No data? No problem!
With not a lot of top-tier data releases on tap, traders turned to yesterday’s market themes and priced in their biases for the awaited reports scheduled later this week.
How did your favorite assets trade anyway?
Headlines:
- BOJ core CPI slowed down from 2.1% y/y to 1.8% y/y (2.1% expected) in July
- German GfK consumer climate worsened from -18.6 to -22.0 (-18.3 expected) in August; Income and economic expectations showed noticeable losses and the willingness to buy also fell
- Germany final GDP for Q2 2024 confirmed at 0.1% as expected
- U.K. CBI realized sales fell for a third straight month in August: -27 (-11 expected, -43 previous)
- U.S. S&P house price index rose by 6.5% y/y in June (6.2% expected, 6.9% previous)
- U.S. FHFA house price index dipped by 0.1% m/m (0.1% expected, 0.0% previous); Prices are down 5.7% between Q2 2023 and Q2 2024
- Richmond manufacturing index weakened from -17 to -19 (-14 expected) in August; Prices received decreased; Employment component fell from -5 to -15
- U.S. CB consumer confidence improved from 101.9 to 103.3 (100.9 expected) in August
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets started the day in tight ranges possibly due to a less busy data calendar. Gold was an exception, extending a downswing from the previous U.S. session.
Volatility picked up during the European session. U.S. 10-year bond yields found support at the previous day’s highs, as traders braced for a flood of new Treasury issuances that could pressure bond prices lower and push yields higher. Meanwhile, WTI crude oil prices dipped, likely due to the lack of escalation in Middle East conflicts and easing concerns over supply disruptions in Libya.
In the U.S., focus turned to U.S. economic concerns after a housing index missed estimates and a separate report showed Americans becoming more anxious about the labor market.
Some market players are now talking about a 50bps interest rate cut from the Fed, which is probably why spot gold erased all of its losses and closed at $2,525, U.S. stock indices traded with mixed results, U.S. 10-year bond yields dipped from 3.87% to 3.82%, and WTI crude dropped back below $76.00.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Risk-takers started Asian session trading on a strong note, pushing currencies like AUD, NZD, and GBP higher while dragging safe havens like USD and JPY lower despite a lack of data releases.
The British pound, in particular, found extra support from Bank of England (BOE) Gov. Andrew Bailey, who took a relatively less dovish stance in his Jackson Hole speech last week. The difference between the dovish Fed and not-so-dovish BOE biases helped push GBP to two-year highs against USD!
The U.S. dollar lowkey extended its intraday downtrends during the European session, possibly as more traders worried about a possible recession in the U.S. The downswings then gained momentum in the U.S. session as lower-tier U.S. reports supported recession concerns and speculations of a 50bps rate cut from the Fed.
The Greenback ended the day lower across the board and the U.S. Dollar Index hit its lowest levels in 2024. Yipes! Among the major counterparts, USD saw the biggest losses against NZD and CHF and had the least losses against EUR and AUD.
Upcoming Potential Catalysts on the Economic Calendar:
- FOMC member Christopher Waller to give a speech at 5:15 am GMT
- Switzerland UBS economic expectations at 8:00 am GMT
- BOE MPC member Mann to give a speech at 12:15 pm GMT
- U.S. crude oil inventories at 2:30 pm GMT
- New Zealand ANZ business confidence at 1:00 am GMT (Aug 29)
With not a lot of potentially market-moving data releases, traders may take cues from geopolitical headlines, central bank speculations, and overall risk sentiment.
End-of-month flows and positioning ahead of this week’s awaited economic reports may also affect your favorite assets, so make sure you’re glued to the tube so you don’t miss any market-moving headlines!
