Round up of today's market news *

North American News

US Indices Surge to Close Out the Week Strong: NASDAQ and S&P 500 Rebound

Major US stock indices wrapped up the week on a high note, marking five consecutive days of gains and rebounding impressively from previous losses. After a turbulent week with sharp declines, the NASDAQ and S&P 500 made a notable recovery, led by substantial gains across key sectors.

Friday’s Market Close:

Dow Jones Industrial Average: Up 297.01 points, or 0.72%, closing at 41,393.78.
S&P 500: Increased by 30.26 points, or 0.54%, ending at 5,626.02.
NASDAQ: Advanced 114.30 points, or 0.65%, to 17,683.98.
Russell 2000: Rose by 53.06 points, or 2.49%, finishing at 2,182.49.

Weekly Performance Recap:

Dow Jones: Gained 2.60% this week, rebounding from a -2.93% drop the prior week.
S&P 500: Rose 4.02%, recovering from a -4.25% decrease last week.
NASDAQ: Increased 5.95%, overcoming a -5.77% decline from the previous week.
Russell 2000: Up 4.35%, bouncing back from a -5.69% drop.

Notable Winners:

ARM Holdings: Soared 25.88%.
Broadcom: Advanced 22.41%.
Chewy: Rose 22.03%.
Super Micro Computer: Increased 18.29%.
Palantir: Gained 17.21%.
Nvidia: Up 15.82%.
AMD: Grew 13.37%.
First Solar: Added 9.64%.
Tesla: Climbed 9.28%.
United Airlines: Up 9.17%.
Amazon: Increased 8.81%.

Major Decliners:

Raytheon: Fell 17.70%.
GameStop: Dropped 13.67%.
Moderna: Declined 6.52%.
Adobe: Down 4.71%.
J.P. Morgan: Decreased 3.82%.
Southwest Airlines: Slid 3.40%.
Biogen: Down 2.58%.
Citigroup: Fell 2.37%.
Wells Fargo: Dropped 2.22%.
Occidental: Decreased 1.88%.
General Mills: Down 1.84%.
General Motors: Fell 1.76%.

Summary: The week ended on a strong note as key indices recovered from last week’s steep declines. Tech giants and growth stocks drove the rally, signaling renewed investor confidence and a solid rebound in market sentiment.

University of Michigan preliminary sentiment for September 69.0 versus 68.5 estimate

University of Michigan consumer sentiment Index preliminary for September

Prior month 67.9
University of Michigan consumer sentiment 69.0 versus 68.5 estimate. Best since May 2024
Current conditions 62.9 versus 61.5 estimate. Last month 61.3. Best since June 2024
expectations and 73.0 versus 71.0 estimate. Last month 72.1. Best since April 2024
1-yesr inflation expectations 2.7% versus 2.8% last month.
5- year inflation expectations 3.1% versus 3.0% last month

US August import prices -0.3% versus -0.2% estimate. Export prices -0.7% vs -0.1% estimate

The August 2024 import and export prices for the US

Import prices prior month: +0.1%
Export price prior month: was 0.7% revised to us 0.5%
Import prices MoM -0.3% % vs -0.2% estimate
Export prices MoM -0.7% vs -0.1% estimate
Import prices YoY 0.8% vs 1.6% last month
Export prices YoY -0.7% vs 1.4% last month

Details:

Overall Imports

U.S. import prices fell by 0.3% in August, the largest monthly decline since December 2023 (-0.7%).
Despite the August decrease, import prices rose 0.8% over the past year.
The last 12-month decline in import prices was recorded in February 2024.

Fuel Imports

Import fuel prices decreased by 3.0% in August, following a 1.1% increase in July.
August’s 3.0% decline was the largest since December 2023 (-8.0%).
The decline was driven by lower prices for petroleum and natural gas.
Import fuel prices fell 4.6% over the year, marking the first 12-month decline since February 2024.
Petroleum prices decreased by 3.2% in August and 3.2% over the past year, the largest 12-month drop since January 2024.
Import natural gas prices fell 3.7% in August, following a 2.0% rise in July, and dropped 51.7% over the past year, the largest 12-month decline since January 2024.

Imports Excluding Fuel

Prices for nonfuel imports edged down 0.1% in August, after rising 0.1% in July and 0.2% in June.
Declines in nonfuel industrial supplies and materials, consumer goods, and foods, feeds, and beverages offset higher capital goods prices.
Nonfuel import prices increased by 1.3% over the past 12 months, with the last annual decline in February 2024.

Overall Exports

U.S. export prices fell 0.7% in August after a 0.5% increase in July.
The decline was driven by lower prices for both nonagricultural and agricultural exports.
Export prices decreased 0.7% over the past year, marking the first annual drop since April 2024.

Agricultural Exports

Agricultural export prices declined 2.0% in August, the second consecutive month of a 2.0% drop.
The declines in August and July were the largest since a 2.3% decrease in May 2023.
A 9.8% drop in soybean prices led the August decline, along with lower prices for corn, wheat, and fruit.
Higher nut prices partially offset the declines.
Agricultural export prices fell 6.9% over the past year.

Exports Excluding Agriculture (Nonagricultural Exports)

Nonagricultural export prices decreased 0.6% in August, following a 0.8% increase in July.
The decrease was due to lower prices for nonagricultural industrial supplies, materials, and capital goods, offsetting higher prices for consumer goods, automotive vehicles, and nonagricultural foods.
Nonagricultural export prices fell 0.1% over the past year, the first annual decrease since March 2024.

Nonagricultural Industrial Supplies and Materials

Prices for nonagricultural industrial supplies and materials declined 1.1% in August after a 1.9% rise in July.
The August decrease was mainly due to a 2.9% drop in export fuel prices.
Prices for these goods fell 1.6% over the past year, the largest 12-month decline since March 2024.

Finished Goods

Prices for finished goods exports were mixed in August.
Capital goods prices fell 0.2%, the first decline since November 2023, led by a 3.0% drop in semiconductor prices.
Consumer goods prices rose 0.1% in August after declining 0.1% in July and 0.3% in June.
Automotive vehicle prices increased 0.1% in August, following a 0.3% rise in July, driven by higher prices for trucks, buses, and special-purpose vehicles.

Consumer Spending Slows, CNBC Retail Monitor Reports Modest Growth

Overview:
CNBC’s retail monitor highlights a cooling in consumer spending, with modest increases in retail sales excluding autos and gas. While some sectors show growth, others have experienced declines, reflecting a mixed picture of consumer behavior.

Key Retail Metrics:

Retail Sales Excluding Autos and Gas (MoM): Increased by 0.5%, down from 0.7% last month.
Retail Sales Excluding Autos and Gas (YoY): Up by 2.1%, compared to 0.9% last month.
Core Retail Sales (MoM): Rose by 0.2%, a slowdown from the previous month’s 1.0%.
Core Retail Sales (YoY): Increased by 0.9%, down from 1.7% last month.

Sector Performance:

Gains:

Clothing and Accessories: +2.1%
Food Services and Drinking Places: +1.7%
Nonstore Retailers: +1.5%

Declines:

Electronics and Appliances: -0.9%
Building and Garden Supplies: -1.3%
Sporting Goods, Hobby, Music, and Bookstores: -2.9%

Summary:
The CNBC retail monitor indicates a slowdown in consumer spending, with modest growth observed in certain sectors like clothing and food services. However, declines in electronics, building supplies, and sporting goods highlight areas of weakness. This mixed data underscores a cooling trend in consumer expenditure.

JP Morgan reiterates its call for 50 basis point cut next week.

Will the Fed go with a big cut or stick to 25bps?

As the Federal Reserve’s September meeting approaches, JP Morgan reiterates its call for a 50 basis point cut, scheduled for Wednesday at 2 PM ET. Following Nick Timiraos’ article highlighting the Fed’s predicament, market odds have shifted from 20-80 to a nearly even 50-50 split.

Goldman Sachs sees a 25 basis point cut from the Fed next week

They also forecast cuts of 25 basis points in November and December

Goldman Sachs is keeping it 25 basis point cut forecast for the Fed next week. They also see cuts of 25 basis points in both November and December.

Fitch: If this is an extended strike you could see Boeing downgraded

Boeing shares are down -3.2% and are down

Boeing machinists went on strike after rejecting a 25% pay raise. That is shuttered the going manufacturing plant

Main points from the Boeing CFO’s statement:

Strike Impact: Strike will jeopardize recovery, impact production and deliveries
Cash Conservation: Laser-like focus on actions to conserve cash
Union Negotiations: Want to get back to the table and reach an agreement
Production Goals: Getting to 38/month by end of year will take longer
Inventory Levels: About 70 aircraft left in inventory at shadow factory
Supply Chain Constraints: Broadly impacting the industry, affecting deliveries
Specific Production Impacts:
- 787 deliveries below 5/month due to seat shortage
- Lower 777 deliveries due to engine supply issues
Defense Unit: Q3 margins to be negative

The last strike lasted 58 days.

Fitch is now out saying that if the strike is extended it could impact Boeings ratings (cut to junk status).

Shares are down -3.1% at $157.80. For the trading year, the stocks is down close to 40% on the year.

Paulson on CNBC: He favors a 50 basis point cut by the Fed

John Paulson predicts a Fed rate cut of 50 points, sees Gold soaring if Harris wins election. Market outlook depends on election results with Trump leading to a robust economy with low inflation. Harris leading to a crash.

He says it is a good time for investing
We did have a bubble in government debt (negative interest rate times), but does not see it anymore
He favors a 50 basis point cut from the Fed next week
He thinks the tipping point from the national debt could put pressure on the financial markets (US yields).
If we continue to run high deficits and increase taxes that would hurt the economy.
We will see a crash if see 40% capital gains taxes, tax on unrealized gains, and if the Trump tax cuts expire under a Harris presidency.
If Harris won, he would be more in cash and keep his investment in Gold (gold is at a record level)
The major reason gold is rising as have less confidence in paper money.
10% in gold would be a prudent amount for investors.
The markets depend on who is elected.
Thinks stocks will go up, interest go do, earnings go up and have a robust economy if Trump elected President

Boeing US factory workers vote to go on strike, reject pay deal

96% of Boeing’s US factory workers voted in favour of the strike

The strike will begin at midnight Pacific Time or in just under two-and-a-half hours from now. Boeing’s US factory workers have rejected the company’s plea deal from earlier this week, which includes a 25% pay rise over four years. The union had previously targeted a 40% pay rise, so there is quite a discrepancy there. For some context, the current arrangement between Boeing and the unions was agreed back in 2008. And that came after an eight-week strike.

Former New York Fed President Dudley sees a strong case for 50bp interest rate cut

Former New York Fed President Dudley:

“I think there’s a strong case for 50, whether they’re going to do it or not,” he said at the Bretton Woods Committee’s annual Future of Finance Forum in Singapore.

Canada July wholesale sales +0.4% versus -1.1% expected

Canada July wholesale and manufacturing sales

Prior month -0.6%

Details of wholesale sales which rose 0.4% versus -1.1% expected:

Wholesale sales (excluding petroleum, petroleum products, other hydrocarbons, oilseed, and grain) grew by 0.4% to $82.7 billion in July.
Sales increased in four of the seven subsectors.
Growth was led by the agriculture supplies industry group (miscellaneous subsector) and the food, beverage, and tobacco subsector.
Wholesale sales were 1.1% higher in July compared to the same month one year earlier.
In volume terms, wholesale sales increased by 0.5% in July

Inventories rise by 0.5% versus -0.1% in June:

Wholesale inventories rose by 0.5% to $127.5 billion in July, following a 0.1% decline in June.
Increases were recorded in four of the seven subsectors.
The machinery, equipment, and supplies subsector led the growth, up 1.0% to $39.4 billion, 3.9% higher than a year earlier.
The motor vehicle and motor vehicle parts and accessories subsector saw a 2.0% increase to $17.3 billion.
Inventory declines were noted in the personal subsector (-0.8% to $20.1 billion) and the building material and supplies subsector (-0.5% to $22.0 billion).
The inventory-to-sales ratio remained unchanged at 1.54 in July, indicating the time required to deplete inventories if sales stay constant.

Canada capacity utilization Q2 79.1% vs 78.6% last quarter

Canada Q2 2024 capacity utilization data

Prior quarter: 78.5% revised to 78.6%

Details:

Canadian industries operated at 79.1% capacity in Q2 2024.
This is a slight increase from 78.6% in Q1 2024.
The Q1 2024 capacity utilization was revised up by 0.1 percentage point.
Mining, Quarrying, and Oil and Gas Extraction
- Capacity utilization increased by 1.6 percentage points to 77.2% in Q2.
- Growth driven by higher activity in oil sands extraction (following resumption after maintenance) and support activities for mining and oil and gas extraction.
Construction
- Capacity utilization decreased by 0.2 percentage points to 82.4% in Q2.
- Decline attributed to a downturn in residential building construction.
Manufacturing
- Capacity utilization rose by 0.5 percentage points to 77.6% in Q2.
- Increase led by computer and electronic product manufacturing (+5.1 percentage points) and wood product manufacturing (+2.9 percentage points).

Peru’s central bank cuts reference rate by 25bps to 5.25%, as expected

Central Reserve Bank of Peru

Banco Central de Reserva del Perú (BCRP) is the Peruvian central bank:

cuts reference rate by 25bps to 5.25%, as expected
says the rate cut does not necessarily mean more rate cuts in the future
y/y inflation expected to stay within the target range on the projected horizon
core inflation expected to have a downward trend
indicators and forecasts improved in August

Commodities

Gold Reaches Record High Amid Rising Fed Rate Cut Bets

Gold prices soared to a new all-time high of $2,586 on Friday, driven by increasing expectations for a significant Federal Reserve (Fed) rate cut. The probability of a 50 basis point (bps) cut surged to 43%, up from 27% earlier this week, following comments from former New York Fed President William Dudley. Simultaneously, the US Dollar Index (DXY) slipped to 101.09, adding further momentum to the gold rally.

Gold is now trading at $2,582, gaining nearly 1%, and market analysts are speculating that the precious metal could approach the $3,000 milestone in the coming months.

Factors Driving the Rally:

Fed Rate Cut Expectations: According to the CME FedWatch Tool, traders now see a 43% chance of a 50 bps rate cut, while estimates for a 25 bps cut fell to 57%. The shift in sentiment is pushing investors toward non-yielding assets like gold.
ETF Inflows: Global gold ETFs have reported inflows for four consecutive months, further supporting bullion prices.
US Dollar Weakness: The DXY’s decline of 0.15% to 101.09 enhances gold’s appeal as a hedge against a weaker dollar.

US Economic Data Supporting Bullish Sentiment:

The University of Michigan Consumer Sentiment Index for September showed improvement, rising from 67.9 to 69.0, beating expectations.
Inflation expectations also decreased, with the one-year outlook dropping from 2.8% to 2.7%, fueling further speculation that the Fed will opt for additional easing measures.

Market Outlook:

With gold ETFs continuing to draw inflows and the growing likelihood of a Fed rate cut, gold prices are expected to maintain their upward trajectory, potentially surpassing the $3,000 level in the near future.

Crude oil futures settled at $68.65

Down $0.32 or -0.46%

Crude oil futures is settling at $68.65. That is down $0.32 -0.46%. The high price reached $70.32. The low price was at $68.50

Baker Hughes Rig Count Report

U.S. Rig Count:

Total Rigs: Up by 8 to 590
- Oil Rigs: Up by 5 to 488
- Gas Rigs: Up by 3 to 97
- Miscellaneous Rigs: Unchanged at 5
Year-over-Year Comparison:
- Total Rigs: Down by 51 from 641
- Oil Rigs: Down by 27
- Gas Rigs: Down by 24
- Miscellaneous Rigs: Unchanged
U.S. Offshore Rig Count:
- Total Offshore Rigs: Up by 2 to 21
- Year-over-Year: Up by 2

Canada Rig Count:

Total Rigs: Down by 2 to 218
- Oil Rigs: Down by 2 to 150
- Gas Rigs: Unchanged at 67
- Miscellaneous Rigs: Unchanged at 1
Year-over-Year Comparison:
- Total Rigs: Up by 28 from 190
- Oil Rigs: Up by 31
- Gas Rigs: Down by 4
- Miscellaneous Rigs: Up by 1

Summary:

U.S.: The rig count shows a recent increase with a notable rise in oil and gas rigs, though still down from last year’s levels.
Canada: The rig count has decreased from last week but remains significantly higher than a year ago, particularly driven by an increase in oil rigs.

South America’s Copper supply remains weak – Commerzbank

The Copper price has recovered slightly in recent days, Commerzbank’s Commodity Analyst Barbara Lambrecht notes.

Production is expected to recover only by 3%

“Market reports point to an improved demand outlook. On the one hand, the Chilean Copper Commission (Cochilco) revised downwards its production targets for Chile, which remains the most important producing country. After Copper production fell to a 20-year low last year, the commission had forecast production of 5.5 million tonnes for this year.”

“Due to disappointing ore grades, production is now expected to recover only by 3% to 5.4 million tons. This is in line with the news that the state producer reported a drop in production of almost 11% in July, following an 8.4% drop in the first half of the year. Actual production in Peru also appears to be falling short of expectations.”

“The country, which is now only the third largest Copper supplier in the world following the rise of the Democratic Republic of Congo, is likely to fall short of its target of 3 million tons with annual production of 2.8 million tons, according to government estimates.”

EU News

Major indices in Europe are closing higher for the week

That’s a wrap for the European stock indices for the trading week, and then ended the day with gains, and the week with gains as well.

For the trading day:

German DAX +0.92%
France’s CAC, +0.41%.
UK’s FTSE 100 +0.39%
Spain’s Ibex, +1.23%
Italy’s FTSE MIB +0.34%

For the trading week:

German DAX +2.11%
France’s CAC +1.54%
UK’s FTSE 100 +1.12%
Spain’s Ibex +3.29%
Italy’s FTSE MIB +0.83%

Looking at European benchmark 10 year yields:

Germany 2.149%, -5.3 basis points
France 2.839%, -6.0 basis points
UK 3.770%, -14.7 basis points
Spain 2.943%, -8.8 basis points
Italy 3.513%, -7.2 basis points

Eurozone July industrial production -0.3% vs -0.5% m/m expected

Latest data released by Eurostat – 13 September 2024

Prior -0.1%; revised to 0.0%

The drop here fits with the continued softness in the euro area industrial sector, led by the struggles in Germany especially. Looking at the breakdown, intermediate goods dropped by 1.3%, capital goods by 1.6%, durable consumer goods by 2.8%. That was slightly offset by an increase in energy by 0.3% and non-durable consumer goods by 1.8%.

France August final CPI +1.8% vs +1.9% y/y prelim

Latest data released by INSEE – 13 September 2024

Prior +2.3%
HICP +2.2% vs +2.2% y/y prelim
Prior +2.7%

Headline prices are showing a slowdown compared to July. However, core annual inflation did tick up a little from 1.5% in the previous month to 1.7% in August.

ECB’s Holzmann: There could be room for another rate cut in December

Remarks by ECB policymaker, Robert Holzmann, to the FT

Monetary policy is now on a good trajectory
Inflation is much less worrisome than when ECB first started cutting rates in June
“I am not per se against lowering rates, I only object when the timing does not look right”
Headline inflation expected to rise temporarily in the coming months due to base effects
October might not be the right time given limited amount of additional data

ECB’s Muller: Temporary acceleration in inflation is likely

Remarks from the Bank of Estonia Governor Madis Muller

Temporary acceleration in inflation is likely.
Services inflation is still a concern.
The Eurozone economy is awaiting moderate recovery.
Confidence is growing that inflation is on the right track.

ECB’s Villeroy: We should continue to reduce gradually and as appropriate

Remarks from the Bank of France Governor

We should continue to reduce gradually and as appropriate the degree of monetary restriction.
ECB must be attentive to risk of undershooting target.
Market inflation expectations well below the ECB forecasts.
The latest activity data have been somewhat disappointing.
Pace of easing has to be highly pragmatic, we keep our full optionality for the next meetings.
The ECB must be attentive to symmetric risks around the 2% goal.

ECB’s Vasle: We are not committed to any predetermined rate path

Remarks by the Slovenian central bank chief

We are not committed to any predetermined rate path.
Inflation to be largely steered by core and services.

ECB’s Rehn says will continue to base policy decisions on assessment of inflation outlook

Remarks by ECB policymaker, Olli Rehn

ECB rate cuts are supportive of growth
Current uncertainties emphasise the dependence on fresh data on the economy
Will base decisions on assessment of inflation outlook, dynamics of core inflation, and also the strength of monetary policy transmission

Deutsche Bank on what makes this ECB rate cut cycle unusual

Contrasting with the Federal Reserve

This via Deutsche Bank was ahead of the rate cut (a precap?), that admittedly everyone was expecting.

What makes this ECB rate cut cycle unusual is that it’s happening against the backdrop of fairly buoyant equity markets.
this is the first time since 1960 that ECB or Bundesbank rate cuts have started when the DAX has been rising over the preceding months. That’s the case whether you look at a 3m, 6m or 12m horizon.
(DAX) was up around 5% in the months before the ECB started cutting in June, and over 15% in the year beforehand

DB add, for comparison:

That’s quite different to the Fed, who’ve often begun to cut rates when equities have been rising, including in 2019.

And, DB off up a why, which is of interest:

But that partly reflects the Bundesbank and ECB’s more hawkish reaction function. The ECB has a single mandate for price stability, rather than a dual mandate that also includes maximum employment. So the Fed have historically had a lower bar to clear before cutting rates, reflecting the fact that employment is an equal component of their mandate.

Bank of England to pause rate cuts next week – survey result unanimous

BoE could announce an acceleration of its QT program

Reuters polling of 65 analysts.

All 65 economists in a Reuters poll said the BoE will likely hold rates at 5.0% on September 19
News on price pressures has been mixed.
Wage growth cooled as members of the Monetary Policy Committee expected last month and the economy failed to grow in July.
the BoE could announce an acceleration of its QT programme

Here is the Reuters link for more info.

Goldman Sachs see a Bank of England rate cut in November, with a cascade of cuts to follow

Bank of England forecast

Goldman Sachs expect the Bank of England to move to consecutive cuts starting at the November meeting

GS expect a terminal rate of 3%

Goldman analysts cite:

UK wage growth to slow down – “While the level of pay growth remains high, the sequential pace of pay rises has slowed and important forward-looking indicators have cooled”
service sector inflation to drop markedly, to 5% by December 2024 and 3.8% by December 2025

Asia-Pacific-World News

China August M2 money supply +6.3% vs +6.2% y/y expected

Latest Chinese credit data for August 2024 has been released

Prior +6.3%
New yuan loans ¥900 billion
Prior ¥260 billion

US finalises steep tariffs on China, with many to begin on 27 September – Reuters

Reuters reports citing the USTR on the matter

This will include steep tariff hikes on Chinese EVs, solar cells, semiconductors, and steel among other strategic goods. More specifically, it will be a 100% duty on Chinese EVs, 50% on solar cells, and 25% on steel, aluminum and key minerals. All of which will be going into effect on 27 September.

As for a 50% duty on Chinese semiconductors, that will be due to start in 2025.

China’s 10 year government bond yield has fallen to a record low of 2.0775%

China bond price surge continues

China’s bonds continue to rally as the economy moves along.

China data this weekend

China’s critical data this weekend, highlighting expected slower growth in industrial production, fixed asset investment, and retail sales

China approves the plan to raise the retirement age for the first time since 1978

Men’s retirement age to rise to 63 from 60, women’s up to 58

Will raise the retirement age for men to 63 – effective January 1, 2025.
Will raise retirement age for white collar female workers to 58 – effective January 1, 2025.
Will raise retirement age for blue collar female workers to 55 – effective January 1, 2025.
From January 2030 the minimum period for employees to receive basic pension on a monthly basis will be gradually increased from 15 years to 20 years.
Employees who have reached the minimum numbers of years of payment may voluntarily choose to retire flexibly and early.

Reports that China set to cut interest rates on more than $5 trillion of outstanding mortgages

The rate cut looks to be coming before the end of September

Bloomberg (gated) with the info, citing unnamed sources:

China poised to cut interest rates on more than $5 trillion of outstanding mortgages as early as this month
Some banks are making final preparations to get ready for the upcoming adjustments on mortgage rates
Some homeowners may enjoy up to 50 basis points of immediate rate reduction
Timeline has yet to be finalized

Critical data coming for AUD/USD … this weekend! (Spoiler – China data)

Chinese economic activity data is due this coming weekend

Via ING:

We are generally looking for another month of sluggish growth data this month, with the three big economic activity indicators of industrial production (5.1% prior, 4.8% forecast), fixed asset investment (3.6% prior, 3.5% forecast), and retail sales (2.7% prior, 2.5% forecast) all expected to moderate.
The housing price data will also be scrutinised closely for signs of stabilisation.

Via Westpac on the Australian dollar:

AUD/USD is showing some tentative signs of shaking off its lacklustre price action linked to iron ore prices hitting 22mth lows and rocky global market conditions.
But AUD must still navigate August China activity data this weekend. August China imports, PMIs and recent credit trends, anecdotally, do not auger well for the August data round.

PBOC sets USD/ CNY reference rate for today at 7.1030 (vs. estimate at 7.1048)

PBOC CNY reference rate setting for the trading session ahead.

In open market operations (OMOs):

PBOC injects 236bn via 7-day RR, sets rate at 1.7%
142bn mature today
thus a net injection of 94bn yuan

New Zealand August Manufacturing PMI 45.8 (prior 44.4)

NZ – BusinessNZ Performance of Manufacturing Index (PMI).

Still in contraction at 45.8

prior revised to 44 .4, from 44.0
long term average is 52.6
has been in contraction for 18 consecutive months

BusinessNZ’s Director, Advocacy Catherine Beard:

sub-index results for Production (46.3) and New Orders (46.8) were both the strongest they have been in a few months

BNZ’s Senior Economist Doug Steel:

“while business confidence and building consent indicators have ticked up from their very low levels offering potential for improvement over the coming 12 months, the PMI is an indicator of outcomes and continues to show that current conditions remain challenging”

BOJ expected to keep rates unchanged this month but hike by year-end – poll

The findings from Reuters’ latest poll on economists – 13 September 2024

No economist predict the BOJ would raise rates in September
28 of 52 economists (~54%) expect the BOJ to raise rates by year-end
Median prediction for year-end interest rate is 25 bps higher at 0.50%
Of those expecting a rate hike, 18 of 23 economists anticipate it to be in December
The remaining 5 economists expect a hike in October instead

Fitch are forecasting a Bank of Japan rates to 1% by the end of 2026

Fitch say “A more hawkish BOJ could continue to have global ramifications”

BOJ “is bucking the global trend of policy easing and hiked rates more aggressively than we had anticipated in July. This reflects its growing conviction that reflation is now firmly entrenched.”
core inflation above the BOJ’s target for 23 straight months
frims prepared to grant “ongoing” and “sizable” wage rises
situation quite different from the 1990s “lost decade” when wages failed to grow amid persistent deflation
BOJ’s goal of a “virtuous wage-price cycle”
BOJ’s confidence that it can continue to raise rates towards neutral settings

Fitch forecasts are for:

0.5% by the end of 2024
0.75% in 2025
1% by end-2026

And conclude:

“A more hawkish BOJ could continue to have global ramifications.”

Cryptocurrency News

Ethereum’s Network Activity Signals Potential Rally Amid Technical Breakout

Ethereum (ETH) is showing promising signs of a potential rally, supported by increased network activity and a technical breakout above a falling wedge pattern.

Recent Developments:

Network Fees Surge: Ethereum network fees have soared nearly 60% over the past week, signaling heightened activity as investors return from summer holidays.
Stablecoin Market Cap Peaks: Ethereum’s stablecoin market capitalization has reached an 18-month high at $83.31 billion, reflecting growing demand and economic activity on the network.

Technical Outlook:

Falling Wedge Breakout: ETH is attempting to sustain a breakout above a falling wedge pattern, which could potentially drive the price up to $3,366 if the upward momentum continues.

ETF Activity:

ETHE Outflows: Ethereum ETFs saw a second consecutive day of negative flows on Thursday, with Grayscale’s ETHE experiencing $20.1 million in net outflows. This trend is partly attributed to the historical Q3 crypto market lull.
Shifting Sentiment: Despite the recent ETF outflows, the positive shift in Ethereum’s network activity and stablecoin market cap suggests a recovery could be on the horizon.

Market Impact:

Potential Price Rally: Increased network activity and stablecoin growth could enhance ETH’s price prospects, potentially aligning with a technical breakout and fueling a rally toward $3,366.

Summary:

Ethereum’s recent network activity and stablecoin growth indicate a potential for price appreciation, particularly if it can maintain its breakout above the falling wedge pattern.

Ripple CLO Responds to SEC Apology Over “Crypto Asset Securities” Term

Ripple’s Chief Legal Officer (CLO) Stuart Alderoty criticized the U.S. Securities & Exchange Commission (SEC) for its usage of the term “crypto asset securities,” calling it misleading and legally unfounded. The SEC recently issued an apology for the confusion caused by referring to crypto tokens as securities in its lawsuit against Binance, amending footnotes to clarify the use of the term.

Alderoty pointed out the inconsistencies in the SEC’s regulatory approach between 2017 and 2024, highlighting that the term “crypto asset securities” has no legal grounding. This discrepancy has been a crucial point in Ripple’s legal battle with the SEC over the classification of XRP.

Ripple’s legal victory, which clarified that XRP is not a security when traded on secondary markets, has bolstered market confidence. XRP extended its gains on Friday, rising over 1% to trade at $0.5695, following Thursday’s surge.

Additionally, Grayscale’s recent announcement of an XRP investment trust is expected to attract institutional capital, further fueling demand for XRP Ledger’s native asset.

Market Outlook:

SEC’s Apology: The SEC amended its use of the term “crypto asset securities,” admitting that the term caused confusion, especially in crypto-related lawsuits.
Legal Clarity: XRP continues to benefit from legal clarity following Judge Torres’ ruling that XRP is not an investment contract in secondary market trading.
Institutional Interest: Grayscale’s new XRP investment trust could drive further gains by increasing institutional adoption of the asset.

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Round up of today’s market news

ByBilals Tech