Risk sentiment was one of the main driving forces for price action for the most part of the week, although there were still instances when some asset classes and major currencies veered away from the pack.

For one, central bank events and top-tier economic updates highlighted divergences in interest rate expectations, spurring gains for currencies with more hawkish policy biases. Geopolitical tensions also popped back in the headlines, propping crude oil higher on global supply concerns.

How did your closely watched assets react to these events? Let’s break them down:

Notable News & Economic Updates:

Broad Market Risk-on Arguments

• FOMC member Goolsbee acknowledged that jobs data is weaker than expected but not indicative of recession
• U.S. ISM services PMI in July: 51.4 (51.1 expected, 48.8 previous)
• Some signs of a rebound seen in eurozone data, particularly from Germany:
  • Euro Area PPI for June 2024: 0.5% m/m (-0.1% m/m forecast; -0.2% m/m previous)
  • German factory orders recovered by 3.9% month-on-month in June vs. estimated 0.4% uptick and previous 1.7% drop
  • German industrial production in June: 1.4% m/m (1.0% expected, previous reading downgraded from -2.5% to -3.0%)
• Mid-tier Chinese data points came in stronger than expected:
  • China Caixin services PMI for July: 52.1 (51.4 expected, 51.2 previous); Employment rose at its fastest rate since August; Selling prices were unchanged
  • Chinese trade surplus in July: $84.7 billion ($97.5 billion expected, $99.1 billion previous) as imports and exports rose 6.5% year-on-year
• U.K. HCOB final services PMI revised higher from 52.4 to 52.5 in July; Input and output prices are at their lowest since 2021; Employment accelerated by its fastest pace since June 2023
• RBA kept interest rates unchanged at 4.35% in a “hawkish hold” decision, as policymakers mentioned that “inflation is still too high and is coming down slower than expected”
• Fears of Israel and Hezbollah retaliation drove crude oil higher on Wednesday due to supply concerns in Middle East
• EIA crude oil inventories fell 3.7 million barrels (-1.6M expected, -3.4M previous)
• New Zealand employment changein Q2 2024: +0.4% q/q (-0.2% expected, previous reading downgraded from -0.2% to -0.3%)
  • Jobless rate in Q2 2024: 4.6% (4.7% expected, previous reading revised from 4.3% to 4.4%)
  • Labor cost index in Q2 2024: 0.9% q/q (0.8% expected, 0.8% previous)
• Japanese average cash earnings in June: 4.5% y/y (2.5% expected, previous reading upgraded from 1.9% to 2.0%)
• In a speech, RBA Gov. Bullock said the central bank “will not hesitate to raise rates if it needs to“
• The Bank of Mexico’s 3-2 vote to cut its benchmark interest rate by 25 bps to 10.75%

Broad Market Risk-off Arguments

• FOMC member Daly talked about potential interest rate cuts later in the year as labor market weakens
• Eurozone final services PMI readings generally showed weak spots among top economies:
  • Spain HCOB services PMI fell from 56.8 to 53.9 in July
  • Italy HCOB services PMI dropped from 53.7 to 51.7 in July
  • France HCOB final services PMI adjusted lower from 50.7 to 50.1 in July; Employment growth fell to a five-month low; Prices rose as companies passed on higher input prices
  • Germany HCOB final services PMI adjusted higher from 52.0 to 52.5 in July; Employment decreased for the first time since December; Selling prices rose by its slowest rate since April 2021