Date: 12th September 2024.
Market Update – Eyes on ECB!
US inflation data supported bets for a rate cut from the Fed next week, but also argued for gradual moves.
Asia & European Sessions:
*Selling initially drove the moves on Wall Street and Treasuries as the pick up in the monthly US CPI core rate weighed on aggressive Fed rate cut bets, and basically confirmed a -25 bp reduction next week. However global equities turned around and dip buyers provided support with the major indexes bouncing off of support.
*European stock markets are broadly higher in catch up trade, after Wall Street turned optimistic yesterday and the tech rally extended through Asian hours. Japanese markets, which were hit by a rally in the yen earlier in the week, bounced back and the Nikkei closed 3.4% higher. DAX and FTSE100 are currently up 1.2% as markets wait for the ECB to deliver the widely expected 25 bp rate cut.
*Tech stocks like Amazon, Microsoft, and Nvidia drove Wall Street’s gains, pushing the S&P 500 and Nasdaq higher.
*ECB Preview: Comments from officials have left little doubt that rates will be cut by 25 bp once again at tomorrow’s meeting. It is likely to be another “cautious cut”, however, that doesn’t commit to additional moves. Growth indicators may have come in lower than hoped, and headline inflation dropped sharply. Underlying inflation, though, remains high and that means Lagarde is likely to stick with a data-dependent approach. We expect further cuts, but for now only at meetings with updated staff projections. A 25 bp cut would leave the deposit rate at 3.50% and the main refinancing rate at 4.00%. However, the ECB announced earlier in the year that it intends to lower the spread between the deposit rate and the main refinancing rate to 15 bp from currently 25 bp. That will come into effect on September 18, together with the changes announced tomorrow. That will leave the main refinancing rate at 3.65%, the marginal lending rate at 3.90%.
Financial Markets Performance:
*The USDIndex is at 101.796 and USDJPY has lifted to 142.66 amid a wider correction in the Yen.
*Oil rebounded 2.19% to $67.80 per barrel due to Hurricane Francine affecting Gulf of Mexico production.
*Gold dipped -0.15% to $2512.89 per ounce after rising to a session high of $2528.98 per ounce.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Andria Pichidi
Market Analyst
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.