Higher-yielding assets had a solid start but wound up in the red while the U.S. dollar and bond yields regained the upper hand.
What went on in the markets recently?
Here are the updates you need to know:
Headlines:
- Australian employment change in June: +50.2K (19.9K expected, 39.5K previous), unemployment rate up from 4.0% to 4.1% as expected
- Australia’s NAB quarterly business confidence index in Q2 2024: -1 (-2 previous)
- Swiss trade balance in June: 6.18 billion CHF (5.05B CHF expected, 5.79B CHF previous)
- U.K. claimant count change in June: 32.3K (23.4K expected, previous reading revised from 50.4K to 51.9K), jobless rate steady at 4.4% as expected
- U.K. average earnings index slowed from 5.9% to 5.7% in the three-month period ending in May as expected
- ECB kept interest rates on hold as expected while stressing data-dependent approach
- During the presser, Lagarde highlighted downside risks to growth outlook and cited possible decline in labor cost inflation if productivity slows
- U.S. weekly initial jobless claims: 243K (229K expected, 223K previous), highest level since August last year
- U.S. Philly Fed manufacturing index in July: 13.9 (2.7 expected, 1.3 previous)
- FOMC member Daly noted that she is seeing positive inflation data but not at target yet
- U.K. GfK consumer confidence index in July: -13 (-12 expected, -14 previous)
- Japanese national core CPI in June: 2.6% y/y (2.7% expected, 2.5% previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Risk assets were off to a relatively good start during Asian market hours, as commodities and crypto cruised higher for the most part of the trading session.
However, WTI crude oil turned lower upon hitting the $81.85 per barrel area then proceeded to slide for the rest of the day, as concerns about a U.S. economic slowdown lingered. Gold also took a tumble and closed more than 0.50% down for the day while bitcoin found itself back below the $64,000 handle.
U.S. equity indices chalked up back-to-back daily losses, despite gains in the utilities and energy sectors, as chipmakers and broader tech companies reversed their earlier rallies.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
On the flip side, the U.S. dollar was able to snap its three-day losing streak, as it ended positive across the board despite the lack of top-tier U.S. data points.
The weekly initial jobless claims figure even came in weaker than expected, as the report indicated a higher increase in unemployment for the reporting period. Other top-tier catalysts barely spurred big moves, as the U.K. printed weaker than expected employment data while the ECB kept rates unchanged as expected.
Only USD/JPY veered from the pack as usual, as yen traders are likely still reeling from the recent volatile moves. Still, data from the BOJ did not show any evidence of central bank intervention in mid-July, allowing USD/JPY to regain the top spot among dollar pairs.
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. retail sales at 6:00 am GMT
- Eurozone current account balance at 8:00 am GMT
- Canadian headline and core retail sales at 12:30 pm GMT
- Australia CB leading index at 2:30 pm GMT
- FOMC member Williams’ testimony at 2:45 pm GMT
- FOMC member Bostic’s testimony at 5:00 pm GMT
A couple more major economies are scheduled to print consumer spending data today, namely the U.K. and Canada, and could provide more clues as to whether or not their respective central banks would need to adjust monetary policy soon.
With that, brace yourselves for potential intraday volatility among GBP and CAD pairs before the week comes to a close, as well as possible profit-taking from recent market moves.
