- The BOJ core CPI slowed to 1.8% year-on-year in July, down from 2.1% and below the 2.1% expected.
- German GfK consumer climate deteriorated to -22.0 in August from -18.6, missing the -18.3 forecast; income and economic expectations declined noticeably, and the willingness to buy also fell.
- Germany's final GDP for Q2 2024 was confirmed at 0.1%, in line with expectations.
- In the UK, CBI realized sales fell for the third consecutive month in August, dropping to -27 (expected -11, previous -43).
- The US S&P house price index increased by 6.5% year-on-year in June, above the expected 6.2% but down from 6.9% previously.
- The US FHFA house price index decreased by 0.1% month-on-month (expected 0.1%, previous 0.0%), with prices down 5.7% between Q2 2023 and Q2 2024.
- The Richmond manufacturing index weakened to -19 in August from -17, below the -14 expected; prices received decreased and the employment component fell from -5 to -15.
- US CB consumer confidence rose to 103.3 in August from 101.9, surpassing the expected 100.9.
Market Price Movement:
Major assets began the day within tight ranges, likely due to a lighter data calendar. Gold was an exception, continuing its decline from the previous U.S. session.
Volatility increased during the European session. U.S. 10-year bond yields found support at the previous day's highs as traders anticipated a surge in Treasury issuances, which could pressure bond prices lower and push yields higher. Meanwhile, WTI crude oil prices fell, likely due to the absence of escalation in Middle East conflicts and reduced concerns over supply disruptions in Libya.
In the U.S., attention shifted to economic concerns following a housing index that missed estimates and a separate report indicating increased anxiety about the labor market.
Speculation about a possible 50bps interest rate cut by the Fed may have contributed to gold erasing its losses, closing at $2,525. U.S. stock indices showed mixed results, 10-year bond yields fell from 3.87% to 3.82%, and WTI crude oil dropped back below $76.00.
FX Market Dynamics: U.S. Dollar vs. Major Currencies
Risk-takers began the Asian session on a strong note, pushing currencies like the AUD, NZD, and GBP higher while dragging safe havens like the USD and JPY lower, despite a lack of significant data releases.
The British pound received additional support from Bank of England (BOE) Governor Andrew Bailey, who adopted a relatively less dovish stance in his Jackson Hole speech last week. The contrast between the dovish Fed and the less dovish BOE helped push GBP to two-year highs against the USD.
During the European session, the U.S. dollar continued its intraday downtrend, driven by growing concerns about a potential recession in the U.S. This decline gained momentum in the U.S. session as lower-tier U.S. reports reinforced recession fears and speculation of a 50bps rate cut by the Fed.
The Greenback ended the day lower, with the U.S. Dollar Index hitting its lowest levels of 2024. Among major counterparts, the USD experienced the most significant losses against the NZD and CHF, while its losses were relatively smaller against the EUR and AUD.
Upcoming Potential Catalysts on the Economic Calendar
- FOMC member Christopher Waller will deliver a speech at 5:15 am GMT.
- Switzerland's UBS economic expectations report is due at 8:00 am GMT.
- BOE MPC member Mann will speak at 12:15 pm GMT.
- U.S. crude oil inventories will be released at 2:30 pm GMT.
- New Zealand's ANZ business confidence report is scheduled for 1:00 am GMT (Aug 29).
With limited potentially market-moving data releases, traders might look to geopolitical developments, central bank speculations, and overall risk sentiment for guidance.
End-of-month flows and positioning ahead of this week’s anticipated economic reports could also impact your favorite assets, so stay tuned to avoid missing any critical market-moving headlines!
