Morning Market Review for 08.10.2024

EUR/USD

The EUR/USD pair is moderately rising, developing a weak and uncertain signal for corrective growth, formed the day before, when the instrument retreated from its local lows of August 15. The single currency is supported by macroeconomic statistics from the eurozone. Investors took note of the 0.8% year-on-year increase in Retail Sales in August after a 0.1% drop in the previous month, while analysts had expected a 1.0% gain, and the monthly figure, as expected, added 0.2% after a flat month in July. The Sentix Investor Confidence indicator strengthened slightly in October from –15.4 points to –13.8 points. Meanwhile, German Factory Orders fell 5.8% in August after rising 3.9% the previous month, against expectations of –2.0%, and on an annual basis the indicator was –3.9% after 4.6%. Today, investors are focusing on August statistics on Industrial Production in Germany: in monthly terms, its volumes rose by 2.9% after –2.4%, while experts expected 0.8%. In turn, tomorrow the minutes of the September meeting of the US Federal Reserve will be presented: investors expect to clarify the prospects for further easing of the regulator's monetary policy this year. At the same time, according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of a rate cut of only 25 basis points during the November meeting is 90.0%.

GBP/USD

The GBP/USD pair is showing mixed trading, consolidating near 1.3090. The instrument is trying to regain some of the positions it lost the day before, receiving limited support from macroeconomic publications from the UK. British Retail Consortium (BRC) Retail Sales volumes rose sharply by 1.7% in September after rising 0.8% the previous month. In turn, tomorrow in the US the minutes of the September meeting of the US Federal Open Market Committee (FOMC) will be published. Earlier, the Chair of the regulator, Jerome Powell, had already clarified the prospects for monetary policy at least until the end of this year, speaking out sharply against reducing the interest rate by 50 basis points or more, but at the same time agreeing with the need for a further adjustment of the value by –25 basis points. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, there is a 90.0% chance of a 25-basis-point cut in borrowing costs in November. On Thursday, October 10, the US will release September inflation statistics: forecasts suggest a slowdown in the Consumer Price Index in annual terms from 2.5% to 2.3%, and in monthly terms from 0.2% to 0.1%. At the same time, the Core CPI excluding Food and Energy is expected to remain at the previous level of 3.2%. In turn, on Friday, the UK will present August data on Industrial Production and Gross Domestic Product (GDP): analysts expect the British economy to accelerate by 0.2% after zero dynamics in July, and Industrial Production could add 0.2% after –0.8%.

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Publication date:

08 October 2024 - 16:02 (GMT)

The AUD/USD pair is showing an uncertain decline, developing a strong "bearish" momentum formed last week, when the instrument retreated from the record highs of February 2023, located at 0.6940. Quotes are testing 0.6735 for a breakdown, being under pressure amid the strengthening of the American currency. Late last week, the US dollar responded with a notable rise to the release of the September labor market report, which further dampened expectations for monetary easing at an accelerated pace by the end of the year. Nonfarm Payrolls accelerated from 159.0 thousand to 254.0 thousand versus the forecast of 140.0 thousand, Average Hourly Earnings rose from 3.9% year-on-year to 4.0% but slowed from 0.5% to 0.4% month-on-month, and the Unemployment Rate fell from 4.2% to 4.1%. The day before, the instrument was supported by data from Australia: in September, the TD-MI Inflation Gauge rose from 2.5% to 2.6% in annual terms and from –0.1% to 0.1% in monthly terms, which reduced expectations regarding the easing of monetary policy by the Reserve Bank of Australia (RBA). Those concerns were reinforced later on Tuesday by the release of minutes from the central bank's September 23-24 meeting, where officials noted that the country's current financial and economic conditions were showing little change, with output growth remaining weak despite the June quarter showing Gross Domestic Product (GDP) expanding in line with expectations. Inflation risks remain muted and balanced by a weak pick-up in household consumption, although the RBA expects it to pick up significantly in the second half of the year.

The USD/JPY pair is trading with near-zero dynamics, holding at 148.00. The day before, the instrument demonstrated a moderate decline, retreating from its local highs of August 16, which became a natural reaction of the market after the significant strengthening of the American currency last Friday. On October 4, September labor market statistics were released, which further reduced the likelihood of rapid easing of monetary policy by the US Federal Reserve before the end of this year. Nonfarm Payrolls increased by 254.0 thousand after rising by 159.0 thousand (revised from 142.0 thousand) in the previous month, compared to the 140.0 thousand estimate, Average Hourly Earnings accelerated to 4.0% from 3.9% year-on-year, compared to the 3.8% estimate, and the Unemployment Rate slowed down to 4.1% from 4.2%. The day before, some pressure on the position of the American currency was exerted by data on Consumer Credit Change: in August, the indicator sharply decreased from 25.45 billion dollars to 8.93 billion dollars, while analysts expected 12.0 billion dollars. In turn, statistics from Japan, presented yesterday, reflected a decrease in the Leading Economic Index index in August from 109.3 points to 106.7 points with expectations of 107.4 points, and the Coincident Index fell from 117.2 points to 113.5 points. Today, investors are focusing on data from Japan: Labor Cash Earnings in August slowed down from 3.4% to 3.0%, while the market expected 3.1%, Overall Household Spending fell 1.9% after increasing by 0.1%, while preliminary estimates were –2.6%. The Eco Watchers Current Situation Index fell from 49.0 points to 47.8 points in September, while the Forecast for Developments fell from 50.3 points to 49.7 points.

The XAU/USD pair shows mixed dynamics, consolidating near the level of 2640.00. Market activity remains subdued, despite the fact that investors continued to evaluate the results of the September US labor market report, published last Friday. Nonfarm Payrolls increased by 254.0 thousand after increasing by 159.0 thousand in the previous month, while analysts expected 140.0 thousand, Average Hourly Earnings accelerated in annual terms from 3.9% to 4.0% with a forecast of 3.8%, but in monthly terms the indicator slowed down from 0.5% to 0.4% with expectations of 0.3%, while the Unemployment Rate decreased from 4.2% to 4.1%. Overall, the report confirmed the resilience of the US economy, which allows the US Federal Reserve to take its time with further monetary easing. It is worth noting that by the end of the current year, market participants are forecasting a 25-basis-point reduction in the interest rate in November and December. Meanwhile, demand for gold is being driven by further escalation of the conflict in the Middle East after Iran launched a massive missile strike on Israel. In turn, the Israeli military-political leadership promised to respond in kind to the attack, which increased tension in the region and acts as a driver of the XAU/USD pair quotes.