Here’s a revised version of your text:
"With a lack of fresh catalysts, major assets traded within narrow ranges early in the day. However, speculation around central banks and positioning ahead of the U.S. CPI reports led to increased volatility during the U.S. session.
Which assets saw the most significant moves?
We're reviewing yesterday's market headlines and price reactions!"
Headlines:
- RBNZ cuts rates by 50 bps, signals potential for more easing ahead.
- Japan's preliminary machine tool orders fell 6.5% year-on-year in September (previous: -3.5%).
- Germany’s trade surplus widened from €16.9B to €22.5B in July (€18.9B expected), with exports up 1.3% and imports down 3.4%.
- EIA crude oil inventories rose by 5.8M barrels, surpassing the 2.0M estimate and 3.9M forecast.
- U.S. federal prosecutors charged crypto firms Gotbit, ZM Quant, CLS Global, and 15 individuals with widespread fraud and market manipulation.
- Seized PlusToken cryptos were transferred to exchanges, sparking concerns over potential selling pressure.
- FOMC September meeting minutes revealed discussions of a potential 25 bps cut, but members rejected a pre-set policy direction.
- FOMC voting member Collins supported a 0.50% cut due to prevailing risks, signaling more adjustments might be necessary.
- FOMC voting member Daly suggested one or two more cuts could occur this year, voicing concerns over the labor market.
Market Price Movements:
With no fresh catalysts, major assets remained in tight ranges during the Asian session. Chinese stocks lost momentum as the initial boost from stimulus announcements faded. However, both Asian and European equities climbed, supported by the absence of further Middle East tensions and rising hopes for additional Chinese stimulus expected on Saturday.
Traders shifted their focus to central bank signals, with ECB and FOMC members indicating a slower pace of easing. The FOMC meeting minutes revealed that a 'substantial majority' favored a 50 bps rate cut in September, though some officials preferred a smaller reduction. The larger cut wasn’t driven by immediate economic concerns, and the Fed's rejection of a fixed policy path helped push U.S. equities higher.
As a result, the Dow and S&P 500 hit record highs, U.S. 10-year Treasury yields climbed to 4.07%, and the dollar strengthened broadly. Meanwhile, gold slid to weekly lows near $2,608, and Bitcoin briefly dropped to $60,400 following news of fraud charges against three crypto companies, before recovering to $60,700.
In commodities, U.S. crude oil prices fell below $72.00, weighed down by reduced concerns over Middle East tensions and a surprise increase in U.S. oil inventories. The price later stabilized under $73.50.
FX Market Behavior: U.S. Dollar vs. Majors:
The U.S. dollar initially strengthened as a countercurrency, gaining against the Kiwi following the RBNZ’s dovish rate cut. However, the dollar lost ground to both the Aussie and Kiwi after China’s finance ministry announced a briefing scheduled for Saturday, raising hopes for more fiscal stimulus.
With no significant data releases during early European trading, the dollar remained range-bound. Market attention then turned to stabilizing Fed rate cut expectations, as traders positioned themselves ahead of key U.S. CPI and PPI data. The dollar’s rally lost momentum after London markets closed, but it managed to hold onto most of its gains, with FOMC minutes confirming the Fed’s flexible approach to monetary policy.
Upcoming Potential Catalysts:
- U.S. CPI report (12:30 pm GMT)
- U.S. initial jobless claims (12:30 pm GMT)
- FOMC member Cook's speech (1:15 pm GMT)
- FOMC member Barkin's speech (2:30 pm GMT)
- FOMC member Williams' speech (3:00 pm GMT)
- SNB member Antoine Martin's speech (3:30 pm GMT)
- BusinessNZ Manufacturing Index (9:30 pm GMT)
All eyes will remain on the U.S., particularly with the release of September's inflation data and additional speeches from FOMC members. Don’t overlook the weekly jobless claims or FOMC speeches, as they could shape expectations for future Fed rate cuts.
Stay alert, especially if you're trading the U.S. dollar in the next sessions!
