The dollar slightly gained, US bond yields rebounded upwards, and Wall Street indices had a successful session. The pretext for gains was the weekly US job market data. The publication, which usually goes unnoticed, this time brought about larger fluctuations and somewhat calmed the markets. All signs point to the recent decline being just a correction and a brief burst of high-risk aversion.
The highlight of yesterday was the release of weekly data from the US job market, after which the USD strengthened. Euro/USD rates fell below 1.09 and the USD/PLN exchange rate grew to 3.9770, followed by a downward movement to the current level of 3.9550. The zloty was stable against the euro. However, it lost when compared to the British sterling. The US data was the first reading from the labor market after a weak NFP report from last Friday, hence it stirred up more emotions than usual. It turned out to be better than expected. The number of applicants remained at a level of 233 thousand and the total number of people receiving benefits was 1.875 million, which matched market forecasts. Today the macro calendar is empty. We saw a noticeable bounce back on Wall Street, which resulted in a nearly 2.9% increase in the Nasdaq Composite Index. The broad SP500 gained 2.3% in contrast, the industrial Dow Jones closed the day with a positive result of 1.76%. The yield on American bonds rose. 2-years rose to 4.08%.
Yesterday, there was a lack of data from Europe. This morning at 8:00 am, we received the final inflation data from Germany. According to the final data, the annual CPI dynamics increased inline with expectations to 2.3% from 2.2% in June. The HICP indicator year-on-year rose in July to 2.6% from 2.5% in May 2024.
Thomas Barkin from the Richmond Fed branch once again tried to reassure the markets, expressing the opinion that the Federal Reserve has plenty of time to analyse the current economic situation and determine the chances of a recession. He spoke optimistically about inflation. The overall tone of his speech was “hawkish.”
After crazy volatilities over the past few weeks, USD-JPY prices are slowly normalising. Over the past three days, the pair has stabilised around the 147 level. Earlier, the JPY gained almost 10% against the USD in just five trading days, only to give back about 4% in two sessions.
At the beginning of the week, the market was convinced that a September cut of 50 basis points was highly likely. Currently, these expectations are being slightly corrected due to Fed statements and macro data. Next week, attention will focus on the CPI and PPI reports for the US. If we see lower results, the probability of a more significant reduction in the cost of money will decrease again.
Łukasz Zembik Oanda TMS Brokers
Source: https://ceo.com.pl/rynki-reaguja-na-dane-z-usa-dolar-rosnie-indeksy-zwyzkuja-38074
