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30
Oct

ADP Non-Farm Employment Change, U.S. Advance GDP, U.S. Pending Home Sales

calendar 30/10/2024 - 07:29 UTC

The dollar traded moderately lower on Tuesday, with the dollar index down by 0.05%, still on track for its largest monthly appreciation against a basket of major currencies. This comes ahead of crucial economic data that could influence the Federal Reserve's monetary policy stance. The dollar appears to react positively to market expectations for a victory next month by Republican candidate and former U.S. President Donald Trump, which would likely bring about inflationary policies such as tariffs.

Based on the CME Fedwatch tool, markets are currently pricing in a strong likelihood of a 25-basis-point interest rate reduction by the Federal Reserve. The probability of such a cut stand at 98.9%, while the odds of a 50 bps rate cut appear negligible at 1.1%.

On Tuesday, a tech-driven rally was seen in Wall Street that sent the US tech 100 to all-time highs, while other sectors remained weak. Renewed confidence in Wall Street, was seen following Alphabet's positive earnings report with investors now positioning for upcoming earnings reports by Meta Platforms, Inc. and Microsoft Corporation on Wednesday. Apple Inc. and Amazon.com, Inc. are set to release their earnings reports on Thursday.

The Japan 225 index outperformed other Asian markets on Wednesday, surging over 1%. This rally was primarily fueled by gains in technology stocks, mirroring the upward trend in U.S. tech shares. Some support in the stock market could also derive from election results that have introduced a degree of political uncertainty and therefore could lead to increased government spending and a more accommodative monetary policy stance from the Bank of Japan.

On the cryptos front, Bitcoin's price increased significantly on Tuesday, coming very close to its all-time high. This surge was driven by heightened volatility and increased trading activity in the cryptocurrency market, partly influenced by the upcoming presidential election.

Market participants may see some price action later today as several key economic indicators are released. These include the German Preliminary CPI and Preliminary GDP, ADP Non-Farm Employment Change from the US, the U.S. Advance GDP, U.S. Pending Home Sales and crude oil inventories from the EIA.

EUR/USD

The EUR/USD pair ended the session with minor gains on Tuesday adding 0.02%. Market sentiment is clouded by uncertainties surrounding the upcoming U.S. presidential election and the anticipation of critical U.S. economic data.

In labor market news, job openings fell by 418,000 to 7.443 million at the end of September, reaching their lowest level since January 2021, according to the U.S. Bureau of Labor Statistics’ JOLTS report.

On the consumer side, the U.S. Conference Board reported a notable increase in its Consumer Confidence Index, which rose to 108.7 in October from a revised 99.2 in September, surpassing the forecasted 99.5. 

In Europe, the European Central Bank (ECB) is expected to make further cuts to its Deposit Facility Rate, although there is debate over whether it will continue with the standard 25 basis point cuts or opt for a larger reduction. 

EUR/USD

Gold

Gold surged to a record high on Tuesday's session as a softer U.S. Treasury yield environment and a risk-on mood spurred demand. Following mixed economic data from the U.S. on Tuesday, market participants appear increasingly confident that the Federal Reserve will implement a rate cut at its upcoming November meeting.

Gold continues to draw safe-haven interest amidst geopolitical concerns, including the ongoing Middle East conflict and escalating tensions in Ukraine, where reports indicate North Korea may have sent troops to support Russian efforts.

Gold

WTI Oil

Oil prices edged lower on Tuesday amid reports that Israeli Prime Minister Benjamin Netanyahu is pursuing a diplomatic solution to the ongoing conflict in Lebanon.

In addition, weaker oil demand from China, the world’s largest importer, continues to weigh on global oil markets.

U.S. crude stocks fell by 573,000 barrels for the week ending October 25, according to the American Petroleum Institute. Gasoline inventories dropped by 282,000 barrels, while distillate stocks declined by 1.46 million barrels. Official U.S. government data on oil inventories is anticipated Wednesday morning, with expectations of a slight build in crude and gasoline stocks, while distillate inventories are predicted to fall.

WTI Oil

US 500

The US Tech 100 reached new record highs on Tuesday, climbing 1.17% as tech stocks advanced despite mixed economic data. By the end of the trading session, the US 30 had dipped 0.24%, while the US 500 rose 0.39%.

This week, five of Wall Street’s “Magnificent Seven” tech giants will report earnings, setting the tone for the market. After Alphabet, Meta Platforms and Microsoft are scheduled to report on Wednesday, followed by Apple and Amazon on Thursday. Investors are particularly focused on whether these companies’ significant investments in artificial intelligence over the past year are translating into meaningful returns.

September’s JOLTS report revealed a drop in job openings, suggesting cooling labor demand. Investors will keep an eye on additional labor data, including weekly jobless claims and the ADP private payrolls report, as well as Friday’s nonfarm payrolls.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

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