Articles

US Markets Surge After Strong Retail Sales – Nasdaq Up 2.3%

US markets surged yesterday as stronger-than-expected retail sales data lifted hopes of a soft landing for the economy, pushing back expectations of a 50-basis point rate cut by the Federal Reserve in September. The three major indices all rallied, with the Dow gaining 1.39%, the S&P 500 up 1.61%, and the Nasdaq closing 2.34% higher. US Treasury yields also rose, with the 2-year yield reaching levels not seen in two weeks, climbing 15.9 basis points to 4.106%. The benchmark 10-year yield increased by 10.6 basis points, trading back to 3.928%. Oil prices benefited from the positive news, with Brent crude up 1.6% to $81.04 per barrel and WTI rising 1.53% to $78.16 per barrel. Gold prices saw a volatile trading day but ultimately closed higher, finishing the New York session at $2,454 an ounce.

Soft Landing for the US on the Horizon

Recent US economic data suggests that the economy may be heading for the much-anticipated “soft landing,” with last night’s stronger-than-expected retail sales figures further supporting this outlook. Markets were anticipating a 0.4% month-on-month increase in the headline figure, but the actual 1% print far exceeded expectations. Just weeks ago, some market participants were calling for an emergency rate cut from the Fed, with a 50-basis point reduction expected at the September meeting. Now, 72% of the market anticipates a more moderate 25-basis point cut next month, with gradual reductions continuing into the new year. The dollar gained ground last night, though it remains within familiar ranges against most major currencies. If data continues to indicate a resilient US economy, traders expect the greenback to push into new ranges in the coming weeks.

Markets Aim to Close the Week on a Positive Note

Global financial markets are poised to end the week on a high note, following a strong performance on Wall Street yesterday. Asian markets are set to open on a positive footing, taking cues from the US, while traders in Australia will closely monitor RBA Governor Michele Bullock and RBNZ Governor Adrian Orr’s separate speeches during the morning session. The London open brings another significant UK data release, this time focusing on retail sales, before attention shifts to New York. With little on the economic calendar to disrupt yesterday’s positive momentum, investors will be watching for building permits data and preliminary reports from the University of Michigan to further bolster the good news narrative.

The post General Market Analysis – 16/08/24 first appeared on IC Markets | Official Blog.

Info incoming from around the place re a Chinese customs announcement:

• China to intensify monitoring of individuals and goods coming from monkeypox-affected regions
• new measures mandate that travellers from outbreak regions must declare any contact with symptomatic individuals and report any symptoms they have

The initiatives aim to curb the spread of monkeypox within China.

Extended lockdowns are still in recent memory. These measures are not that. Fingers crossed this doesn’t escalate. I don’t think this is as contagious, but I could be wrong.

This article was written by Eamonn Sheridan at www.forexlive.com.

Singapore’s non-oil domestic exports (NODX) for July 2024

+12.2% m/m

• vs. +2.2% expected and -0.4% in June

+15.7% y/y

• expected +1.2%, prior -8.7%

Electronics and non-electronics
exports growing. Non-oil exports to the United States +28.9% y/y

• to China
  +21.1% y/y
• to the European
  Union, Japan, Hong Kong and South Korea fell

—

Singapore Non-oil Domestic Exports (NODX) measures the value of goods exported from Singapore excluding oil and petroleum products.

• an important gauge of Singapore’s external trade performance, especially for the manufacturing and export sectors
• covers a wide range of products, including electronics, chemicals, pharmaceuticals, machinery, precision engineering goods, and more
• growth in NODX indicates an increase in exports, which can boost economic activity and contribute to GDP growth
• a decline in NODX suggests a slowdown in export demand and may signal weaker economic conditions
• factors influencing NODX include global economic conditions, changes in international demand for Singaporean goods, fluctuations in exchange rates, shifts in global supply chains, and changes in government policies related to trade

Singapore is heavily reliant reliance on international trade. It’s a small and open economy where exports play a significant role in driving economic growth and employment.

This article was written by Eamonn Sheridan at www.forexlive.com.

Rabobank analysts on oil:

• “The concerns of an escalation in the Middle East between Iran and Israel again remain overblown with regard to elevated crude oil prices”
• “Only direct action between Saudi Arabia, Iran, and the United States toward some kind of blockade or closure of the Strait of Hormuz will materially affect the global crude oil and natural gas supply”

Nevertheless, Rabo say that the fears of a wider conflict will keep Brent crude above US$70 a barrel.

If there is an escalation and prices rise the analysts say the best trade is to sell the spike.

This article was written by Eamonn Sheridan at www.forexlive.com.

Via EMSC (pic below) on the Taiwan earthquake:

• Magnitude 6.1
• Depth 15 km
• Distance 117 km E of Taichung, Taiwan
• 27 km SE of Hualien City, Taiwan

This article was written by Eamonn Sheridan at www.forexlive.com.

Venezuelan President Nicolas
Maduro on Thursday rejected comments from U.S. and Brazilian
leaders about his country’s contested July presidential
election.

• “I reject absolutely that the United States is trying to
  become Venezuela’s electoral authority,”

We keep an eye on Venezuela because it is an oil producer.

This article was written by Eamonn Sheridan at www.forexlive.com.

Quite the jump for these!

The Reserve Bank of New Zealand cut its cash rate on Wednesday. While consumer inflation has been drifting down this data has gone in the opposite direction.

Earlier from New Zealand today:

• New Zealand July Manufacturing PMI 44.0 (prior 41.1)

—

The Producer Price Index (PPI) is a measure of the average prices that producers in a country receive for their outputs (PPI Outputs) and the average prices that producers pay for their inputs (PPI Inputs).

PPI Outputs:

• The PPI Outputs measure the average prices received by New Zealand producers for goods and services they produce and sell. This could be to other businesses (intermediate consumption) or to final consumers.
• cover various industries such as agriculture, manufacturing, construction, and services, among others
• rising PPI Outputs index can indicate increasing inflationary pressure as producers are getting higher prices for their goods and services. However, they might not necessarily pass these increases on to consumers

PPI Inputs:

• The PPI Inputs, on the other hand, measure the average prices paid by New Zealand producers for their inputs — the raw materials, services, and capital goods they use to produce their goods and services.
• These inputs can be sourced domestically or imported.
• When the PPI Inputs index is rising, it suggests that producers are facing higher costs, which might eventually lead to higher prices for consumers if the producers pass these costs on through higher output prices.

This article was written by Eamonn Sheridan at www.forexlive.com.

Business NZ Manufacturing PMI for July 2024 records its 17th consecutive month of contraction.

• some small signs of improvement
• still significantly below its long-term average of 52.6

BusinessNZ’s Director, Advocacy Catherine Beard:

• sector continuing to strugglee

BNZ’s Senior Economist Doug Steel:

• manufacturing activity will turn when the broader economy turns
• Easing monetary conditions will help in this regard, but it will take time for the likes of a lower OCR to generate a general pick up in sales

This article was written by Eamonn Sheridan at www.forexlive.com.

China has built the world’s largest offshore oil platform that will be used at the Marjan field in Saudi Arabia.

More info here at the link

Its an interesting read and also has other information including:

• Chevron company announced last week it had successfully tested a new high-pressure extraction technology at a deepwater well in the Gulf of Mexico

—

Brent update:

This article was written by Eamonn Sheridan at www.forexlive.com.

Vice President Kamala Harris will call for the construction of 3 million new housing units in her first four years in office, as well as a new tax incentive for builders that construct properties for first-time home buyers

The Wall Street Journal with the report. The housing plan is part of Harris’ economic plan, which she is expected to address in a speech in Raleigh, N.C., on Friday.

The Journal is gated, if you can access it, here is the link:

• Harris to Call for Construction of 3 Million New Housing Units, Tax Incentives to Build Homes for First-Time Buyers

Vice President Harris is the Democrat nominee for the US Presidential election

This article was written by Eamonn Sheridan at www.forexlive.com.

• US July retail sales +1.0% versus +0.3% expected
• Walmart offered six endorsements on the health of the US and global consumer
• US initial jobless claims 227K vs 235K expected
• US July Philly Fed -7.0 vs +6.0 expected
• August Empire Fed -4.7 vs -6.0 expected
• US July import prices 0.1% vs -0.1% expected
• US August NAHB home builder sentiment survey 39 vs 43 expected
• US June business inventories +0.3% vs +0.3% expected
• US July industrial production -0.6% vs -0.3% expected
• Fed’s Musalem: Time may be nearing for a change in the policy rate
• Canada June wholesale sales -0.6% vs -0.6% expected
• Atlanta Fed GDPNow Q3 2.4% vs 2.9% prior
• PBOC Governor Pan: Will stabilize expectations and help consolidate recovery
• Bank of America fund manager survey highlights optimism in a soft landing, equities

Markets:

• S&P 500 up 1.6%
• WTI crude oil 98-cents to $77.98
• US 10-year yields up 10 bps to 3.92%
• Gold up $8 to $2456
• AUD leads, JPY lags

It was all about the economic data today as US retail sales and initial jobless claims underscored a resilient economy that’s not tumbling towards a hard landing. Fed pricing for 50 bps fell to just 25% after the numbers, which were underscored by upbeat comments from Walmart executives following earnings.

The initial response was a strong wave of US dollar buying, particularly against the yen as is surged more than 170 pips in a straight line. Elsewhere the dollar rose 30-60 pips but those trades often didn’t last as the upbeat risk mood competed with higher Treasury yields.

Ultimately, USD/JPY tracked to the highs of the day late while the other trades chopped and sometimes completely retraced. Cable fell as low as 1.2800 from 1.2860 but later completely rebounded and is on track to close the day up by 30 pips.

The euro fell 50 pips to 1.0950 initially before fighting back to 1.0985 before giving back a dozen pips late, to close down 40 pips on the day.

The commodity currencies were choppy as well as they fully recovered from 30-40 pip declines only to sag again, with CAD closing near the lows of the day, partly on housing worries due to rates moving back up.

The day marks a stark turnaround from last Monday when the world was screaming recession and emergency rate cuts. Eyes will now be on Japan as the carry trade flirts with the 38.2% retracement of the July-August rout.

This article was written by Adam Button at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:.

And happy Friday to all!

This article was written by Eamonn Sheridan at www.forexlive.com.