was written by Arno V Venter at www.forexlive.com.

• China’s Foreign Minister Wang Yi, in a meeting with U.S. National Security Adviser Sullivan, emphasized the importance of treating each other as equals for the smooth development of China-US interactions – Chinese state media.
• Wang Yi advised the U.S. not to judge China based on the path it has traveled nor to view China through the lens of a hegemonic strong country – state media.
• Wang Yi called for the U.S. to cease suppressing China in areas such as trade, commerce, science, and technology, and to stop jeopardizing China’s legitimate interests – state media.
• He criticized protectionism under the guise of ‘overcapacity’, stating it would jeopardize global green development and impact world economic growth – state media.
• Wang Yi urged the U.S. to adhere to its commitment not to support ‘Taiwan independence’, to stop arming Taiwan, and to support the peaceful ‘reunification’ of China – state media.
• He asserted that Taiwan ‘belongs to’ China and that ‘Taiwan independence’ poses the greatest risk to peace and stability in the Taiwan Strait – state media.
• Wang Yi warned the U.S. against undermining China’s sovereignty and territorial integrity under any pretext, and not to support or condone what he termed the Philippines’ ‘infringing acts’.
• He criticized the U.S. for not taking responsibility regarding the Ukraine crisis and for imposing ‘illegal’ unilateral sanctions indiscriminately.
• Both sides agreed to hold video calls between the two militaries’ theater leaders at an appropriate time – state media.
• China’s Foreign Minister Wang Yi, in a meeting with U.S. National Security Adviser Sullivan: Two sides discussed a new round of interaction between the two heads of state in the near future – state media.

This article was written by Arno V Venter at www.forexlive.com.

The bank notes three negative drivers for the USD:

• Lower Yields Environment: A persistent low-yield environment in the US, with the Fed’s dovish tone at the Jackson Hole speech reinforcing expectations for rate cuts is a negative environment for the USD as the Dollar’s value typically declines with lower US yields.

• Relative Disinflation: A new factor weighing on the USD is the relative disinflation in the US compared to other parts of the world, especially Europe. This could lead to divergent monetary policy paths between the Fed and other central banks like the ECB, putting further pressure on the Dollar.

• FX Sensitivity to Rates: The USD remains highly sensitive to changes in US Treasury yields. The DXY is likely to decline further if US yields continue to fall. The current forecast is for the UST 10Y yield to drop to 3.5% by year-end, which would translate to an additional 1.4% downside for the USD.

This article was written by Arno V Venter at www.forexlive.com.

Catalysts have been very thin on the commodity side this morning, but WTI has given up all of it’s Libya inspired gains from Monday.

We’re currently trading back below the $75 and getting close to the 1-standard deviation implied volatility low for the day.

When something can’t rally on good news or sustain a rally on good news I think that tells you a lot about the underlying sentiment. Price pushing lower despite the Libya situation and the draw of -3.4M in private inventory data overnight isn’t a great sign.

This article was written by Arno V Venter at www.forexlive.com.

The bank notes that knowing the outcome of US elections in advance doesn’t necessarily provide an investing edge.

Pre-Election Market Behavior:

• Historical data shows that the S&P 500 index and other markets do not follow a consistent pattern in the six months leading into an election, regardless of whether the government is divided or unified.
• Markets typically perform similarly in election years compared to non-election years, and the party of the winning candidate does not significantly affect this trajectory.

Post-Election Observations:

• While pre-election periods are generally noisy with little differentiation, post-election periods begin to show some distinctions based on expected policy changes in trade, fiscal, and tax areas.

Data and Analysis:

• While returns on stocks, bonds, the USD, and gold may look similar leading up to the election, they start to diverge after election results are announced.

Caveats:

• The effectiveness of using past election outcomes to predict future market behavior is limited due to the small sample size of elections and changing economic conditions.
• Market responses are more likely influenced by macroeconomic conditions and broader shifts in policy priorities over time.

This article was written by Arno V Venter at www.forexlive.com.

Israeli, US, Egyptian, and Qatari negotiators were meeting in Doha on Wednesday for “technical/working level” Gaza ceasefire talks – source with knowledge of the meeting to Reuters.

This article was written by Arno V Venter at www.forexlive.com.

Swiss investor sentiment: -3.vs 9.4 prior

This article was written by Arno V Venter at www.forexlive.com.

Eurozone Money M3 annual growth: 2.3% vs 2.7% expected

Eurozone loans to households: % vs 0.3% prior

Eurozone loans to non-finance institutions: % vs 0.7% prior

This article was written by Arno V Venter at www.forexlive.com.

• Citi Research: Zinc could touch $3,100/t by 4Q or early 2025 as manufacturing sentiment recovers amid supply-side constraints.
• Citi Research: “We see renewed upside for aluminium by 4Q or early 2025.”

This article was written by Arno V Venter at www.forexlive.com.

Libya’s Sarir oil field reduces production to near total shutdown – engineers to Reuters.

More updates out of Libya regarding their oil situation. Oil price is largely unchanged after the news as a lot of the good news was priced in on Monday.

This article was written by Arno V Venter at www.forexlive.com.

French consumer confidence: 92 vs 92 expected

This article was written by Arno V Venter at www.forexlive.com.

Swedish trade balance: 6.5 vs 8.7B prior

Swedish exports: 156.0 vs 170.6B prior

Swedish imports: 149.5 vs 161.9B prior

This article was written by Arno V Venter at www.forexlive.com.