Morning Market Review for 14.10.2024

EUR/USD

The EUR/USD pair is showing an uncertain decline, consolidating near 1.0925 and local lows from August 8, updated at the end of last week, although the instrument demonstrated attempts at corrective growth, receiving weak support from technical factors. Meanwhile, key macroeconomic statistics on inflation from the US and Germany were in the center of attention of market participants. In September, the US Consumer Price Index slowed from 2.5% to 2.4% year-on-year, compared to a forecast of 2.3%, and in monthly terms it remained at 0.2%, while analysts had expected 0.1%. The Core CPI excluding Food and Energy accelerated from 3.2% to 3.3% year-on-year and added another 0.3% month-on-month. On Friday, data on producer inflation in the US was released: the Producer Price Index in September in annual terms was adjusted from 1.9% to 1.8% with expectations of 1.6%, and in monthly terms — from 0.2% to 0.0% with preliminary estimates of 0.1%, while the PPI excluding Food and Energy rose from 2.6% to 2.8%, while analysts expected 2.7%. In addition, market participants noted the decline in the University of Michigan Consumer Confidence index in October from 70.1 points to 68.9 points, with a forecast of 70.8 points. German inflation statistics did not have a noticeable impact on the market: the Consumer Price Index in September remained at 0.0% monthly and 1.6% annually, while the Harmonized CPI fell by 0.1% and added 1.8%, respectively. The European Central Bank (ECB) is set to meet on Thursday and is likely to cut its interest rate by 25 basis points to 3.40%, which could put further pressure on the single currency.

GBP/USD

The GBP/USD pair is trading in different directions, holding close to 1.3060. Activity on the instrument remains low at the beginning of the new week, as traders expect new drivers to emerge, while simultaneously assessing the prospects for monetary easing by the US Federal Reserve and the Bank of England. Earlier, the Chair of the American regulator, Jerome Powell, spoke out against the high pace of reduction in the cost of borrowing, which led to a revision of forecasts for the November meeting. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of an interest rate adjustment of –25 basis points is 80.0%, while the previous main scenario envisaged a cut of 50 basis points. Last week's US consumer and producer inflation data only confirmed these considerations: in September, the Consumer Price Index slowed from 2.5% to 2.4%, while analysts expected 2.3%, and the Core CPI accelerated from 3.2% to 3.3%. In turn, the Core Producer Price Index rose from 2.6% to 2.8%, with preliminary estimates of 2.7%. Meanwhile, the pound received some support from macroeconomic data released on Friday: the UK's Gross Domestic Product (GDP) growth rate accelerated in August from 0.0% to 0.2%, Industrial Production increased by 0.5% month-on-month after –0.7% in the previous month, while experts expected 0.2%, and in annual terms the figure rose from –2.2% to –1.6%, which was significantly worse than expectations of –0.5%. Manufacturing Production rose 1.1% in August after falling 1.2%, while analysts had expected a 0.2% gain. Tomorrow, the market will receive data on the UK labor market for August-September: a slight decrease from 23.7 thousand to 20.2 thousand is expected in the Claimant Count Change in September, and Average Earnings Including Bonus in August are likely to adjust from 4.0% to 3.8%, and Excluding Bonus — from 5.1% to 5.0%.

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Publication date:

14 October 2024 - 16:25 (GMT)

The NZD/USD pair is trading with near-zero dynamics, holding near 0.6090. Market activity remains subdued as trading floors in the US are closed for Columbus Day celebrations. Meanwhile, New Zealand's macroeconomic data released this morning were mixed, with the Business NZ PSI rising to 45.7 points in September from 45.5 points, and Electronic Card Retail Sales falling sharply by 5.6% year-on-year from –2.9% the previous month, and by 0.2% month-on-month to 0.0%. Some pressure on the instrument's position was also exerted by data from China presented last weekend, where the Consumer Price Index in September slowed from 0.6% to 0.4% year-on-year, and from 0.4% to 0.0% month-on-month, while analysts expected the previous dynamics to be maintained. Producer Price Index for the same period showed an acceleration in the rate of decline from –1.8% to –2.8%, while analysts had expected –2.5%. In addition, pressure on the instrument remains after the Reserve Bank of New Zealand (RBNZ) reviewed its monetary policy parameters last week: as expected, the regulator adjusted the interest rate by –50 basis points to 4.75%, noting significant success in combating high rates of inflation growth. Investors are also assessing the impact of inflation data on the Fed's future monetary policy: recall that in September, the Consumer Price Index slowed from 2.5% to 2.4% against a forecast of 2.3%, and the Core CPI increased from 3.2% to 3.3%, further strengthening analysts' belief that the regulator will reduce borrowing costs by only 25 basis points in November.

The USD/JPY pair shows insignificant growth, developing a weak "bullish" momentum formed at the end of last week. The instrument is testing 149.30 for a breakout, preparing to update the local highs of early August. Activity remains muted at the start of the week, however, as the US trading floors are closed for Columbus Day and investors are analyzing inflation data released late last week. The Core Consumer Price Index excluding Food and Energy rose to 3.3% year-on-year in September from 3.2%, compared with neutral forecasts, and remained at 0.3% month-on-month, while experts expected 0.2%, with the broader measure slowing to 2.4% year-on-year from 2.5%, compared with expectations of 2.3%. In turn, the Producer Price Index fell from 1.9% to 1.8% with preliminary estimates of 1.6% in annual terms and adjusted from 0.2% to 0.0%, ahead of forecasts of 0.1%, in monthly terms, while the annual Core PPI accelerated from 2.6% to 2.8%, while analysts expected 2.7%. Separately, market participants drew attention to the decline in the Consumer Confidence index from the University of Michigan in October from 70.1 points to 68.9 points, while analysts expected the indicator to rise to 70.8 points. Tomorrow at 01:50 (GMT+2), Japan will publish August Industrial Production data: the previous negative dynamics in monthly terms are expected to remain at –3.3%. September inflation data hits the market on Friday, with preliminary estimates showing the National Consumer Price Index excluding Fresh Food to slow sharply to 2.3% from 2.8%, which could significantly dampen expectations for further monetary tightening by the Bank of Japan.

The XAU/USD pair is showing moderate growth, developing the "bullish" momentum formed once again at the end of last week, when the instrument managed to retreat from its local lows of September 20. Gold is testing 2660.00 for a breakout, receiving support from expectations of monetary easing by global financial regulators. In particular, on Thursday, October 17, the European Central Bank (ECB) is expected to cut the interest rate by 25 basis points. Investors are counting on another reduction in the indicator from the US Federal Reserve in November. At the same time, analysts have practically abandoned the idea of adjusting the rate immediately by –50 basis points against the backdrop of statements by the Chair of the Fed, Jerome Powell, as well as macroeconomic statistics on inflation published at the end of last week. In September, the Consumer Price Index slowed down in annual terms from 2.5% to 2.4%, with a forecast of 2.3%, and in monthly terms it remained at 0.2%, while experts expected 0.1%. The Core CPI excluding Food and Energy adjusted from 3.2% to 3.3% year-on-year and added 0.3% month-on-month. In turn, the Producer Price Index in annual terms fell from 1.9% to 1.8% with expectations of 1.6%, and in monthly terms — from 0.2% to 0.0% with preliminary estimates of 0.1%, while the PPI excluding Food and Energy rose from 2.6% to 2.8% with a forecast of 2.7%. Separately, market participants drew attention to the decline in the Consumer Confidence index from the University of Michigan in October from 70.1 points to 68.9 points, while analysts expected the indicator to rise to 70.8 points. Additionally, gold is supported by ongoing geopolitical risks, which are only intensifying as uncertainty around the US presidential election in November grows.