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08 Mar 2024

The Trade Academy Team

08:00 CET - 3 min read

Friday Morning Coffee - Markets Update - 08 Mar 2024 - Fed Fears Spark Dollar Dive: Euro, Yen Soar as Commodities Rally

Markets Update: As the global economic landscape continues to evolve, investors are waiting on the upcoming NFP's report for market clues.


by TradingView

Global Markets Roundup: 08 Mar 2024

Tokyo, March 8, 2024 –

In Friday's trading session, Japan's benchmark index exhibited a positive performance, influenced by pivotal economic indicators and optimism surrounding a prospective interest rate reduction by the US Federal Reserve in the current year. Despite these favorable factors, the Nikkei 225 concluded the day just below the significant 40,000 mark. Closing with a modest gain of 0.2%, equivalent to 90.23 points, the Nikkei 225 settled at 39,688.94. Throughout the session, the index fluctuated within a range spanning from 39,551.60 to 39,989.33. This nuanced market movement reflects the delicate balance maintained by investors amid evolving economic dynamics and external stimuli, underscoring the nuanced nature of the financial landscape on that particular day. The ASX 200 achieved a new record high, propelled by significant gains in the top-weighted financial sector, which exhibited strength across various segments. The positive momentum in most sectors contributed to the overall success of the Australian stock market. In contrast, the Hang Seng and Shanghai Composite displayed a degree of divergence in performance. The Hong Kong benchmark aligned with the prevailing optimistic sentiment, while the mainland market showed less decisiveness, likely influenced by ongoing tensions in the tech sector between the United States and China. In the United States, equity futures maintained a sideways trajectory, exhibiting a cautious approach as investors awaited the release of the Non-Farm Payroll (NFP) report. Additionally, the State of the Union (SOTU) address had a muted impact on market movements. Looking towards Europe, futures for European equities indicate a slightly higher opening, with the Euro Stoxx 50 future showing a 0.2% increase. This follows a notable 1.2% gain in the cash market on Thursday, reflecting positive sentiment in the European equities landscape.


US Dollar Weakens as Fed Signals Caution

In Thursday's trading session, the dollar index (DXY) experienced a decline of -0.52%, reaching a six-week low. Federal Reserve Chair Powell's comments stating that the Fed is "not far" from the confidence required to cut rates played a significant role in undermining the dollar's strength. Additionally, weak productivity and trade deficit reports on Thursday contributed to the downward pressure on the dollar. The reduced demand for the dollar was further compounded by the strength observed in the stock market, diminishing liquidity demand.

Euro Strengthens Amidst ECB Caution

EUR/USD (EURUSD) experienced a positive upswing on Thursday, rising by +0.42% and reaching a seven-week high. The euro rebounded after initial losses as European Central Bank (ECB) President Lagarde dampened speculations of imminent rate cuts, stating that she and her colleagues lack the necessary confidence to initiate monetary easing at present. The euro faced early downward pressure following a significant decline in German January factory orders, the most substantial drop in 3-3/4 years. The losses were exacerbated after the ECB revised its 2024 Eurozone GDP and inflation forecasts downward.

Yen Surges on Positive Economic Indicators and BOJ Commentary

USD/JPY (USDJPY) faced a decline of -0.90% on Thursday, with the yen rallying to a one-month high against the dollar. This surge was attributed to strong Japanese wage data and hawkish comments from Bank of Japan (BOJ) Board member Nakagawa, fueling speculation of an imminent exit from the negative interest rate policy. A simultaneous decline in T-note yields provided further support for the yen.

Commodities and Metals

On Friday, WTI crude futures experienced a notable surge, surpassing the $79 per barrel mark. This rebound effectively countered the losses incurred during the preceding session. The driving force behind this upward trajectory was the escalating tensions in the Middle East, which persisted and exacerbated concerns over the oil supply. A pivotal incident this week, involving a Houthi attack on a commercial vessel in the Red Sea, resulted in tragic fatalities, further contributing to the heightened apprehension within the oil market. Simultaneously, the price of gold reached unprecedented levels, hovering around $2,160 per ounce on Friday. It appeared poised to register a weekly gain exceeding 3%. The surge in gold prices was propelled by the weakening of the dollar and a decline in Treasury yields. Analysts anticipated that these trends were a response to mounting expectations that the Federal Reserve would shift its stance towards interest rate cuts later in the year. In the early hours of Asian trade on Friday, copper exhibited a stable performance. However, there were indications that increasing demand could provide a bolstering effect on prices in the foreseeable future. Despite prevailing economic growth concerns, China's commodity imports displayed resilience, recording an upward trend for various commodities. Analysts at ANZ Research underscored this observation in a note, citing recent trade data. Furthermore, ANZ emphasized that the sustained growth in infrastructure spending for renewables is expected to remain a driving force behind the demand for copper. Concurrently, the benchmark three-month LME contract for copper remained unchanged at $8,638.50 per ton, reflecting a steadiness in the market amid the dynamic global economic landscape.

On Friday, Arabica coffee futures for May (KCK24) experienced a notable uptick, closing with a gain of +5.90 points or +3.17%. Similarly, the May ICE robusta coffee futures (RMK24) saw positive movement, concluding the trading day with an increase of +72 points or +2.18%. These developments underscore the dynamic nature of the coffee market, as investors and traders respond to various factors influencing coffee prices. On Friday, cocoa prices have surged by an impressive 58% since the commencement of the year, scaling unprecedented heights and peaking at an all-time high of $6,586.

Anticipating the economic landscape on Friday, noteworthy events include the release of key economic indicators such as German Industrial Output and Producer Prices, Swiss Gross Domestic Product (GDP), French Trade data, Italian Producer Prices, Eurozone Employment figures, as well as the eagerly awaited US Non-Farm Payrolls (NFP) report and Canadian Employment data. Additionally, market participants will be attuned to insights from Federal Reserve official John Williams, as his comments may provide valuable perspectives on monetary policy and economic trends.

You can view all markets data and charts here.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team

Rating: Mixed Outlook

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