DAILY MARKET NEWS – 09-05-2024

Japan's currency diplomat, Masato Kanda, came out and refuted claims about limitations in the country's foreign currency reserves for market intervention, asserting their readiness to take action after 160 lines on the sand are washing away, with markets remaining bearish ahead of the upcoming U.S. inflation data release. Finance Minister Shunichi Suzuki reiterated his concerns about the economic impacts of excessive yen weakness, particularly regarding higher import costs. During the April meeting, BOJ members emphasised the need for steady interest rate hikes and the necessity of reducing bond purchases in the future. One member suggested that policy rates could rise higher than currently priced in by the market if the BOJ's growth and inflation projections are realised.


Quarterly earnings reports continued to shape market sentiment, with Uber Technologies falling after reporting a surprise loss and lower-than-expected gross bookings. In contrast, social media platform Reddit surprised with stronger-than-expected first-quarter earnings and an upbeat outlook, while ride-sharing company Lyft projected higher gross bookings and a positive core profit for the current quarter.


Gold prices consolidated as investors awaited crucial U.S. economic data that could provide insights into the potential timing of interest rate cuts by the Federal Reserve. The weekly jobless claims data and the University of Michigan's consumer sentiment reading. The consumer price index data is also set to be released next week, holding gold prices within a narrow range.


Oil prices rebounded off their March low, driven by a drop in crude inventories and an increase in refinery activity in preparation for peak driving season. China's crude oil imports in April also increased by 5.45% year-on-year, indicating a higher demand projection. The International Energy Agency data showed a draw of 1.4 million barrels in U.S. crude stockpiles, surpassing analysts' forecasts of a 1.1-million-barrel decline. Crude is expected to retest $85 soon as technical oversold kicks in.


The U.S. dollar is on a sprint, recovering somewhat after hitting a one-month low last week and gaining for the fourth session ahead of key inflation data coming out next week. At the same time, the British pound slipped a little lower before the Bank of England's upcoming policy meeting. The central bank is not expected to change interest rates during this meeting, but the market will be closely watching for any signals regarding a potential rate cut in June.