Market Updates Today

Market Overview

Core PPI m/m and PPI m/m showed a slowdown after releasing 0.0% and -0.2% respectively. This decline in numbers was further highlighted by the rise in Unemployment claims to 242K from 229K--indicating a possible slowdown in purchasing power. 

“Initial claims have been drifting up for some time, but the big increase this week leaves the uptrend far harder to dismiss,” says Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

Ongoing claims (USJOBN=ECI), which lag initial claims by one week, increased by 1.7% to 1.82 million, well above the pre-pandemic norm.

“Greater layoffs will probably mean that the labor market starts to look a lot weaker very soon,” Allen adds. “Especially when combined with the meaningful slowdown in gross hiring suggested by most of the business surveys.”

Indeed, the most recent JOLTS data shows a slowdown in hiring, suggesting that it's taking longer for laid-off workers to find suitable replacement gigs. 

The yield on the benchmark U.S. 10-year Treasury note fell 4.3 basis points to 4.252%.

Yields had dropped after the consumer price index report on Wednesday but pared some declines after the Federal Reserve left interest rates unchanged and pushed out the start of rate cuts to perhaps as late as December.

The yield on the 30-year bond declined 3.6 basis points to 4.414%. A $22 billion auction in 30-year bonds was seen as strong by analysts, with the above-average demand of 2.49 times the notes on sale the highest in a year, according to LSEG data.

Market expectations for a rate cut of at least 25 basis points at the Fed's September meeting stand at 68.5%, according to CME's FedWatch Tool, up slightly from the 64.7% in the prior session.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a negative 44.7 basis points.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, shed 5.3 basis points to 4.697%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities was last at 2.175% after closing at 2.19% on June 12.

The 10-year TIPS breakeven rate was last at 2.22%, indicating the market sees inflation averaging about 2.2% a year for the next decade.

GOLD -Gold has held above 2295.536, indicating strong support levels. The momentum and volume have been sufficient to sustain the current price. However, as market dynamics can shift quickly, it's crucial to align short-term trading goals with the long-term trend. Central banks increasing their reserves may further bolster demand for gold.

SILVER -Silver has broken below 29.018 but is showing signs of retracing back to this level. If it consolidates above this structure, we need to monitor its behavior closely. There is potential for Silver to either maintain its price levels or push lower. Currently, it remains in a consolidation phase.

DXY -Despite dovish news, the Dollar Index (DXY) is trending upwards, reflecting confidence after the FOMC maintained interest rates. The FED's decision to delay rate cuts until inflation moves towards the 2% target has solidified market expectations. This bullish sentiment persists despite underwhelming PPI data, suggesting a shift in the overall trend.

GBPUSD -The pound has declined against the dollar and is now testing 1.26256, a level we suspect may be breached easily. If the price falls through this support, the next key level is 1.27006. A break below this would likely lead to further declines within the range.

AUDUSD - AUDUSD is trading below 0.66541 and is testing 0.66145. Should the price continue to fall and break through this structure, the next significant level is 0.65869. While the short-term outlook appears bearish, the overall trend remains bullish, with current conditions showing consolidation.

NZDUSD - NZDUSD has shown little movement, staying within a consolidation range between 0.61408 and 0.60954. Although the price might be 0.61408, the overall structure is bullish. We await further price action to confirm our bullish bias.

EURUSD - As per our expectations, the EURUSD filled the gap before trading lower, under the trendline. We expect the price to remain suppressed below 1.07637 and fall further below 1.07240. The bearish sentiment is reinforced by the broken bullish structures and the recent price corrections.

USDJPY - USDJPY is stable ahead of the BoJ statement release. We anticipate further price action post-announcement of the BoJ Policy rate decision. A hawkish outlook from the BoJ, likely involving interest rate hikes, could drive the price below 154.658.

USDCHF -USDCHF has shown little movement since yesterday, indicating a sideways market. We are waiting for further confirmations before establishing a bias, though bearish structures currently remain intact.

USDCAD - USDCAD has moved above 1.37435, indicating weakness in the Canadian Dollar. We expect further weakening of the CAD as the BoC suggests additional rate cuts. The price is likely to remain bullish above this structure.