The recent trading sessions saw some notable moves across asset classes, despite a relatively light flow of data. The U.S. dollar and Treasury yields edged higher on the back of a strong labor market indicator, while the energy markets responded to surprising inventory data. Here’s a snapshot of today’s market activity:
Key Headlines:
- New Zealand’s GDT auction showed a 1.2% increase in dairy prices (previous 0.8%).
- Japan's consumer confidence index improved slightly to 36.9 in September (forecast: 37.1).
- Japan’s new Prime Minister Shigeru Ishiba stated the economy isn't ready for further interest rate hikes after meeting with BOJ Governor Ueda.
- Spanish unemployment increased by 3.2K in September (estimate: 12.1K, previous: 21.9K).
- Eurozone unemployment rate held steady at 6.4% in August, as expected.
- U.S. ADP non-farm employment change for September came in at 143K (forecast: 126K, previous: 103K).
- EIA crude oil inventories unexpectedly rose by 3.9 million barrels (expected: -1.5M, previous: -4.5M).
- FOMC official Barkin supported a 50 bps September rate cut, citing inflation and employment alignment.
Market Price Action:
Across major markets, price movements were driven by specific catalysts, reflecting some divergence in asset class behavior:
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Crude Oil: Prices surged early in the day, fueled by escalating geopolitical conflict in the Middle East, which sparked fears of supply disruptions. However, the rally lost steam after the EIA's surprising report of a 3.9 million-barrel inventory build, suggesting weaker-than-expected demand.
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U.S. Equities: Risk-off sentiment largely weighed on stocks, driven by concerns over the potential global economic fallout from geopolitical tensions. However, gains in defense and energy stocks helped the S&P 500, Nasdaq, and Dow to eke out modest gains.
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Bitcoin (BTC/USD): The cryptocurrency fluctuated between resistance at $61,600 and support at $60,500, ultimately finishing the day lower due to dollar strength.
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Treasury Yields: U.S. bond yields initially rose but pared gains later in the session, following the release of the ADP employment report.
FX Market Behavior: U.S. Dollar (USD):
The greenback saw a mixed performance, with dollar pairs initially slow before major counterparts broke in different directions. USD/JPY climbed nearly 2% after the Japanese Prime Minister’s remarks dampened rate hike expectations. While the Aussie and Kiwi posted gains early on, they fell into consolidation during the London session. USD/CHF also moved higher ahead of the ADP report, benefiting from stronger-than-expected employment numbers.
Upcoming Economic Catalysts:
- Chinese banks still closed for the holiday
- Swiss CPI (6:30 am GMT)
- Eurozone PPI (9:00 am GMT)
- U.S. Challenger job cuts (11:30 am GMT)
- U.S. Initial jobless claims (12:30 pm GMT)
- U.S. ISM Services PMI (2:00 pm GMT)
- U.S. Factory orders (2:00 pm GMT)
- FOMC speeches: Schmid (2:00 pm GMT)
- FOMC speeches: Bostic (2:40 pm GMT)
Franc traders will be keeping a close eye on Switzerland's September CPI release, as it could influence the SNB’s future rate decisions.
In the U.S., additional job market data and the ISM services PMI report could shape expectations ahead of Friday’s Nonfarm Payrolls release, potentially impacting the dollar.
