Daily Broad Market Recap – July 4, 2024

July 5, 2024 5:24 am

No U.S. session traders? No problem!

Global equities and commodities still managed to chalk up pretty big moves during the Fourth of July holiday, as the spotlight shifted to political headlines.


Crude oil surged to its highest level in nearly two months while European stocks bagged decent gains thanks to the U.K. election results.

Here are the updates you need to know:

Headlines:

  • Australia’s goods trade surplus in May narrowed to 5.77B AUD (6.20B AUD expected, previous reading downgraded from 6.55B AUD to 6.03B AUD)
  • Swiss jobless rate held steady at 2.4% as expected in June
  • German factory orders in May: -1.6% m/m (+0.5% expected, previous reading downgraded from -0.2% to -0.6%)
  • Swiss CPI in June: 0.0% m/m (+0.1% expected, +0.3% previous)
  • U.K. general elections yielded massive win for Labour Party at 410 out of 650 seats in parliament, toppling Conservative leadership for the first time in 14 years
  • U.K. construction PMI in June: 52.2 (54.0 expected, 54.7 previous)
  • ECB June monetary policy meeting minutes highlighted doubts about the region’s economic recovery and policymakers’ uncertainty about reaching 2% inflation target
  • Japanese household spending in June: -1.8% y/y (+0.2% expected, +0.5% previous)

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

Risk assets were all over the place, as market correlations seemed to break down during the U.S. market holiday.

Crude oil had a pretty good run, despite getting knocked down early in the day, as the energy commodity got a boost from resurfacing tensions in the Middle East on news of Israel killing a senior Hezbollah commander and prompting retaliatory attacks.

Gold was off to a positive start but traded carefully throughout, as investors are probably playing it safe while waiting for the U.S. NFP release.

On the flip side, bitcoin was in selloff mode the entire time, tumbling below the key $60,000 support zone. As it turned out, BTC/USD is still reeling from profit-taking while Mt. Gox is paying back almost $9 billion worth of tokens to thousands of users.

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

With U.S. markets closed for the Fourth of July holiday, majority of dollar pairs cruised in ranges with a slight risk-on lean for the most part of the trading sessions.

USD/CHF had a noticeable pop higher during the release of a weaker than expected Swiss CPI report, as the flat reading led traders to price in expectations of a dovish SNB. Meanwhile, the U.K. general elections led to a dip for a handful of GBP pairs on a stronger likelihood of a BOE cut soon, although Cable was able to hold its ground.

The higher-yielding Aussie and Kiwi took advantage of early risk-on flows which stayed in play until the early London session, before joining the rest of its peers in moving sideways to the dollar.

Upcoming Potential Catalysts on the Economic Calendar:

  • German industrial production at 6:00 am GMT
  • French industrial production at 6:45 am GMT
  • SNB foreign currency reserves at 7:00 am GMT
  • Swiss SECO consumer climate index at 7:00 am GMT
  • FOMC member Williams’ speech at 9:40 am GMT
  • U.S. non-farm payrolls report at 12:30 pm GMT
  • Canadian jobs report at 12:30 pm GMT
  • Canada’s Ivey PMI at 2:00 pm GMT
  • ECB head Lagarde’s speech at 5:15 pm GMT

U.S. markets are about to reopen today, and traders will likely be greeted by another set of fireworks from no less than the June NFP release which will probably have strong implications for Fed policy.

Don’t miss Canada’s June employment report also, as the numbers could also make or break BOC easing expectations for next month and likely trigger big moves among CAD pairs before the week comes to a close.

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