Articles

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.

Two weeks ago Morgan Stanley lowered their Brent crude oil forecast to $80 / barrel. Now they’ve cut it even further:

now expecting an average $75 a barrel in Q4 of 2024

Citing demand headwinds:

• “considerable demand weakness”
• signals are of “recession-like inventory builds”

On supply:

• oil market to remain tight through Q3
• potential move into surplus by 2025

Brent update, a more or less sideways beginning to the week:

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

• New York Fed: 1 year inflation expectations unchanged at 3.0%.3-year up to 2.5% from 2.3%
• US wholesale sales +1.1% vs +0.2% expected
• US August employment trends 109.04 vs 109.61 prior
• Citigroup CFO Mason: Feels good about consumer and corporate balance sheets
• Atlanta Fed GDPNow growth estimate for Q3 comes in at 2.5%
• Mark Carney will head Liberal advisory task force
• US July consumer credit outstanding +25.45B vs +2.0B expected

Markets:

• Gold up $8 to $2504
• US 10-year yields down 0.8 bps to 3.70%
• WTI crude oil up 95-cents to $68.62
• S&P 500 up 1.2%
• USD leads, NZD lags

Friday’s US dollar strength continued onto Monday despite a much better risk mood. It’s not often you see NZD at the bottom of the FX pile on a day when the S&P 500 rises more than 1%. That speaks to a market that’s sorting out cross currents.

Economic data was a non-factor and the Fed is in the blackout so the only thing to do was consider Fed possibilities and prepare for the US Presidential debate Tuesday and CPI on Wednesday. Bonds sold off early but recovered strongly as the day wore on despite some supply coming this week in 3s, 10s and 30s.

Cable was soft as it broke last week’s lows and fell to 1.3069 and is on track to close near the worst levels. The euro held last week’s lows but was pressured lower of the second day in a broad USD rally.

USD/JPY has made a standing at the August spike lows, bouncing off 142.00 for the second day in a sign that the market might be waiting for the FOMC or some other nudge to break the range.

Overall, there were some decent moves today despite the lack of data or news in a sign of a market that’s struggling to find direction.

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

Chinese trade data is usually of interest. Expectations for the data today are for lower y/y result for both exports and imports. If exports come in as expected it’ll be the slowest growth in 4 months. There was a narrative about that exports would surge ahead of increased trade barriers, which has not turned out to be accurate. Still, it could get worse! Imports, too, are expected to have slowed. The narrative surrounding this was that the surge China has had in imports has been p[partially due to bringing in chips ahead of tighter curbs. This seems a little better supported in the data.

Australian business conditions and confidence are due. Of most interest in these figures will likely be how businesses are viewing employment and inflation developments … which of course comprise the two Reserve Bank of Australia mandates.

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
• I’ve noted data for New Zealand and Australia with text as the similarity of the little flags can sometimes be confusing.

This article was written by Eamonn Sheridan 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:

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

On the day:

• S&P 500 +1.2%
• Nasdaq Comp +1.1%
• DJIA +1.2%
• Russell 2000 +0.4%
• Toronto TSX Comp +1.1%

These gains aren’t enough to recoup Friday’s losses and last week’s big decline but it’s a good start.

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