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The greenback held its ground somewhat on Friday last week as risk sentiment retreated. But as the latter recovered a little yesterday, the dollar also managed to squeeze in some gains to start the week. USD/JPY is back up above 143.00 as 10-year Treasury yields continue to stay afloat just above the 3.70% mark. That is keeping things more interesting as we look to sort things out before getting to the FOMC meeting next week.

So far today, major currencies are not up to much. The ranges for the day are narrow with USD/JPY once again the only one slightly more stretched. That said, as mentioned above, the fate of the pair is still very much tied to the direction of the bond market as well for now.

Besides that, the recent dollar rebound is bringing in some key short-term levels in play.

EUR/USD is hovering near its low from last week of 1.1026 while USD/CAD is not too far away from its 200-day moving average of 1.3588. Meanwhile, AUD/USD is already contesting its 100-day moving average of 0.6646 today. Those are some of the more interesting levels to watch out for to start the week.

USD/JPY is also one to keep an eye out for with a potential double-bottom around 142.00 in play now.

This article was written by Justin Low at www.forexlive.com.

• AUD traders heads up – RBA (Hunter) speaking on Wednesday
• South Korean stock markets to close for a temporary holiday (October 1)
• Two items to watch in China’s trade balance data due soon
• Australian August business confidence -4 vs. prior +1
• South Korea warn that rapid pick-up in household debt may turn into systemic risk.
• PBOC sets USD/ CNY central rate at 7.1136 (vs. estimate at 7.1140)
• Australian Westpac Consumer Confidence Index (September 2024) 84.6 (prior 85.0)
• ECB eyes rate cut amid weakening outlook – preview of the September 12 meeting
• Japan PM contender Kato wants folks to have higher wages
• Morgan Stanley on US equities at risk from a further unwinding of yen-funded carry trades
• More on the failed changes at the Reserve Bank of Australia
• Sales for New Zealand’s manufacturing sector improved in Q2
• Goldman Sachs on 3 reasons China’s economy is going to trun better
• The changes proposed for the Board of the RBA have failed
• Fed to halve biggest banks’ capital hike in latest Basel plan, from 19% to 9%
• A recession will engulf Europe early next year
• It “wouldn’t take much for the Fed to be behind the curve”, then “a string of 50bp cuts”
• Barclays rule out a 50bp FOMC rate cut in September, see 3 consecutive 25bp rate cuts
• ICYMI – Morgan Stanley have cut its oil price forecast again, see Brent @ $75 / bbl in Q4
• Forexlive Americas FX news wrap: US dollar firms further and risk rebounds
• Trade ideas thread – Tuesday, 10 September, insightful charts, technical analysis, ideas

Yen
crosses were on the move again today, with USD/JPY trading up to just
above 143.50. We didn’t have much in the way of news nor data out
of Japan. We did get comments from Katsunobu Kato, Japan’s former
health minister and a candidate running in the ruling

party
leadership race. He called for a fresh stimulus package to fund
spending to boost domestic investment and capex. Also said Japan must
double households’ income by promoting wage hikes. Double? Really?
While correlation is not causation this was in the midst of the yen
falling today. What a weird thing to say/promise. Politicians, eh?
Kato added that Japan is on the verge of emerging from deflation.

From
Australia today was plenty of woeful data:

• consumer
  sentiment slumped from an already poor level
• business
  confidence and conditions slumped also

If
there was a glimmer of light in the data it was mixed results on
inflation indications in the business survey. Growth in labour costs
eased back. But purchase cost growth accelerated in the quarter, as
did retail prices.

Apart
from the yen major FX was bound in small ranges only.

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

South Korea has designated October 1 as ‘Armed Forces Day’, and a temporary holiday.

• The move is intended to boost domestic consumption, and troop morale.

Korea Composite Stock Price Index (KOSPI)

• KOSDAQ
• ETF, derivatives markets and commodity markets

will all be closed.

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

A snippet preview from ING on what to watch for the Chinese trade data due today:

• We are looking for trade growth to continue to slow on the month, and we are forecasting export growth of around 5% YoY and import growth of around 3% YoY for a trade balance of USD 74.9 bn.
• This month’s data may have two scrutinised categories for those monitoring the overcapacity theme, one being auto exports, which have come under some recent pressure and are expected to continue to slow this month. Another category will be steel, which got some headlines last month amid rising exports but shrinking imports.

That 0300 GMT (2300 US Eastern) time for the trade data should be viewed as a guide only.

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

National Australia Bank monthly survey of business, for August 2024

Business Confidence -4

• prior +1

Business Conditions +3

• prior +6

more to come

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

Info via Reuters:

• South Korea’s financial
  watchdog chief on Tuesday expressed concern about a rapid
  pick-up in household debt and said such financial imbalance may
  turn into systemic risk.
• “There are concerns that it may turn into a systemic risk,
  as financial imbalances accumulate and soundness deteriorates
  should home prices undergo correction”
• South Korea has one of the world’s highest household
  debt-to-economy ratios, with more than 60% of loans tied to
  mortgages at local banks.

Sheesh … SK not along on high debt. Not at all.

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

Westpac-Melbourne Institute index of consumer sentiment fell from August to September, to 84.6

• prior 85.0

WPAC comment:

• “The pessimism that has dominated for over two years now is
  still showing no real signs of lifting”
• “While cost-of-living pressures are becoming a little less
  intense and fears of further interest rate rises have eased,
  consumers are becoming more concerned about where the economy
  may be headed and what this could mean for jobs.”

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

Big promises from one of the runners to be new Prime Minister:

Kato:

• sees exit from deflation on horizon
• must compile stimulus package backed by a bold supplementary budget at an early date
• stimulus package should include spending for reconstruction from the Noto earthquake and typhoon
• package should contain to prompt higher wage

Kato talks of doubling wages. Yeah, right.

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

US Stocks Rally Ahead of Inflation Data – Dow up 1.2%

US stock indices rebounded in trading yesterday as investors turned their attention to upcoming inflation data. The Dow led the surge, closing the session up 1.2%. It was closely followed by the S&P 500 and Nasdaq, both ending the day with a 1.16% gain. The dollar also had a strong showing, advancing 0.4% on the index, as FX traders began pricing in a smaller rate cut from the Fed next week. Treasury yields saw a mixed performance in choppy markets, with the 2-year yield rising by 2.1 basis points to close at 3.669%, while the 10-year yield slipped by 0.9 basis points to settle at 3.699%. Oil prices pushed higher as Tropical Storm Francine moved across the Gulf of Mexico, lifting Brent crude by 1.10% to $71.84, and WTI by 1.54% to $68.71 per barrel. Meanwhile, gold traded within familiar ranges, gaining 0.4% to close at $2,505 by the end of the New York session.

Dollar Poised for Further Gains with Fed in Focus

The dollar strengthened significantly in yesterday’s trading session, with most major currencies now reverting to mid-range levels after last week’s volatility, driven by heightened expectations of a 50-basis point Fed rate cut. While treasury yields remain subdued, FX traders have been buying back the dollar, which had seen a sharp decline in recent weeks. The safe-haven appeal of the greenback is gaining traction among market participants, as fears grow that the US economy may face contraction. However, the general sentiment suggests the Fed is unlikely to make drastic policy moves in response. Should tomorrow’s inflation data align with market expectations, traders anticipate further unwinding of the dollar’s recent downside.

Key Data and Central Bankers in the Spotlight Today

After a quiet start to the week, today’s macroeconomic event calendar heats up, with key data releases from the UK and updates from major central bankers. The Asian session is expected to be relatively uneventful, but attention will turn to the UK once the European trading day begins, with crucial employment figures set to be released. The market expects the Claimant Count to show an increase of 95,000, with the unemployment rate dropping to 4.1%. Later in the day, Bank of Canada Governor Tiff Macklem will speak in London, followed by remarks from FOMC members Michael Barr and Michelle Bowman during the New York session.

The post General Market Analysis – 10/09/24 first appeared on IC Markets | Official Blog.

New Zealand manufacturing sales rose in second quarter:

• +0.6% q/q vs the -0.4% in Q1

NZD/USD little changed:

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

Goldman Sachs on China’s (improving) economy, citing 3 stronger signs:

• fiscal easing, strong export momentum, and subsiding weather-related
  risks

1. Fiscal easing – GS see signs this has recommenced in recent weeks

2. Export momentum is strong (an interesting point, it’ll be tested today: Economic calendar in Asia 10 September 2024 – Chinese trade data for August)

3. Weather-related risks from the summer are likely subsiding

Combining the three GS China’s property market could get some positive input.

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

Analysts at BCA are expecting a recession for Europe early in 2025:

• “Our conviction that a recession will engulf Europe early next year is strengthening.”

Citing:

• Leading global growth indicators continue to deteriorate
• weakening economic activity ahead
• steepening of the yield curve, the rebound in the VIX, the continued weakening of carry trades, and the relapse of commodity prices are all poor omens
• data softening in Europe

On the euro:

• EUR/USD always depreciates significantly after carry trades have unwound
• wait for the first rate cut from the Fed before selling the euro

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