Articles

As the election approaches, there is concerns about the deficit.

Fed’s Kashkari is saying that

• Rising budget deficit would on the margin mean interest rates would be higher.

How all the dust settles is still up in the air as much may also depend on the split in the House and the Senate. Nevertheless, deficits remain a big concern, and making campaign promises are typically focused on the giveaways versus takeaways (in some form or fashion.

This article was written by Greg Michalowski at www.forexlive.com.

The US dollar is at the best levels of the day across the board as US 10-year yields extend their gain to 8 bps and 4.15%, which is also the highest since late July.

USD/JPY is approaching last week’s high and a break of it would be the best level since late July.

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

• Prior was -0.2%
• Six-month decline accelerates to 2.6%, worse than previous 2.2% fall

This index isn’t a market mover but it’s a decent 10,000 ft view on the economy and shows why the Fed is in an easing cycle.

“Weakness in factory new orders continued to be a major drag on the US
LEI in September as the global manufacturing slump persists,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.
“Additionally, the yield curve remained inverted, building permits
declined, and consumers’ outlook for future business conditions was
tepid. Gains among other LEI components were not significant enough to
offset weakness among the four gauges mentioned above. Overall, the LEI
continued to signal uncertainty for economic activity ahead and is
consistent with The Conference Board expectation for moderate growth at
the close of 2024 and into early 2025.“

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

The major US indices moved higher last week and in doing so extended they went straight 26 consecutive weeks. That’s the longest streak in 2024.

To start the new trading week, stock are marginally lower with declines around -0.10% in the three major indices:

• Dow industrial average -54 points or -0.13% at 43220
• S&P index -5.4 points or -0.09% at 5859.39
• NASDAQ index -10.39 points or -0.05% at 18480.77

The small-cap Russell 2000 is down -7.05 points or -0.31% had 2269

The earnings season heats up a bit next week with Tesla, Boeing, AT&T, and Coca-Cola leading the way.

Monday

After Close:

• SAP (SAP)
• Nucor (NUE)
• Logitech (LOGI)
• Zions Bancorporation (ZION)

Tuesday

Before Open:

• Verizon (VZ)
• General Motors (GM)
• 3M (MMM)
• RTX (RTX)
• Freeport McMoRan (FCX)
• GE Aerospace (GE)
• Lockheed Martin (LMT)
• Sherwin-Williams (SHW)

After Close:

• Enphase Energy (ENPH)
• Baker Hughes (BKR)
• Seagate Technology (STX)
• Texas Instruments (TXN)

Wednesday

Before Open:

• Boeing (BA)
• AT&T (T)
• Coca-Cola (KO)
• Thermo Fisher Scientific (TMO)
• CME Group (CME)
• Boston Scientific (BSX)
• General Dynamics (GD)

After Close:

• Tesla (TSLA)
• Lam Research (LRCX)
• IBM (IBM)
• ServiceNow (NOW)
• Viking Therapeutics (VKTX)
• T-Mobile (TMUS)
• Sands (LVS)

Thursday

Before Open:

• American Airlines (AAL)
• UPS (UPS)
• Southwest Airlines (LUV)
• Nasdaq (NDAQ)
• Carrier (CARR)
• Tractor Supply Company (TSCO)

After Close:

• Dexcom (DXCM)
• Deckers Brands (DECK)
• Western Digital (WDC)
• Skechers (SKX)

Friday

Before Open:

• New York Community Bancorp (NYCB)
• Colgate-Palmolive (CL)
• Piper Sandler (PIPR)

The bigger names are still week or more away:

– Nvidia: November 14- Meta – October 30- Apple – October 31- Amazon – October 31- Alphabet/Google – October 29- Microsoft – October 30

This article was written by Greg Michalowski at www.forexlive.com.

S&P 500 futures are down 0.2% and we’re on a six-week winning streak. In that time, the index has gained 8.45% despite the election uncertainty.

If you read Friday’s Goldman Sachs note, then that is as good as it will get for a long time.

“We estimate the S&P 500 will deliver an annualized nominal total return of 3% during the next 10 years (7th percentile since 1930) and roughly 1% on a real basis.”

That’s scary and it’s a reminder that the US is trading at a rich P/E ratio.

Goldman Sachs’ equity strategy team, citing high concentration in the Mag7 and a lofty starting valuation.

“Our
historical analyses show that it is extremely difficult for any firm to
maintain high levels of sales growth and profit margins over sustained
periods of time.”

The current CAPE ratio is 38 times, which is in the 97th percentile, highlights Goldman.

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

Treasury yields are creeping above the top of the recent range in an unsettling move today. That’s weighed on stock futures, which are down 0.2%, and helped to lift USD/JPY by 40 pips.

The question remains: How much of this is pricing out a recession and how much of it is pricing in inflation?

I’m in the camp that the vast majority of it is about erasing the recession fears from late July in light of a Fed put and much better economic data. On Friday, I went through 16 corporate conference calls and it was tough to find any indication of a slowing economy.

But every tick higher in yields is a warning sign that the ‘pause’ in Fed rate cuts might come sooner than expected. US 2s are creeping towards 4%, which is still restrictive. So long as you believe that the Fed will cut in a weakening economy, 400 bps of ammunition is fine but if it’s a situation where they can’t cut because of inflation.

Perhaps the election is driving the trade right now so we will have to wait two weeks before any clarity there. Ian Lyngen from BMO highlights 4.17% as the level to watch in 10s:

In the week ahead, there
is a limited docket of fundamental events that could inspire trading direction
in the US rates market. The resulting environment will be one in which external
markets, headlines, and other developments will have a disproportionately large
influence on the direction of yields. It’s also a backdrop for the technicals
to be of elevated relevance as the recent bearish tone has brought yields to
the top of the local yield range. The 200-day moving-average in 10s remains a
bearish beacon at 4.170% and in the event of another leg lower, this will be
our target as well as a potential inflection point for dip-buyers.

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

Headlines:

• Dollar keeps steadier so far on the session
• Gold remains undaunted as the run higher continues
• Weekly update on interest rate expectations
• ECB’s Šimkus says lower rates possible if disinflation gets entrenched
• ECB’s Šimkus: Policy will clearly become less restrictive from here
• ECB’s Kažimír says all options are on the table for December meeting
• Germany September PPI -0.5% vs -0.2% m/m expected
• SNB total sight deposits w.e. 18 October CHF 462.3 bn vs CHF 467.1 bn prior

Markets:

• CHF leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields up 4.3 bps to 4.128%
• Gold up 0.6% to $2,736.00
• WTI crude up 2.3% to $70.81
• Bitcoin down 0.1% to $68,325

It was a quiet session but there were some decent moves in broader markets.

Of note, equities trended lower after a more pensive start and alongside higher yields, it pushed the dollar a little higher during the session.

EUR/USD moved down from 1.0860 to 1.0845 while USD/JPY notably gained from a low of 149.10 in Asia to clip the 150.00 mark briefly. As equities are slightly softer, the antipodeans are lagging with AUD/USD falling back below its 100-day moving average – down 0.3% to 0.6685.

US futures gradually nudged lower during the session, with little catalysts in general. The same goes for European indices and this is pretty much weighing on broader sentiment. Tech shares are leading declines with S&P 500 futures down 0.4% and Nasdaq futures down 0.6%.

The overall market mood is more mixed though with bonds being offered. Higher Treasury yields is helping to underpin USD/JPY as such.

In the commodities space, gold continues to shine ever so brightly in a push to fresh record highs again near $2,736. Up, up, and away we go.

Looking to US trading, there won’t be much catalysts on the agenda so traders will continue to be left to their own devices to start the week.

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

The ranges for the day aren’t overly interesting but the dollar is seen holding a slight edge in European morning trade. It comes as Treasury yields are pushing higher as well, allowing for some light action on the session. USD/JPY is now marked up by 0.3% to 149.95 from a low of 149.10 in Asia earlier in the day.

In the bigger picture, USD/JPY remains pinned closer to the 150.00 mark and that remains a key level to watch. There is also key resistance closer to the 50.0 Fib retracement level and the 100-day moving average (red line) near 150.76 currently. So, that is the bigger technical region in play for now.

Besides that, GBP/USD is down 0.2% to 1.3020 and AUD/USD down 0.2% to 0.6690 currently. The latter is in an interesting spot as it slips back below its own 100-day moving average of 0.6695.

The moves are coming as bond yields are seen nudging higher again today. 10-year Treasury yields are up another 3 bps to 4.116% with 2-year yields at 3.982% on the day. The former is seeing a bounce after testing the 4% mark last week, with bond sellers drawing a line at the key level.

There’s not much else to work with besides flow movement in European trading thus far. The economic calendar to start the week isn’t anything enticing. So, traders will be left to deal with the technical plays and getting a feel of trading sentiment with each passing session.

That until we get the next key catalyst to really move markets. And that might not come until later in the week.

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

The post Ex-Dividend 22/10/2024 first appeared on IC Markets | Official Blog.

• Domestic sight deposits CHF 454.1 bn vs CHF 459.4 bn prior

Swiss sight deposits fell again in the past week, continuing to keep within levels seen in the last few months after a slight rise towards the end of September. Here’s a look at the trend:

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

Fundamental
Overview

The lack of catalysts recently
kept the US Dollar supported across the board despite the slowdown in momentum.
The market might now be looking forward to the first weeks of November when we
will get the key economic data, the FOMC decision and the US elections.

There’s been also a good
argument that the markets are already positioning for a Trump victory and that
should translate in USD strength as it should appreciate on higher growth and
less rate cuts expectations. Nevertheless, not all markets have been in sync
with this view.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY is bouncing around the 149.40 level with the 150.00 handle
acting as a ceiling. The buyers will want to see the price breaking above the
150.00 handle to start targeting the 152.00 handle next, while the sellers will
look for a break below the 149.00 handle to position for a pullback into the
147.22 level.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the recent price action which has been showing a slowing down
in the bullish momentum ahead of the 150.00 handle. There’s not much we can
glean from this chart as the choppy price action around the 149.40 level makes
it hard to find clean levels where to lean onto.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price probed below the minor upward trendline
overnight but eventually bounced back above it. We now have a counter-trendline
where the sellers will likely lean onto to position for a drop into new lows.

The buyers, on the other
hand, will want to see the price breaking higher to pile in for a rally into
the 152.00 handle. The red lines define the average daily range for today.

Upcoming
Catalysts

This week is pretty empty on the data front with market moving releases scheduled
for the latter part of the week. On Thursday, we get the Flash Japanese and US
PMIs, and the US Jobless Claims figures. On Friday, we conclude the week with
the Tokyo CPI report.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The week starts quietly on Monday with no significant economic events scheduled for the FX market.

On Tuesday, the U.S. will release the Richmond manufacturing index, offering some early insights into the country’s industrial performance.

Wednesday’s focus will be on Canada, where the BoC is set to announce its monetary policy decision. In the U.S., attention will turn to the existing home sales data, providing a glimpse into the state of the housing market.

Thursday brings a series of flash PMI releases, with both manufacturing and services data expected from Australia, Japan, the eurozone, the U.K., and the U.S.

Finally, Friday will see Japan release the Tokyo core CPI y/y, while Canada reports retail sales figures. In the U.S., key data releases include durable goods orders m/m, as well as the revised University of Michigan consumer sentiment and inflation expectations.

At this week’s meeting, the BoC is expected to deliver a 50 bps rate cut, reducing the overnight rate from 4.25% to 3.75%. This cut would be larger than previous ones, driven by the recent economic slowdown and the fact that headline inflation in Canada dropped below the Bank’s desired 2% target in September. Core inflation currently sits between 2.0% and 2.5%.

Given the recent economic slowdown, there is little upside risk to inflation. Another factor to consider is that higher rates are further hurting the economy and that the impact of any interest rate decreases will take time to have an impact. Considering that the BoC considers the neutral rate range to be between 2.25% and 3.25%, analysts from Royal Bank of Canada expect a 50 bps cut now followed by another 50 bps one in December and other cuts next year in order to stop the softening of the economy by mid-2025.

This week’s PMI data for the eurozone will be important to watch, as it could provide clues about the ECB’s next move. The consensus for the manufacturing PMI is 45.3, while for the services PMI, it is 51.5.

The manufacturing sector is expected to continue showing weakness and to remain in contractionary territory despite small gains, while a slight improvement in the services sector is also likely. For now, the market anticipates another rate cut from the ECB in December.

In the U.K. the consensus for the flash manufacturing PMI is 51.5, unchanged from the previous 51.5, while the flash services PMI is expected to be 52.3, slightly down from the prior 52.4.

Both manufacturing and services PMIs for the U.K. are expected to remain in expansionary territory, though last month’s data for both sectors came in below expectations, which is not an encouraging sign. Despite this, analysts argue that the economy is still on track for a positive trajectory.

In terms of monetary policy, the BoE is expected to deliver a 25 bps rate cut at the November meeting. However, it remains unclear on whether this will be followed by another reduction in December and the PMI reports could sway some opinions, especially if they print above expectations.

In Japan, the consensus for Tokyo CPI y/y is 1.7% vs 2.0% prior. This data will be important to monitor, as it could provide clues about the timing of the BoJ’s next steps.

The consensus for U.S. core durable goods orders m/m is -0.1% vs 0.5% prior, while durable goods orders m/m are expected to be -1.1%, compared to the previous 0.0%.

Overall, the outlook for durable goods is not very promising, and it may take some time before the effects of the Fed’s rate cuts have an impact, particularly in business demand.

Wish you a profitable trading week.

This article was written by Gina Constantin at www.forexlive.com.