Daily Broad Market Recap – July 10, 2024

July 11, 2024 9:02 am

Risk-on vibes seemed to be present in the financial markets, as equities and commodities closed higher while bond yields and the dollar took hits.

What’s been driving these asset classes lately?

Here are the market updates you need to know:

Headlines:

  • Chinese headline CPI slowed from 0.3% y/y to 0.2% in June vs. estimated 0.4% uptick
  • Chinese PPI chalked up 0.8% y/y decline in June as expected vs. previous 1.4% drop
  • RBNZ kept interest rates unchanged at 5.50% for eighth consecutive month in “dovish hold” decision
  • OPEC upgraded its global economic growth forecast for 2024 slightly higher to 2.9% and maintained its oil demand growth forecast of 2.2 million barrels per day for this year
  • Italian industrial production in May: 0.5% m/m (0.0% expected, -1.0% previous)
  • BOE Chief Economist Huw Pill said that timing of rate cut is still an “open question” due to persistent inflation
  • Fed Chairperson Powell reiterated that is not yet confident that inflation is returning to 2% target, adds that there is “more work to do” in driving price pressures down
  • EIA crude oil inventories show reduction of 3.4M barrels vs. estimated 0.7M increase, previous 12.2M draw
  • BOE MPC member Catherine Mann warned that supply side of economy is growing very slowly
  • New Zealand food price index rebounded 1.0% m/m in June vs. previous 0.2% dip
  • U.K. RICS house price balance still down 17% vs. estimated 14% drop
  • Japanese core machinery orders slowed from 2.9% y/y decline to 3.2% drop vs. estimated 0.9% gain

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Financial markets were off to a mixed start, as crude oil was still in selloff mode during the Asian market hours while bitcoin pulled higher to the $59,000 region early in the day.


Treasury yields had a rough time while traders continued to assess the implications of Powell’s remarks on the central bank’s easing timeline, staying in the red for the most part of the day.

Meanwhile, crude oil managed to catch a break when the OPEC upgraded its global growth forecasts and also when the EIA inventories report revealed another draw in stockpiles instead of the projected gain.

Gold was cruising higher in the first part of the day before retreating after Powell’s testimony in Congress, as traders likely started to book profits ahead of today’s highly-anticipated U.S. CPI report.

U.S. equities had another stellar run, thanks to big gains from Nvidia and semiconductor stocks, as well as strengthening expectations for a Fed rate cut in September.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Major Currencies Chart by TradingView

Overlay of USD vs. Major Currencies Chart by TradingView

Price action among dollar pairs was a bit mixed compared to that of the previous day, as the Kiwi and pound had their individual catalysts to contend with.

Early in the Asian session, the RBNZ announced a “dovish hold” decision in citing that domestic growth and inflationary pressures are receding, spurring doubts that the central bank can maintain its restrictive policy for much longer. Not surprisingly, NZD/USD tumbled and stayed in the red for the rest of the trading day.

On the flip side, the pound was able to get a boost during the London market hours from surprise remarks by BOE Chief Economist Pill who said that a potential rate cut isn’t a done deal just yet.

Fed head Powell’s testimony in Congress barely set a direction for the U.S. dollar, as his remarks were mostly a repeat of what he already mentioned in Senate the day prior. Still, the Greenback managed to maintain its lead versus the yen and franc while ending marginally lower versus the Loonie, Aussie, and euro.

Upcoming Potential Catalysts on the Economic Calendar:

  • U.K. monthly GDP at 6:00 am GMT
  • U.K. industrial production at 6:00 am GMT
  • BOE Credit Conditions Survey at 8:30 am GMT
  • U.S. headline and core CPI at 12:30 pm GMT
  • U.S. initial jobless claims at 12:30 pm GMT
  • FOMC member Bostic’s speech at 3:30 pm GMT
  • FOMC member Musalem’s speech at 5:00 pm GMT
  • New Zealand BusinessNZ manufacturing index at 10:30 pm GMT

The market focus today is on the U.S. CPI report for June, as the numbers could make or break September rate cut expectations. Stay on your toes for additional volatility among dollar pairs, especially if the numbers come in widely above or below consensus.

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