General Market Analysis – 20/08/24

US Stocks Surge – Nasdaq Gains 1.4%

US stocks surged on the first trading day of the week as investors continued to support the prospect of a soft landing for the US economy and priced in potential rate cuts from the Federal Reserve. The Nasdaq led the charge, closing up 1.39%, followed by the S&P 500, which gained 0.97%, and the Dow, which added 0.58% on the day. US Treasury yields edged lower, with the 2-year yield dropping 0.4 basis points to 4.062% and the 10-year yield falling 1.9 basis points to 3.873%. The dollar took another hit, losing 0.56% on the index to reach levels not seen in seven months. Meanwhile, oil prices tumbled again as demand concerns persisted, with Brent down 2.4% and WTI falling 1.9%, closing the day at $77.79 and $74.42 respectively. Gold prices, after hitting another all-time high, drifted slightly lower in late trading to finish the New York session at $2,501 an ounce.

Dollar Plummets Across the Board

Dollar bears were in full force yesterday, as the greenback suffered further losses against major currencies and metals. Gold had led the way on Friday, breaking through recent resistance levels to reach fresh record highs, setting the stage for more dollar selling as the trading sessions unfolded yesterday. The USD/JPY pair led the decline during the Asian session, crashing nearly 2% at one point, with the market struggling to find bids on the way down. Although it recovered later in the session, it was a sign of what was to come. The dollar broke through key support levels against the Euro, Kiwi, and CAD over the course of the day and continued to weaken against other major pairs. Traders are now looking ahead to the end of the week and the update from Fed Chair Jerome Powell at Jackson Hole, though some believe this move may be slightly overdone, particularly if he remains cautious about the extent of the upcoming rate cuts.

Markets Set for Another Buoyant Day

Markets are poised to open the second day of the trading week in a buoyant mood following another strong performance on Wall Street. The macroeconomic calendar becomes more active today with several key data points scheduled across different regions. The Asian session will feature the latest rate update from China, with the key 1-year and 5-year Loan Prime Rate updates due midway through the session. Traders will be on alert after last month’s surprise cut. The Reserve Bank of Australia will publish its latest Monetary Policy Meeting Minutes shortly after the Chinese rate decision, which could prompt some moves in the Aussie dollar. The European session is relatively quiet, although SNB Chairman Thomas Jordan is due to speak during the day. However, the highlight of the day is likely to come early in the New York session with the release of the latest CPI data from Canada.

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