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Markets update: The possibility of a 50-basis-point rate cut by the Federal Reserve has decreased following reports from the Financial Times and Wall Street Journal. The chances of a larger interest rate reduction have increased to 45% from 28%. The US dollar has fallen to its lowest level against the Japanese yen since December 28. Meanwhile, the price of crude oil continues to rise as the impact of Francine is being evaluated.
Economic Calendar
Global Markets Roundup: 13 September 2024
On Friday, the dollar reached its lowest point of the year against the yen, while the price of gold surged to a new high, driven by increased investor expectations of a significant interest rate cut by the Federal Reserve next week. Following reports in the Financial Times and Wall Street Journal referring to the decision as "a close call," traders in Asia boosted their bets on a 50-basis point rate cut on September 18 to 45% from the previous 28%. Former New York Fed President Bill Dudley, speaking at a forum in Singapore, supported the case for a 50-basis point cut, surprising many who had anticipated a smaller 25-basis point cut.
In the stock markets, the broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) surged by 0.48%. Hong Kong's Hang Seng index (HSI) led the gains in regional markets, rising by 0.94%. Mainland Chinese blue-chip stocks (3399300) saw a modest increase of 0.09%, despite expectations of more weak economic data being released on Saturday. Australia's main index (XJO) also went up by 0.25%. However, South Korea's Kospi index (KOSPI) slightly declined by 0.1%. On the other hand, Japanese stocks performed poorly, affected by the stronger yen, with the Nikkei index (NI225) dropping by 0.35%. Japan, mainland China, and South Korea are all approaching long weekends, with Tokyo returning on Tuesday, China on Wednesday, and South Korea resuming on Thursday. In the U.S., stock futures (ES1!) rose by 0.1%, following Thursday's gains in the cash indexes. Furthermore, Pan-European STOXX 50 futures (FESX1!) showed an increase of 0.42%. HSI KOSPI XJO NI225Â ES1! FESX1!
The yen strengthened against the dollar, with the dollar dropping by up to 0.81% to 140.645 yen, marking its lowest level since Dec. 28. This week, the yen received support from hawkish remarks made by Bank of Japan officials. Naoki Tamura, a policy board member, expressed concerns on Thursday about the increasing risk of inflation. The dollar index (DXY), which gauges the currency against the yen and five other major counterparts, hit a one-week low at 101.00. Carol Kong, a strategist at Commonwealth Bank of Australia, believes that the current expectations for Federal Open Market Committee (FOMC) easing are overly optimistic. Kong stated in a note that they prefer a 25 basis point cut over a 50 basis point cut due to the resilience of the labor market and the overall economy. She pointed out that the current market projections are aggressive compared to historical FOMC rate cuts during non-recession periods. Both Kong and the majority of U.S. economists do not anticipate a recession in the U.S. economy. The euro gained 0.07% against the dollar, reaching $1.1083, following a 0.57% increase on Thursday after European Central Bank President Christine Lagarde indicated a reluctance to cut rates in October, following the anticipated quarter-point reduction on Thursday.
In commodities, Gold prices surged by 1.9% on Thursday, hitting a new all-time high of $2,570.03, supported by the weakening dollar. Meanwhile, following a 2% increase, crude oil prices continued to rise as producers evaluated the impact of Hurricane Francine on production in the Gulf of Mexico. U.S. West Texas Intermediate crude futures (CL1!) climbed 0.71% to $69.46 per barrel, extending the previous day's 2.5% gain. Brent crude futures (BRN1!) also rose by 0.65% to $72.44, following a 1.9% increase in the prior session. GOLD CL1! BRN1!
In the agricultural commodities market, November robusta coffee (RC2!) closed higher by $69, or 1.4%, at $5,077 per ton, edging closer to the 16-year peak of $5,180 reached on Aug. 30. December arabica coffee (KC2!) increased by 1.1% to $2.494 per lb. December New York cocoa (CC2!) ended lower by $140, or 1.8%, at $7,588 per ton, following a 6.3% surge on Wednesday. The active wheat contract on the Chicago Board of Trade (CBOT) (ZW1!) rose by 0.43% to $5.81 per bushel by 0447 GMT, hitting its highest level since July 7 in the previous session. Meanwhile, the soybean contract (ZS1!) rose by 0.15% to $10.12-1/2 per bushel, and corn (ZC1!) gained 0.62% to $4.08-3/4 per bushel.
In the upcoming trading sessions, key events to watch out for are the final Consumer Price Index (CPI) in France, Industrial Production in the Eurozone, Trade data in the United States, Preliminary University of Michigan Consumer Sentiment Index, the Bank of England (BoE) and Ipsos survey, and the European Central Bank's Targeted Longer-Term Refinancing Operations (TLTRO) publication.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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