Morning Market Review for 10.10.2024

EUR/USD

The EUR/USD pair is showing mixed dynamics, consolidating near 1.0940 and local lows from August 13. Market activity remains fairly subdued as traders await the release of US inflation statistics for September. The Core Consumer Price Index excluding Food and Energy is forecast to remain unchanged at 3.2% year-on-year and to slow slightly from 0.3% to 0.2% month-on-month, while the broader measure is likely to decline from 2.5% to 2.3% and from 0.2% to 0.1%, respectively. Also, during the day, data on jobless claims will be presented: it is expected that the initial jobless claims for the week ending October 4 will increase from 225.0 thousand to 230.0 thousand. For now, traders have at their disposal the minutes of the September meeting of the US Federal Reserve System, which were published the day before and ended with a reduction in the interest rate by 50 basis points. Officials cautioned against jumping to conclusions that the rapid pace of monetary easing signals a worsening economic outlook. In turn, today at 13:30 (GMT+2), the minutes of the meeting of the European Central Bank (ECB) will be released to the market: in September, the regulator decided to keep monetary parameters unchanged, but market participants still expect new easing before the end of this year, especially since the region's economic indicators continue to deteriorate. In particular, the day before, Germany announced a revision of its forecasts for economic growth for the current year and now expects a decline in Gross Domestic Product (GDP) by 0.2%, contrary to the previous estimate of 0.3%, with an increase of 1.1% expected in 2025 and 1.6% in 2026. In addition, data on Retail Sales in Germany were presented today: the monthly figure rose from –1.2% to 1.6%, and the annual figure rose from –1.6% to 2.1%.

GBP/USD

The GBP/USD pair is trading with near-zero dynamics during the morning session on October 10, holding close to 1.3075 and local lows from September 12: investors are mainly focused on data from the US. In particular, the day before, the market assessed the published minutes of the September meeting of the US Federal Open Market Committee (FOMC). Earlier, the Chair of the Fed, Jerome Powell, already noted a number of key points, speaking out against further easing of monetary parameters at a high pace. Now, according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, markets are pricing in a rate adjustment of only –25 basis points in November with a probability close to 90.0%. The situation regarding the December meeting is still more uncertain, but analysts are also more inclined to favor a scenario with a 25-basis-point cut. Today at 14:30 (GMT+2), the US will release September inflation statistics, which could also make significant adjustments to market expectations regarding interest rates. Forecasts suggest a slowdown in the Consumer Price Index from 2.5% to 2.3% year-on-year and from 0.2% to 0.1% month-on-month, while the Core CPI excluding Food and Energy is likely to remain at the same level of 3.2%. In addition, the Bank of England's inflation report will be published today, which may influence the regulator's future rhetoric, which is currently maintaining a wait-and-see stance, but after the US Federal Reserve's interest rate cut, the likelihood of new monetary policy adjustments in the UK has increased significantly. The instrument was also given some support today by the Royal Institution of Chartered Surveyors (RICS) house price index, which showed an increase of 11.0% in September after zero dynamics in August, while analysts expected an increase of 4.0%.

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Publication date:

10 October 2024 - 18:26 (GMT)

The NZD/USD pair shows a noticeable growth during the Asian session on October 10, quickly recovering from a sharp decline the day before, due to which local lows from August 19 were updated near the psychological level of 0.6000. The instrument is testing 0.6090 for a breakout, while trading participants expect the emergence of new movement drivers. In particular, today at 14:30 (GMT+2), the US will publish September inflation statistics: forecasts suggest that the Core Consumer Price Index excluding Energy and Food will increase by another 3.2% year-on-year and slow from 0.3% to 0.2% month-on-month, while the broader index will decline from 2.5% to 2.3% and from 0.2% to 0.1%, respectively. Meanwhile, the results of the Reserve Bank of New Zealand (RBNZ) meeting put pressure on the instrument's position the day before: as expected, the regulator adjusted the interest rate by –50 basis points to 4.75% for the second time in a row. As in the case of the US Federal Reserve, the RBNZ noted that the pace of further reduction in borrowing costs will depend on the situation in the economy, in particular, on the level of inflation. For now, officials say the annualized Consumer Price Index is already within the target range and is heading toward its lower limit of 2.0%. New Zealand's September manufacturing business activity data are due out tomorrow, with forecasts suggesting little change from the previous reading of 45.8 points.

The USD/JPY pair is showing flat dynamics, consolidating near 149.20 and local highs from August 2. Market activity remains fairly subdued as traders await the release of US inflation statistics for September. Forecasts suggest a slowdown in the Consumer Price Index from 2.5% to 2.3% year-on-year and from 0.2% to 0.1% month-on-month, while the Core CPI excluding Food and Energy is likely to remain at the same level of 3.2%. Investors will also be looking at jobless claims data and the monthly US budget report for September, which is expected to show a surplus of 61.0 billion dollars after a deficit of –380.0 billion dollars. Investors are assessing a block of statistics from Japan: the index of domestic prices for corporate goods in September accelerated from 2.6% to 2.8%, contrary to forecasts of a slowdown to 2.3%, the indicator of producer prices of goods showed zero dynamics in monthly terms after –0.2% in August, while the markets expected an increase in negative dynamics to –0.3%, and the volume of bank lending slowed slightly from 3.0% to 2.7%. Overall, the data reflected a possible increase in inflation risks within the country, which should have a positive impact on expectations of further monetary tightening by the Bank of Japan.

The XAU/USD pair is slightly strengthening during the morning session on October 10, trying to recover from the local lows of September 20. Pressure on the instrument remains as the market revises its forecasts for the future monetary policy of the US Federal Reserve. After a sharp 50-basis-point rate cut in September, Fed Chairman Jerome Powell has spoken out against further rate adjustments at a rapid pace. This was also confirmed by the official minutes of the September meeting, which became available the day before. In particular, officials stated that the size of the next reduction in the indicator will be determined based on the current economic situation in the country. The market has significantly revised its expectations for the US Federal Reserve's November meeting and now, according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, analysts are expecting a –25-basis-point adjustment with a probability of about 90.0%. Today at 14:30 (GMT+2), the market will receive statistics on inflation in the US: it is expected that the Core Consumer Price Index excluding Energy and Food will add another 3.2% in September in annual terms and slow from 0.3% to 0.2% in monthly terms, while the CPI may decrease from 2.5% to 2.3% and from 0.2% to 0.1%, respectively. Additional pressure on the instrument is also being exerted by the results of the meeting of the National Development and Reform Commission of the People's Republic of China, which failed to meet all market expectations: the commission did not announce the introduction of any specific measures, and the new support package is more systemic in nature. It was also announced that a new investment plan of 100.0 billion yuan for next year would be published by the end of October.