Ekonomické zpravodajství

Daily analysis 10/23/2024

23. 10. 2024 - Josef Brynda

Latest news
  • Bank of Canada is today expected to cut rates by 50bps to 3.75%, which could significantly impact CAD movement.
  • USD/JPY broke above 151, reaching highest levels since July, testing 200-day moving average at 151.37.
  • EUR/USD dropped below 1.08 for the first time since early August due to dovish ECB rhetoric.
  • ECB officials, including Lagarde, indicated potential rate cuts, with markets pricing in 50bps cut in December.
  • IMF downgraded Germany's growth forecast, adding pressure on EUR.
  • USD/CAD trades above 1.38 ahead of BOC decision, with potential to reach 1.3890 on dovish guidance.
  • AUD/USD approached 0.67, supported by rising commodity prices.
  • IMF lowered global growth forecast for 2025 to 3.2%, but raised US growth forecasts for 2024 and 2025.
  • China's growth forecast for 2024 was downgraded by IMF, potentially impacting AUD and NZD.
  • Rising US Treasury yields continue to support USD strength across major pairs.
  • Oil prices jumped higher, supporting commodity currencies like CAD, AUD, and NZD.
  • ECB markets now expect 32bps cut in December and 58bps by January, pressuring EUR.
  • Trump trade concerns continue to impact Eurozone economic outlook, affecting EUR.
  • Japanese Nikkei fell 1.39%, reflecting concerns about upcoming elections and potentially impacting JPY.
  • US 10-year yield broke above 4.20% for first time since July, supporting USD.
  • Markets pricing in faster ECB rate cuts following Lagarde's comments about clear direction of cutting cycle.
  • German short-term bond yields dropped on increased rate cut expectations, weighing on EUR.
  • Rising oil prices and Middle East tensions continue to influence currency movements, particularly commodity currencies.
  • McDonald's E-coli outbreak investigation could impact USD sentiment if situation escalates.
  • Starbucks' poor performance and withdrawn guidance may affect USD sentiment.
  • IMF expects inflation to slow to 4.3% in 2025 from 5.8%, potentially influencing central bank policies.
  • US election uncertainties creating volatility in currency markets.
  • Chinese stimulus measures, including potential rate cuts, could impact AUD and NZD through trade relations.
  • European consumer confidence data release could affect EUR movement.
  • Multiple ECB speakers emphasizing disappointing growth could pressure EUR further.
  • BOC's updated economic forecasts could provide direction for CAD trading.
  • Rising commodity prices, particularly gold and silver, influencing commodity currency pairs.
  • US existing home sales data could impact USD through housing market sentiment.
  • Fed's Beige Book release could provide insights affecting USD direction.
  • Market concerns about Middle East conflict escalation affecting risk sentiment and safe-haven currencies.
     
  • UK Shares Attempt Gains
  • UK Stocks Close Slightly Lower
  • Unilever Hits 9-week Low (It is a multinational company that is the largest consumer goods manufacturer in the UK)
News summary
  • The Bank of Canada's expected 50bps rate cut to 3.75% could significantly weaken the CAD, potentially pushing USD/CAD above 1.38 and possibly toward 1.3890. This dovish shift, combined with the ECB's increasingly accommodative stance, is creating a divergent monetary policy environment globally. The ECB's signals of potential rate cuts, with markets pricing in 50bps by December, has already pushed EUR/USD below 1.08, marking its lowest level since early August.
  • The IMF's downgrade of Germany's growth forecast and broader global growth concerns for 2025 (revised to 3.2%) are particularly weighing on the EUR. This could continue to pressure EUR crosses, especially EUR/GBP and EUR/USD. However, the upward revision of US growth forecasts for 2024 and 2025 is supporting USD strength across major pairs, reflected in rising US Treasury yields breaking above 4.20%.
  • Rising oil prices are creating mixed effects for commodity currencies. While supporting the CAD, this support is being offset by the BOC's dovish stance. AUD/USD's approach to 0.67 reflects this commodity price support, but China's downgraded growth forecast could limit gains for both AUD and NZD. This dynamic could create interesting movements in crosses like AUD/NZD and NZD/CAD.
  • USD/JPY breaking above 151 reflects both USD strength and risk sentiment shifts. The Japanese Nikkei's 1.39% fall and Middle East tensions are influencing safe-haven flows, which could continue to impact JPY crosses. Corporate news like McDonald's E-coli investigation and Starbucks' poor performance might add to market uncertainty, potentially supporting safe-haven currencies.
  • Unilever's 9-week low and UK stock market performance reflect broader European market concerns. Combined with Trump trade concerns and deteriorating European consumer confidence, these factors could continue to pressure EUR and GBP. While EUR/GBP is likely to test this year's lows, it's important to note that potential BOE rate cuts could partially weaken the pound, which might prevent the pair from breaking significantly lower. This creates a complex dynamic where both currencies face downward pressure from their respective central banks' dovish stances, potentially leading to range-bound trading in EUR/GBP while both currencies weaken against other majors like USD
  • These market dynamics suggest continued USD strength against most major pairs, particularly against EUR and GBP, while commodity currencies may show mixed performance depending on commodity price movements and central bank actions. Cross rates like AUD/NZD and EUR/GBP could see increased volatility as these various factors play out.

Daily analysis 10/22/2024

22. 10. 2024 - Josef Brynda

Latest news
  • Dow Jones dropped 344 points, while Nasdaq 100 edged up 0.2%, indicating mixed market performance.
  • Nvidia stock surged 4.1%, reaching a new all-time high.
  • Japan's Nikkei fell 1.7%, leading losses in Asian markets despite yen weakness.
  • Chinese stocks rose 0.7% following another interest rate cut from the PBOC.
  • The US dollar approached its recent peak as US yields increased significantly.
  • Precious metals remained strong despite rising yields and dollar strength.
  • Sovereign bond selloff intensified as hopes for aggressive rate cuts faded.
  • Philadelphia Fed and Richmond Fed will release activity reports today.
  • Fed's Logan expects gradual rate cuts if the economy meets forecasts, emphasizing nimble policy choices.
  • Minneapolis Fed President Kashkari warned higher budget deficits could lead to higher interest rates.
  • Kansas City President Schmid favors slower interest rate reductions due to uncertainty about the ultimate low point.
  • The VIX rose 1.89% to 18.37, while VIX9D increased significantly by 16.24%.
  • European sovereign bonds fell, with Italian 10-year yields rising 15 basis points to 3.51%.
  • The spread between Italian and German 10-year bonds widened by 6 basis points to 123.
  • US 10-year Treasury yield increased by 10 basis points to 4.19%.
  • Gold and silver hit new highs despite rising Treasury yields and a stronger USD.
  • UK inflation unexpectedly dropped to 1.7% in September, below the Bank of England’s 2% target.
  • Crude oil traded lower after Monday's Middle East-focused bounce lost momentum.
  • Arabica coffee retreated as key production areas in Brazil may see rain after prolonged drought.
  • USDJPY exchange rate rose above 151.00, potentially risking verbal intervention from Japanese authorities.
  • The Mexican peso weakened to over 20 pesos per USD due to concerns about potential Trump presidency.
  • SAP lifted annual guidance after Q3 results topped estimates.
  • Nike renewed uniform partnership with NBA and WNBA as NFL opens bidding to competitors.
  • Microsoft plans to roll out new autonomous AI agents next month.
  • Chinese banks cut benchmark rates to revive economic growth and halt housing market crash.
  • Chinese banks have lowered benchmark interest rates, which may affect AUD and NZD due to their trade ties with China. Should be weakening AUD, NZD.
  • Growing demand for silver for solar panels could support AUD given Australia's mining sector.
  • Weakening of active currencies like AUD and NZD against USD in response to rising bond yields.
  • IMF World Economic Outlook release is scheduled.
  • ECB's Lagarde, Holzmann, Knot, and Centeno are set to speak.
  • Bank of England's Greene, Bailey, and Breeden will make statements.
  • Earnings reports expected from Verizon, General Motors, RTX, 3M, Lockheed Martin, and Texas Instruments.
  • Tesla's stock fell 0.8% ahead of its earnings report due tomorrow.
  • The swaps market priced in 39 basis points of easing over the next two Fed policy meetings, down from 42 basis points
  • Uncertainty about US presidential elections and a possible Trump victory is affecting global currency markets, including AUD, NZD, and CAD. Because of Trump import restriction.
     
News summary
  • The U.S. dollar is approaching its recent peak as U.S. yields increase significantly. Higher yields are a key factor, as they reflect expectations that the Federal Reserve may not cut rates as aggressively as previously anticipated This trend, coupled with the intensifying sovereign bond selloff, is likely to strengthen the USD against other major currencies. As a result, currency pairs like AUDUSD, NZDUSD, and EURUSD may face downward pressure in the near term. The rising yields and stronger USD are also affecting precious metals, which remain strong despite these headwinds. This resilience in gold and silver prices could provide some support to commodity-linked currencies like the AUD and CAD. ederal Reserve officials are providing mixed signals regarding future rate cuts. Fed's Logan expects gradual cuts if the economy meets forecasts, while Minneapolis Fed President Kashkari warned that higher budget deficits could lead to higher interest rates.
  • The euro has revisited its lowest levels since August against the dollar, with EURUSD facing downward pressure. This weakness could be further influenced by ECB President Lagarde's upcoming comments. Similarly, activity currencies like the Australian dollar, New Zealand dollar, and British pound have all experienced notable declines against the USD. This has implications for pairs such as AUDUSD, NZDUSD, and GBPUSD, which may continue to face headwinds if the dollar's strength persists.
  • The unexpected drop in UK inflation to 1.7% in September, below the Bank of England's 2% target, could impact the GBP. This development may lead to a weakening of the pound against other major currencies, potentially affecting pairs like EURGBP and GBPUSD. The Bank of England's upcoming statements from Greene, Bailey, and Breeden will be closely watched for further guidance on monetary policy, which could cause additional movements in GBP-related pairs.
  • Uncertainty surrounding the U.S. presidential elections and a possible Trump victory is affecting global currency markets. This political factor could particularly impact currencies like AUD, NZD, and CAD due to potential changes in trade policies. As a result, currency pairs such as AUDNZD, NZDCAD, and AUDCAD may experience increased volatility as markets price in the potential outcomes of the election. If Trump's victory is confirmed, currencies like NZD, AUD, CAD, and EUR could weaken due to his restrictive import policies.
  • The global financial markets are experiencing mixed performances, with significant movements across various sectors and regions. The Dow Jones dropped 344 points, while the Nasdaq 100 edged up slightly, indicating divergent trends in U.S. equities. This mixed performance is likely to create uncertainty in forex markets, potentially leading to increased volatility in currency pairs like EURUSD and GBPUSD.

Daily analysis 10/21/2024

21. 10. 2024 - Josef Brynda

Latest news
  • The US presidential election race has tightened significantly, with betting odds favoring Trump, potentially leading to increased market volatility.
  • Chinese banks have cut benchmark rates more than expected, signaling a strong commitment to stimulating economic growth.
  • The Federal Reserve's stance remains cautious, with officials suggesting the neutral policy rate is in the 3-3.5% range.
  • Gold continues to hit record highs, while silver and platinum are outperforming, indicating growing investor concern about economic stability and inflation.
  • The Canadian dollar is near its weakest levels versus the USD since the pandemic outbreak, with expectations of the Bank of Canada outpacing the Fed in rate cuts.
  • Crude oil prices have slumped due to reduced demand forecasts and China's slowing economic growth, despite ongoing Middle East tensions.
  • The Dow Jones Industrial Average has reached another record high, reflecting optimism in certain sectors of the US economy.
  • Netflix's strong Q3 results have led to a surge in its stock price, potentially influencing the broader tech sector.
  • Apple's reported strong iPhone sales in China could impact both tech stocks and US-China trade relations.
  • The PBOC's larger-than-expected loan prime rate cut is part of Beijing's ongoing stimulus efforts, which could have global economic implications.
  • Volatility in the market, as measured by the VIX, has eased but remains higher than earlier in the year.
  • US Treasury yields have stabilized, but economic resilience suggests the Fed may keep rates elevated longer.
  • European bond yields have seen slight declines, influenced by factors like potential ECB rate cuts and geopolitical tensions.
  • Investors are focusing on upcoming economic reports and policy decisions from major financial institutions like the Bank of Canada, IMF, and World Bank.
  • The industrial metals market is recovering amid focus on Chinese stimulus efforts, potentially impacting commodity-linked currencies.
  • Middle East tensions continue to support precious metal prices but have had a limited impact on oil prices.
  • The Japanese yen has gained broadly as global bond yields dipped, highlighting its status as a safe-haven currency.
  • The US dollar's strength has eased, which could affect global trade and emerging market currencies.
  • Procter & Gamble's missed sales forecasts could indicate shifts in consumer spending patterns.
  • Boeing's tentative agreement with its union, including a significant wage increase, may influence labor market expectations.
  • The close US popular vote points to a potential Trump victory due to the electoral college system, which could have significant market implications.
  • Fed's Bostic's comments on the need for vigilance on inflation suggest ongoing uncertainty in monetary policy.
  • The expected weekly moves for the S&P 500 and Nasdaq 100 indicate potential market fluctuations that could affect currency pairs.
  • The divergence in monetary policy between the Bank of Canada and the Federal Reserve could lead to significant movements in the CAD/USD pair.
  • Polls showing rising odds of former President Donald Trump winning the Nov. 5 election are also helping the dollar against some currencies, analysts say, since his proposed tariff and tax policies are seen as likely to keep U.S. interest rates high and hurt trading partners.
  • ECB governors at Thursday's rate-setting meeting made the case for dropping a pledge to keep policy tight as inflation may now turn out lower than anticipated only a few weeks ago, sources told Reuter
  • Eurozone PMI Data Could Weaken Euro Further
News summary
  • The global financial landscape is experiencing significant shifts, with several key factors influencing forex markets and currency pairs. The tightening US presidential race, with betting odds favoring Trump, has introduced increased market volatility. This development could potentially strengthen the USD against other major currencies like EUR, GBP, and CAD, as Trump's proposed policies are perceived as likely to keep US interest rates high. Consequently, pairs such as EURUSD and GBPUSD might face downward pressure, while USDCAD could see upward movement.
  • Chinese banks' larger-than-expected benchmark rate cuts signal a strong commitment to stimulating economic growth. This move by the People's Bank of China (PBOC) could have far-reaching implications for commodity-linked currencies such as AUD and NZD. As China is a major trading partner for both Australia and New Zealand, improved Chinese economic prospects could bolster these currencies. This might lead to strengthening in pairs like AUDUSD and NZDUSD, while potentially causing fluctuations in cross-pairs such as AUDNZD.
  • The larger-than-expected cut in key interest rates by Chinese banks signals a strong commitment to stimulating economic growth. This move by the People's Bank of China (PBOC) could have far-reaching implications for commodity-linked currencies such as AUD and NZD. Given that China is a major trading partner of both Australia and New Zealand, these moves could ideally strengthen the currency economy in the very possible future in our case, but given that the Chinese economy is underperforming its potential output, currencies are more likely to weaken as it bumps up against a riskier slowing economy. So currencies should weaken more in the coming times.
  • The Federal Reserve's cautious stance, with officials suggesting a neutral policy rate in the 3-3.5% range, contrasts with the Bank of Canada's expected rate cuts. This divergence in monetary policy could lead to significant movements in the CAD/USD pair, potentially weakening the Canadian dollar against its US counterpart. As a result, USDCAD might see upward pressure, while cross-pairs involving the Canadian dollar, such as AUDCAD and NZDCAD, could experience volatility.
  • The European Central Bank's (ECB) potential shift in policy stance, with governors considering dropping the pledge to keep policy tight due to lower inflation expectations, could weaken the euro. This development, combined with potentially weak Eurozone PMI data, might put downward pressure on the EUR against other major currencies. Pairs like EURUSD and EURGBP could see the euro losing ground
  • The EUR/GBP currency pair is expected to be influenced by the relatively weaker performance of the eurozone economy compared to the UK economy. Although the euro has bounced off its 2.5-year low against the British pound, its future movement may depend on macroeconomic data. If the UK economy continues to show stronger results than the eurozone, as confirmed by data such as the PMI, the pound could further strengthen against the euro. On the other hand, if the Bank of England issues dovish comments regarding rate cuts, the pound could come under pressure, and the euro might gain strength. However, we lean more towards the scenario where EUR/GBP is likely to remain under pressure.
     
  • In the coming weeks, forex markets will likely be highly sensitive to upcoming economic reports and policy decisions from major financial institutions. The interplay between these factors will continue to shape currency movements, with particular attention on how the US election race, central bank policies, and global economic indicators impact major currency pairs and cross-pairs in the forex market.

Daily analysis 10/17/2024

17. 10. 2024 - Josef Brynda

Latest news
  • USD shows persistent strength, pushing EURUSD below 1.09 ahead of today's ECB meeting.
  • GBPUSD fell below the key 1.30 level following weaker UK inflation data.
  • USDJPY approaches the psychologically important 150 level, increasing the risk of Japanese government intervention.
  • Today's release of Japanese September inflation data will impact the JPY.
  • AUD strengthened due to strong labor market data, confirming the RBA's stance on maintaining interest rates.
  • ECB decides on interest rates today, with a 0.25% cut to 3.25% expected.
  • US retail sales release for September may influence expectations regarding Fed policy.
  • US initial jobless claims may provide further insight into the state of the labor market.
  • US industrial production for September could affect sentiment towards the USD.
  • Japan's trade balance fell into deficit in September 2024, potentially impacting the JPY.
  • Australia's unemployment rate remained at 4.1%, supporting the AUD.
  • UK bond yields plunged after inflation data release, affecting the GBP.
  • US 10-year yields hold around 4%, influencing USD attractiveness.
  • Oil prices remain range-bound, affecting currencies of oil-exporting countries.
  • Gold holds near record highs, potentially influencing safe-haven currencies like CHF.
  • Copper trades near key support levels, which may affect commodity-exporting countries' currencies.
  • Iron ore fell to a three-week low, potentially impacting the AUD.
  • Expectations of central bank rate cuts influence currency outlooks.
  • Geopolitical tensions support safe-haven currencies like USD, CHF, and JPY.
  • Concerns about fiscal instability in some countries affect sentiment towards their currencies.
  • De-dollarization process may have long-term effects on USD's position as a reserve currency.
  • Uncertainty surrounding US presidential elections may influence USD volatility.
  • Expected rate cuts lower the cost of holding gold, potentially affecting gold-linked currencies.
  • Silver crossed $32, which may influence currencies of silver-producing countries.
  • Concerns about demand in China, especially in the property sector, affect currencies dependent on Chinese growth.
News summary
  • The US dollar is showing persistent strength, reflected in major currency pairs. EURUSD has fallen below 1.09 ahead of today's ECB meeting, where a 0.25% rate cut to 3.25% is expected. This cut could further weaken the euro against the dollar. GBPUSD has dropped below the key 1.30 level following weaker UK inflation data. These movements highlight the USD's dominance and may continue to pressure EUR and GBP in the short term. So We may continue to see the EUR/USD pair move in the same direction as in recent days. Today's employment reports will be important, as they could take away some of the USD's gains if they turn out worse than expected
  • The Australian dollar strengthened due to strong labor market data, with unemployment remaining at 4.1%. This supports the RBA's stance on maintaining interest rates. However, falling iron ore prices to a three-week low may offset some of AUD's gains as same as china"s bad situation.. For NZD and CAD, the range-bound oil prices and copper trading near key support levels could influence their performance. Traders should monitor commodity price movements closely when trading AUD, NZD, and CAD pairs.
  • Upcoming US retail sales data for September and initial jobless claims may influence expectations regarding Fed policy and affect USD pairs. The US industrial production report could also impact sentiment towards the USD. Traders should pay attention to these releases for potential short-term volatility in USD pairs, including EURUSD, GBPUSD, USDJPY, AUDUSD, NZDUSD, and USDCAD.
  • Gold holding near record highs and geopolitical tensions are supporting safe-haven currencies like USD, CHF, and JPY. This trend may continue to influence currency pairs involving these currencies. Additionally, the de-dollarization process and uncertainty surrounding US presidential elections could affect USD volatility in the longer term.
  • In conclusion, the forex market is currently driven by a mix of economic data, central bank expectations, and geopolitical factors. Traders should closely monitor these elements when trading major currency pairs, especially those involving USD, EUR, GBP, JPY, AUD, NZD, and CAD.

Daily analysis 10/16/2024

16. 10. 2024 - Josef Brynda

Latest news
  • UK reported lower than expected September CPI figures, with headline inflation at 1.7% YoY vs. 1.9% expected.
  • UK core inflation came in at 3.2% YoY, a new cycle low and below the 3.4% expected.
  • Sterling dropped sharply on the soft UK CPI figures this morning.
  • New Zealand Q3 CPI was reported at 2.2% YoY, in line with expectations.
  • Canada's annual inflation rate dropped to 1.6% in September, below the 1.9% forecast and the Bank of Canada's 2% target.
  • The Japanese Yen firmed as US yields dropped.
  • US Oct. Empire manufacturing survey surprised very negatively with a reading of -11.9 vs. +3.6 expected.
  • US Treasury yields traded softer overnight, extending Tuesday's decline.
  • The US 10-year yield fell by 7 basis points to 4.03%.
  • German 2 and 10-year yields both softened ahead of Thursday's ECB rate decision.
  • GBPUSD is testing the psychologically important 1.3000 level.
  • The New Zealand dollar softened overnight after the country's Q3 inflation report.
  • Saxo's Q4 Outlook suggests the US rate cut cycle has begun.
  • The LBMA sees silver gaining 40% in the next twelve months.
  • Crude prices have steadied after suffering a +4% decline on Tuesday.
  • Gold trades higher for a second day, supported by declining US Treasury yields.
  • The US dollar maintained a solid footing despite the drop in US yields.
  • Canadian CPI data increased the likelihood of further rate cuts by the Bank of Canada.
  • Market participants are bracing for potential volatility around tomorrow's U.S. retail sales report.
  • The ECB rate decision on Thursday could impact Euro pairs significantly.
  • Metals Commodities Updates: Platinum Gains by 1.28%
  • UK 10-Year Gilt Yield Falls to 2-Week Low
  • China Stocks Wobble Ahead of Property Sector Briefing
  • New Zealand Dollar Falls After Weak Inflation Data

 

News summary
  • The UK reported lower-than-expected September CPI figures, with headline inflation at 1.7% YoY versus 1.9% expected, and core inflation at 3.2% YoY, a new cycle low. This softer inflation data caused the sterling to drop sharply, testing the psychologically important 1.3000 level against the USD. The lower inflation figures could potentially lead the Bank of England to adopt a more dovish stance, which may further weaken GBP. But potentially an ECB rate cut would put the EUR GBP pair under pressure again if further signs of economic instability in the Eurozone are confirmed
  • New Zealand's Q3 CPI was reported at 2.2% YoY, in line with expectations. However, the New Zealand dollar softened overnight, likely due to the lack of upside surprise in the inflation data. This could lead to pressure on NZD/USD and potentially benefit AUD/NZD as traders reassess the Reserve Bank of New Zealand's future policy path.
  • Canada's annual inflation rate dropped to 1.6% in September, below the 1.9% forecast and the Bank of Canada's 2% target. This increase in the likelihood of further rate cuts by the Bank of Canada could put pressure on the CAD, potentially weakening it against USD
  • The US Empire manufacturing survey came in significantly below expectations, contributing to a drop in US Treasury yields, with the 10-year yield falling by 7 basis points to 4.03%. This led to a firming of the Japanese Yen and could potentially weaken the USD against other major currencies. However, the US dollar has maintained a solid footing despite the yield drop, indicating mixed signals for USD pairs
  • The LBMA's bullish outlook on silver, with expectations of a 40% gain in the next twelve months, along with gold trading higher, could potentially support commodity-linked currencies like AUD and NZD. Conversely, the recent decline in crude prices, despite a slight recovery, might put pressure on oil-exporting currencies like CAD.
  • The wobble in Chinese stocks ahead of a property sector briefing could impact risk sentiment, potentially affecting AUD and NZD due to their economic ties with China, as well as influencing broader risk appetite in currency markets.
  • Looking ahead, we will need to closely monitor the upcoming data releases. Key factors to watch include the U.S. unemployment figures for the USD, tomorrow’s ECB rate cut decision, and further data from the UK. For NZD and AUD, China's economic performance will play a critical role. In my view, the USD should continue to show strength at least until the elections, while the ECB is likely to remain behind the USD in terms of performance. For CAD, it will be important to keep an eye on oil prices and the movement of the USD, as its strength often weighs on the CAD. Oil prices have dropped to a five-day low, indicating that the Canadian dollar could continue to weaken against the USD.

Daily analysis 10/15/2024

15. 10. 2024 - Josef Brynda

Latest news
  • US stock markets hit new all-time highs, with S&P 500 up 0.77% and Dow Jones up 0.47%.
  • Nvidia closed at a record high of $138.07, up 2.4%, leading a tech stock rally.
  • The VIX volatility index fell 3.71% to 19.70, indicating calm market sentiment.
  • Major earnings reports due today from UnitedHealth, J&J, Bank of America, and Goldman Sachs.
  • US 10-year Treasury yield trading just below recent highs above 4.1%.
  • Japanese 10-year bond yield approaching the 1.00% level ahead of Friday's inflation data.
  • Crude oil prices slumped on reports Israel won't target Iran's oil production facilities.
  • Copper prices hit multi-week lows, possibly due to disappointment with Chinese stimulus scale.
  • Gold corrected about 1% lower from recent highs, potentially due to strong US dollar.
  • US dollar strengthened across the board, possibly linked to rising odds of a Trump victory.
  • USDJPY approached the 150.00 level, seen as a possible intervention point for Japanese authorities.
  • Canadian dollar notably weak as US-Canada 2-year yield spread widens.
  • Germany's ZEW Survey and Eurozone Industrial Production data due at 0900 GMT.
  • US Empire Manufacturing and Canada CPI data expected at 1230 GMT.
  • Earnings season intensifying with reports from major banks and tech companies this week.
  • ASML, Dutch chip equipment maker, set to report earnings on Wednesday.
  • Netflix earnings report anticipated later this week.
  • Biden administration considering new restrictions on AI-chip sales to certain countries.
  • Nvidia approaching Apple's market cap as world's largest company.
  • Iron ore prices up in Asia overnight, contrasting with other commodities.
  • US Fed's Daly and Bostic scheduled to speak later today.
  • New Zealand Q3 CPI data due at 2145 GMT.
  • Australia RBA's Hunter to speak at 2200 GMT.
  • New Zealand RBNZ's Silk to speak at 2245 GMT.
  • South Africa SARB Monetary Policy review scheduled for 1400 GMT.
  • The euro falls to a two-and-a-half-month low against the dollar ahead of the European Central Bank's meeting on Thursday, where another interest rate cut is expected.
  • A rewidening in eurozone-U.S. rate differentials has prompted investors to scale back bets on the euro rising against the dollar.
  • Sterling remains steady after U.K. labor market data showed a drop in payrolls and easing wage growth, though inflation data on Wednesday is more likely to move the pound.
  • China's recent pro-growth stimulus could stabilize the economic outlook but may not be enough to address structural challenges, affecting currencies like AUD and NZD.
  • The USD Index is likely to continue rising, supported by technical levels and the recent breach of key resistance at 103.46.
  • The Bank of England is expected to cautiously cut interest rates in November, with wage growth slowing and unemployment data showing some uncertainty.
  • Gilt yields decline as the market prices in increased odds of a BOE rate cut following weaker wage growth and unemployment data.
  • The Bank of Thailand is expected to hold its policy rate at 2.50%, but some economists see a small chance of a cut due to economic growth risks.
  • Indonesia's weak trade data doesn't change the expectation that Bank Indonesia will maintain its policy rate, but the rupiah's recent decline remains a concern.
  • U.S. long-term yields continue to rise, supporting the dollar as rate differentials favor the greenback, keeping the USD bid.
News summary
  • The US dollar is showing significant strength across the board, supported by multiple factors. The rise in US stock markets to new all-time highs, coupled with the fall in the VIX volatility index, indicates a risk-on sentiment that typically benefits the USD. Additionally, the US 10-year Treasury yield trading near recent highs above 4.1% is attracting investors to dollar-denominated assets. This strength is particularly evident against the Japanese yen, with USDJPY approaching the 150.00 level, a point that might prompt intervention from Japanese authorities. The dollar's rise is also putting pressure on the euro, which has fallen to a two-and-a-half-month low against the USD ahead of the European Central Bank's meeting.
  • The Canadian dollar is notably weak against its US counterpart as the US-Canada 2-year yield spread widens. This weakness in the CAD is further exacerbated by the slump in crude oil prices, a key export for Canada. Meanwhile, the euro's decline is not only against the USD but also potentially against other major currencies like GBP and JPY, as investors scale back bets on euro appreciation due to the expected ECB rate cut and widening rate differentials with the US.
  • Sterling remains relatively steady following UK labor market data showing easing wage growth and a drop in payrolls. However, the pound's performance against both the USD and EUR will likely be influenced more significantly by upcoming inflation data. The Bank of England's cautious approach to potential rate cuts in November could provide some support for GBP against EUR, but may not be enough to overcome USD strength.
  • The Australian and New Zealand dollars are facing headwinds from multiple directions. The slump in commodity prices, particularly copper hitting multi-week lows, is negatively impacting these commodity-linked currencies. Additionally, disappointment with the scale of Chinese stimulus measures is weighing on AUD and NZD, as China is a major trading partner for both countries. However, the rise in iron ore prices provides a small counterbalance, particularly for the AUD.
  • The overall market sentiment seems to favor the US dollar, with its strength likely to continue against most major currencies. The EUR/USD pair is expected to remain under pressure, while GBP/USD may show mixed performance depending on upcoming data. The commodity currencies (AUD, NZD, CAD) are likely to struggle against the USD but may show varying performances against each other and the EUR depending on specific economic data and commodity price movements.
     

Daily analysis 10/14/2024

15. 10. 2024 - Josef Brynda

Latest news
  • Markets are at all-time highs, with strong earnings from JPMorgan and Wells Fargo.
  • The USD is flat after last week's surge.
  • Gold is pulling back toward cycle highs in a strong start to the week.
  • US 10-year yields remain near recent highs above 4.00%.
  • CPI data for many countries is due this week.
  • China's stimulus news at the weekend left markets with more questions than answers.
  • There was no language indicating support for consumption in the form of fiscal stimulus in China.
  • The ECB is expected to cut rates this Thursday.
  • The market is pricing nearly 100% odds of a 0.25% rate cut at this ECB meeting and the following one.
  • A dovish surprise from the ECB would require guidance for a possibly faster pace of easing.
  • US Fed's Waller is set to speak at 1900 GMT.
  • UK labor market data is due tomorrow early at 0600 GMT.
  • Sweden's September CPI is due at 0600 GMT tomorrow.
  • Germany's October ZEW survey is up at 0900 GMT tomorrow.
  • Earnings season begins to hit full stride this week.
  • JPMorgan and Wells Fargo delivered standout earnings, boosting financials.
  • Investors remain cautious regarding China's recent pledge for fiscal support.
  • The market will be focused on earnings from Citi, Bank of America, and Goldman Sachs.
  • Key economic data, including U.S. retail sales and jobless claims, will be pivotal in shaping market sentiment.
  • The VIX remains above 20, signaling that underlying market risks persist.
  • The US yield curve steepened again last week.
  • The market currently prices 90% odds that the Fed will hike 0.25% at its November 7 meeting.
  • Long yields remain near the recent highs, with the US 10-year yield in the pivotal 4.00-4.25% area.
  • Brent crude trades mid-range near 78 dollars per barrel.
  • Gold has pulled sharply higher to start the week, trading north of 2,660 this morning.
  • Weak action to start the week in currencies as the calendar is relatively light this week on US data.
  • September Retail Sales in the US are due on Thursday.
  • Several countries report their September CPI data this week, including Sweden and Canada tomorrow.
  • New Zealand and the UK report CPI on Wednesday.
  • Japan reports its CPI on Friday, an interesting test of the recent slide in the Japanese yen.
  • The market has removed a large chunk of the anticipated Fed easing later this year and into next year due to recent resilient economic data.
  • The Hang Seng index is still trading at the time of writing, with early reactions showing muted optimism as markets await more details on China's fiscal support.
News summary
  • Markets are currently at all-time highs, bolstered by strong earnings reports from JPMorgan and Wells Fargo, which have led to a positive sentiment in financials. The USD is flat after a strong surge last week, but the resilience of the U.S. economy continues to support the greenback in the medium term, keeping pressure on other currencies like CAD and EUR. However, the upcoming CPI reports for various countries could shift the USD further, depending on inflation trends.
  • Gold is pulling back toward cycle highs, trading above 2,660, reflecting growing concerns around inflation and market risks. This rise in gold prices could impact the AUD and NZD, as their economies are sensitive to commodity market fluctuations. Higher gold prices often lead to a stronger AUD due to Australia's significant gold exports, while NZD might experience some upward movement due to broader risk sentiment.
  • The US 10-year yields remain above 4.00%, signaling continued expectations of strong economic performance. Higher yields tend to strengthen the USD, putting pressure on other currencies like EUR and GBP, as they face weaker rate environments. A steepening US yield curve may continue to weigh on EUR, particularly as the ECB is expected to cut rates on Thursday. The market is pricing in nearly 100% odds of a 0.25% cut at this meeting, which would likely weaken the EUR further against the USD, as the divergence in monetary policy becomes clearer.
  • China’s recent announcement on fiscal stimulus left many investors uncertain, as no significant support for consumption was mentioned. This has led to mixed market reactions, particularly in the Hang Seng index. The muted optimism could weigh on currencies like AUD and NZD, as both are heavily dependent on trade with China. A lack of clear fiscal support in China could suppress demand for commodities, indirectly affecting these currencies.
  • Upcoming US retail sales and jobless claims data this week are crucial for shaping market sentiment. A strong retail sales report would further boost the USD. Meanwhile, weaker data could give some relief to CAD and GBP, which are sensitive to U.S. economic conditions. GBP will also be influenced by UK labor market data tomorrow, with weaker-than-expected employment figures potentially adding pressure on the Bank of England to pause future rate hikes, weakening the pound further against USD and EUR.
  • Lastly, the Japanese yen (JPY) remains under pressure as Japan is set to report its CPI on Friday. A continuation of low inflation combined with the yen's recent weakness could push the currency lower, especially against the USD, EUR, and AUD. Japan's dovish stance contrasts with the tightening or stable policy environments in other major economies, making the JPY a candidate for further depreciation.

Daily analysis 10/11/2024

11. 10. 2024 - Josef Brynda

Latest news
  • The S&P 500 eased lower while Chinese stocks slumped.
  • Oil prices rallied sharply, and gold continued its rebound.
  • The US dollar remained firm amid mixed economic data.
  • Treasury yields hit new highs in a 30-year auction but closed well off their peaks.
  • US Producer Price Index (PPI) increased following a hotter-than-expected Consumer Price Index (CPI) report.
  • Core US inflation unexpectedly edged up to 3.3% annually, above forecasts.
  • Market expectations for a November Fed rate cut decreased, with only 85% odds of a 25 basis point cut priced in.
  • US weekly jobless claims rose to 258,000, largely due to the impact of recent hurricanes.
  • France is implementing measures to cut spending and raise taxes, which may weigh on growth next year.
  • Tesla's Elon Musk unveiled plans for a robotaxi without a steering wheel or pedals, slated for 2026 release.
  • Chinese equities slumped ahead of an anticipated fiscal stimulus package announcement.
  • The Q3 earnings season kicks off with major US banks reporting.
  • Brent crude oil prices surged over three dollars per barrel at one point.
  • Gold rebounded, trading between its recent high of 2685 and local support.
  • US stock futures drifted higher as markets digested the hot CPI report.
  • AMD debuted its latest AI chips, competing with rivals Nvidia and Intel.
  • Warren Buffett's Berkshire Hathaway reduced its stake in Bank of America to below 10%.
  • The Bank of Japan may not be as dovish as Governor Ueda's cautious rhetoric suggests.
  • Shares of Trump's media company surged to their highest level in six weeks.
  • Three Fed officials downplayed the CPI report, while Atlanta Fed President Bostic was open to a pause in rate hikes.
  • The US annual inflation rate slowed to 2.4% in September, the lowest since February 2021.
  • Energy costs saw a greater decline, while food and transportation prices increased.
  • US weekly jobless claims hit a 14-month high at 258,000.
  • Hong Kong equities jumped 2.8% on optimism for Chinese fiscal support.
  • Treasury yields ended mixed, with short-term yields improving and long-term yields declining.
  • The 30-year Treasury bond auction yielded 4.389%, the highest since July.
  • Gold prices rose 0.84% to $2,629, rebounding from a three-week low.
  • WTI and Brent crude oil futures surged due to heightened US fuel demand and Middle East supply concerns.
  • The US dollar weakened against major currencies following disappointing labor market data.
  • The Australian dollar gained 0.14% to $0.67280, driven by an equity rally in China.
News summary
  • Global financial markets showed mixed performance across various asset classes. The S&P 500 eased lower while Chinese stocks slumped, reflecting ongoing economic uncertainties. However, US stock futures drifted higher as markets digested the latest inflation data. This divergence in equity performance could lead to increased volatility in currency pairs involving the USD, EUR, and CNY. The USD may experience short-term strength against the EUR and GBP due to the relative stability of US markets.
  • Inflation remains a key concern, with core US inflation unexpectedly edging up to 3.3% annually, above forecasts. The US Producer Price Index (PPI) also increased following a hotter-than-expected Consumer Price Index (CPI) report. These inflationary pressures may support a stronger USD in the short term
  • The commodities market saw significant movements, with oil prices rallying sharply and gold continuing its rebound. Brent crude oil prices surged over three dollars per barrel at one point, while gold rose 0.84% to $2,629. These commodity price fluctuations could boost commodity-linked currencies such as the CAD, AUD, and NZD.
  • In the fixed income market, Treasury yields hit new highs in a 30-year auction but closed well off their peaks. The 30-year Treasury bond auction yielded 4.389%, the highest since July. This yield movement could attract foreign investors seeking higher returns, potentially supporting the USD against other major currencies like the EUR and GBP. The EUR/USD pair might test lower levels if the yield differential widens further.
  • Economic data presented a mixed picture, with US weekly jobless claims rising to 258,000, largely due to the impact of recent hurricanes. This weaker labor market data, combined with the inflation report, led to decreased market expectations for a November Fed rate cut. These factors may create short-term volatility in USD pairs, potentially benefiting the EUR and GBP if the US economic outlook weakens
  • International developments, such as France implementing measures to cut spending and raise taxes, could put pressure on the EUR. The EUR/GBP pair might decline if UK economic data outperforms the Eurozone. 
  • Optimism surrounding Chinese fiscal support boosted Hong Kong equities, which may strengthen Asian currencies against major counterparts. This could benefit the AUD and NZD due to their close economic ties with China, potentially leading to gains in AUD/USD and NZD/USD pairs.
  • In the current forex landscape, the US dollar is expected to maintain its overall strength against major currencies, supported by robust economic data and higher inflation figures. However, potential job losses due to recent hurricanes could introduce short-term volatility. The euro is likely to face continued weakness due to concerning Eurozone economic data. Commodity-linked currencies like the AUD and NZD may benefit from anticipated Chinese fiscal stimulus, though the NZD could underperform against the AUD due to rate cut expectations. The CAD might gain from rising oil prices, but USD strength could limit its appreciation. The GBP shows potential for further gains against the EUR, backed by stronger UK economic data, despite rhetoric about faster rate cuts which may be seen as verbal intervention. Traders should remain alert to shifts in central bank policies, geopolitical events, and economic data releases that could alter these projected trends.