Forex Market News and Technical Overview

The forex market is a dynamic arena where economic indicators, geopolitical events, and monetary policies converge to influence currency values. As we navigate through today’s market landscape, we examine the latest developments impacting forex trading, including the Bank of Canada’s recent rate cut, fluctuations in key currency pairs, and broader market sentiments. This technical overview will provide insights into price movements and trading opportunities, helping traders make informed decisions in an ever-evolving environment.

The Bank of Canada Cut the Rate by 0.5%. Stock Indices Under Selling Pressure Ahead of US Elections

At Wednesday’s close, the Dow Jones (US30) Index was down 0.96%, the S&P 500 Index (US500) decreased by 0.92%, and the NASDAQ Technology Index (US100) closed negative 1.55%. All three major US equity indices closed sharply lower on Wednesday due to rising Treasury yields and concerns over the upcoming US elections. Investors and hedge funds are locking in profits to reduce uncertainty risks.

Stocks also declined amid negative corporate news. McDonald’s (MCD) shares fell by 5% after an E. coli outbreak linked to Quarter Pounder sandwiches sickened dozens in multiple states. Boeing (BA) shares dropped by 1.7% after reporting larger-than-expected negative adjusted free cash flow for Q3. Coca-Cola’s (KO) share price fell 2.00% after reporting a 1% decline in Q3 sales.

The Canadian dollar fell to 1.38 per US dollar, its lowest since August, after the Bank of Canada (BoC) cut rates by 50 bps and signaled further cuts might follow. This was the first major rate cut in the current easing cycle after three consecutive 25 bps cuts. The Monetary Policy Committee noted recent data showing slowing inflation and a weakening labor market. CAD was also pressured by lower oil prices, impacting the Canadian economy’s export turnover.

Global Markets Overview

Europe

Equity markets in Europe also saw declines. Germany’s DAX (DE40) fell by 0.23%, France’s CAC 40 (FR40) closed down 0.50%, while Spain’s IBEX 35 (ES35) gained 0.27%, and the UK’s FTSE 100 (UK100) closed down 0.58%.

Crude Oil

WTI crude oil prices fell below $71 per barrel on Wednesday, ending a two-day rally. The latest EIA data showed that US oil inventories remain high, with a 5.5 million barrel increase in crude inventories, well above forecasts.

Asia

Asian markets were mostly rising on Wednesday. Japan’s Nikkei 225 (JP225) fell by 0.80%, China’s FTSE China A50 (CHA50) gained 0.37%, Hong Kong’s Hang Seng (HK50) rose by 1.27%, and Australia’s ASX 200 (AU200) increased by 0.13%. Chinese markets continued their upward trend, buoyed by the suggestion of a 2 trillion yuan market stabilization fund and the expansion of the central bank’s swap fund to support stock market liquidity.

Australian Economic Data

Australia’s Manufacturing PMI Index fell to 46.6 in October 2024 from 46.7 in September, marking the ninth consecutive month of deterioration in the sector. Meanwhile, the Services PMI business activity index rose to 50.6 from 50.5 in September. Deputy Governor Andrew Hauser of the Reserve Bank of Australia (RBA) suggested that strong employment growth could influence future monetary policy decisions. The markets expect the RBA to maintain steady policy this year, with the first rate cut not fully expected until May next year.

New Zealand Dollar

The New Zealand dollar traded near a two-month low as the US dollar strengthened amid growing expectations that the Federal Reserve will slow interest rate cuts in the coming months. Domestically, the Kiwi faced additional pressure as the Reserve Bank of New Zealand is expected to deliver another 50 bps rate cut in November, with some risk of a 75 bps hike being priced in.

Key Indices Performance

S&P 500 (US500): 5,797.42 −53.78 (−0.92%)
Dow Jones (US30): 42,514.95 −409.94 (−0.96%)
DAX (DE40): 19,377.62 −44.29 (−0.23%)
FTSE 100 (UK100): 8,258.64 −47.90 (−0.58%)
USD Index: 104.42 +0.35 (+0.33%)

Economic Calendar (2024.10.24, GMT+6)

Australia Manufacturing PMI (m/m) at 03:00
Australia Services PMI (m/m) at 03:00
Japan Manufacturing PMI (m/m) at 05:30
Japan Services PMI (m/m) at 05:30
German Manufacturing PMI (m/m) at 12:30
German Services PMI (m/m) at 12:30
Eurozone Manufacturing PMI (m/m) at 13:00
Eurozone Services PMI (m/m) at 13:00
UK Manufacturing PMI (m/m) at 13:30
UK Services PMI (m/m) at 13:30
US Initial Jobless Claims (w/w) at 17:30
US Manufacturing PMI (m/m) at 18:45
US Services PMI (m/m) at 18:45
US New Home Sales (m/m) at 19:00
US Natural Gas Storage (w/w) at 19:30

Conclusion

In summary, the current forex market is influenced by various global economic factors, including the recent rate cuts by the Bank of Canada, rising Treasury yields in the U.S., and the overall sentiment surrounding the upcoming U.S. elections. The movements in key currency pairs, such as EUR/USD, GBP/USD, and USD/JPY, reflect the market’s response to these developments. Traders should remain vigilant and adaptable, keeping an eye on economic indicators and geopolitical events that may affect their trading strategies. As always, it’s essential to conduct thorough analysis and stay informed to navigate the complexities of the forex market successfully.

Forex Market News and Technical Overview