Daily Broad Market Summary – June 27, 2024

Major assets remained broadly flat until the US pulled back on generally weak mid-tier US data.

Alternatives to the US dollar such as spot gold, crude oil and Bitcoin recorded gains following the release of the reports, although the US dollar was able to recoup its losses against its foreign currency counterparts.

What topics dominated yesterday’s trading? We have the details!

headlines:

• Australia’s inflation expectations rose from 4.1% to 4.4% year-on-year in May
• ANZ New Zealand Business Confidence Index June: 6.1 (previously 11.2)
• Thursday, Japanese officials spoke out against the yen’s rapid movesFinance Minister Shunichi Suzuki said they would “take necessary measures” while Chief Cabinet Secretary Yoshimasa Hayashi warned they would take “appropriate” measures against excessive currency moves.
• British banks borrowed £21.35bn in cash through the Bank of England’s short-term repo programme, the 11th time in the last 14 repo deals that use has reached record levels and has raised concerns about cash levels in the financial system.
• The Bank of England’s Financial Stability Report is published twice a year. He warned of “material” global economic risks and adjustments to the high interest rate environment that make assets “vulnerable to a sharp correction.”
• Reserve Bank of Australia Deputy Governor Andrew Hauser He said it was a “huge mistake” to base policies on the CPI alone, and cited upcoming reports on employment, retail sales and business surveys as potential data points.
• US final GDP Q1 2024: 1.4% QoQ as expected vs. 1.3% previously
• Final US GDP price index for Q1 2024: 3.1% QoQ (3.0% expected, 3.0% previous)
• US Initial Jobless Claims for the week ending June 22: 233K (FX: 236K, Previous FX: 239K)
• Addresses for durable goods orders in the United States Up 0.1% m/m in May (-0.5% expected, 0.6% previously); Core durable goods down 0.1% (0.2% expected, 0.4% previously)
• Pending home sales in the US unexpectedly fell in May: -2.1% m/m (0.6% expected, -7.7% previously)
• Tokyo Core CPI June: 2.1% YoY (2.0% F, 1.9% P)

Broad market price movement:

Major financial assets continued or reversed their movements from the previous US session, while traders in the Asian session braced for US data releases on Thursday.

Bitcoin (BTC/USD) fell below $61,000, spot gold fell below $2,300, and US crude oil prices fell below $80.50.

The tides are starting to turn during the European session as traders are likely to prepare for the upcoming mid-term US data releases.

As the US reports showed some weakness, the 10-year Treasury yield fell from 4.34% to 4.28%, giving a boost to dollar alternatives such as spot gold, bitcoin and crude oil. Oil even got some extra support from rising tensions between Israel and Hezbollah, the Iranian-backed group in Lebanon.

Forex market behavior: US dollar against major currencies

Overlay of the US dollar against major currencies Chart by TradingView

With not much top-tier data to consider, Asian session traders focused on USD/JPY holding above 160.00 and the potential impact if it reaches 161.00. The US dollar, which was probably driven by USD/JPY, faced downward pressure during the US session and ahead of several mid-level data releases.

In the US session, we saw that the final GDP reading was slightly higher than the second estimate, but core durable goods orders and continuing jobless claims pointed to some economic weakness.

The dollar fell sharply following the reports, but was able to recover most of its losses during the day after about two hours. One reason for this may be that traders adjusted their positions ahead of the expected data. US Core PCE Price Index Report Scheduled later today.

By the end of the day, the US dollar remained unchanged against most major currencies, except for the euro and the pound sterling, which rose by about 0.21% and 0.12%, respectively.

Potential catalysts coming up on the economic calendar:

• UK Final GDP at 6:00am GMT
• UK current account balance at 6:00 am GMT
• Preliminary consumer price index in France 6:45 AM GMT
• KOF Swiss Economic Index at 7:00 am GMT
• Spot CPI in Spain 7:00 AM GMT
• Germany’s unemployment rate changed at 7:55 AM GMT
• Italy Preliminary CPI at 9:00 AM GMT
• Canada’s monthly GDP at 12:30 PM GMT
• US core personal consumption expenditures price index 12:30 PM GMT
• US Personal Income and Spending at 12:30 PM GMT
• US Chicago Purchasing Managers’ Index (PMI) at 1:45 pm GMT
• US consumer confidence and inflation expectations were revised from the University of Michigan at 2:00 PM GMT

Markets are bracing for another busy day as the UK publishes the final reading of GDP for the first quarter of 2024.

Later, the closely watched US Core Personal Consumption Expenditures Price Index – the Fed’s preferred measure of inflation – will be released and, if that does not cause additional volatility for the US dollar, mid-level data such as personal income and spending might. And the final consumer inflation forecast from the University of Michigan!

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