Markets Consolidate Ahead of Key Data
It was a case of more of the same for financial markets across the globe yesterday as recent market trends continued, only to a lesser extent, ahead of key data that will hit investors the next day. Investors maintained their focus on the more dovish Fed narrative in the US Day with treasury yields again making a move south, but the correlation did not really work for the equity market or indeed the dollar. The major US indices all closed close to flat, the Dow up 0.04%, the S&P down 0.09% and the Nasdaq down 0.16%. Whilst the dollar initially saw more losses against the majors before seeing a bit of a rally towards the end of the day after US GDP data surprised to the topside. Oil jumped again on anticipated cuts from OPEC+ and Gold remains at recent elevated levels.
FX Set for a Big December
FX traders hoping for a relatively peaceful December to take them into the new year may be sadly disappointed in the last month of 2023. The dollar has taken a bit of a bath in the last month or so and is now sitting at multi-month lows with some pairs trading at interesting levels that should see more volatility in the coming weeks. There’s no doubt that the dollar (as usual) has been the dominant currency over the last few months, with Fed expectations dictating direction, but over the next few weeks we have the usual full array of tier 1 data and the final Fed meeting for the year. Some traders are now questioning just how many potential cuts have been priced into the recent dollar decline and see more volatility if it looks like the market has got ahead of itself with an overly optimistic view on where the US economy will be in 2024.
Inflation Data the Key Event Today for Traders
The Core PCE Price Index data release later today in the US session is the major focus for the day given the global markets fixation on the Fed’s next move, however there are some other events scheduled on the macroeconomic calendar that could see some moves earlier in the trading day. The Asian session will see a sharp focus on China with the release of the Manufacturing PMI and Non-Manufacturing PMI numbers due out midway through the session. The European session has the latest Eurozone CPI numbers and traders will also be keeping a close eye on any updates from the OPEC+ meeting that is eventually taking place. But really the main focus will come after the New York open with the Fed’s favourite inflation indicator the PCE Price Index is released, we also have the Canadian GDP number and the weekly unemployment claims data, but expect them to remain second fiddle to the PCE.
