Global Market Insights - Forex, Futures, Stocks

Risk appetite ebbs as markets fret over China stimulus, Fed rate cuts

Broadcast on:: 08 Oct 2024
Audio Format:: other

Risk sentiment dented as China refrains from fresh stimulus measures. Fed officials give cautious green light to more rate cuts. Dollar and equities turn lower after recent gains as US CPI awaited.

Risk Warning: Our services involve a significant risk and can result in the loss of your invested capital. *T&Cs apply.

Please consider our Risk Disclosure: https://www.xm.com/goto/risk/en

Risk warning is correct at the time of publication and may change. Please check our Risk Disclosure for an up to date risk warning

Receive your daily market and forex news analysis directly from experienced forex and market news analysts! Tune in here to stay updated on a daily basis: https://www.xm.com/weekly-forex-review-and-outlook

In-depth forex news analysis on all major currencies, such as EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD.

Welcome to another episode of Global Market Insights, brought to you by XM.com, where we provide meaningful and informative content about the events that affect market trends and shape global markets. It's Tuesday the 8th of October, 2024, and you're listening to the Daily Comment Podcast by Rafi Boyajian. I'm Marie Eppesherd this, thanks for joining us at XM.com. Optimism about China's newfound love for bold stimulus policies faded slightly on Tuesday, as a much-anticipated press briefing by the country's National Development and Reform Commission ended without any significant new measures being announced. Chinese traders returned from a week-long holiday today, and hopes were high that the government would unleash more big packages to support the flagging economy. Instead, the decision to bring forward a 100 billion yuan investment plan failed to satisfy investors. Nevertheless, Chinese stocks managed to finish the day sharply higher in a catch-up move, but equities globally turned red. The sense of disappointment wasn't restricted to just China, however, as investors sifted through the latest remarks by Fed officials. In a busy week for FedSpeak, Monday's commentary, which included those from Williams, Coogler, Ian Salem, were balanced, supporting the case for additional rate cuts, but seeing little need for further 50 basis point moves. Rate cut expectations held steady after the comments, with investors pricing in 25 basis point reductions in both November and December, following the dialing back of aggressive bets after Friday's blowout jobs report, but Wall Street closed lower and futures are flat today. The US dollar is also on the slide today, snapping a six-day winning streak that took its gauge against a basket of currencies to a seven-week high. The focus now is on Thursday's CPI report for September, which could further cast out on whether another rate cut is forthcoming in November. Ahead of that, the minutes of the Fed's September meeting will be watched tomorrow to gain better insight into the Fed's thinking behind the surprise decision to cut by 50 basis points. Elsewhere, the yen sought to extend its gains for a second day as it recovers from last week's losses when it came under pressure from Japanese Prime Minister Ishiba U-turn on his support for interest rate normalization. The Australian dollar slid the most as the absence of fresh stimulus from China weighed on the currency, even as the Reserve Bank of Australia revealed it has not ruled out future rate hikes and its meeting minutes that were published today. The attention is now on the New Zealand dollar as the RPNZ is expected to slash rates by 50 basis points when it meets early on Wednesday. Gold prices remain subdued on Tuesday despite the softer greenback. The pullback and treasury yields today is very modest and seems more of a corrective move than a reversal, and this is likely holding gold bulls back for the time being. Still, with strong support in the $2,630 area, a near-term bounce-back is possible, especially as tensions in the Middle East remain very elevated. Oil futures are also correcting lower, slipping by around 2.0 percent, as the world holds its breath while Israel decides on how to respond to last week's missile attack by Iran. The fact that Israel has yet to carry out retaliatory strikes could be an indication that its response will be measured, and this could be negative for oil in the short term. In the meantime, Israel continues to bombard South Lebanon with no end in sight to the conflict in the region. Thanks for listening. This was today's Daily Comment here at XM.com. Thank you for listening to another episode of Global Market Insights brought to you by XM.com. For more in-depth technical and fundamental analysis, be sure to visit www.xm.com/research. research. [BLANK_AUDIO]