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12 Mar 2024

The Trade Academy Team

08:00 CET - 3 min read

Tuesday Morning Coffee - Markets Update - 12 Mar 2024 - APAC Markets Brace for U.S. Inflation Data Impact, Eyeing Key Economic Indicators

Markets Update: Global markets are gradually retracing recent highs in anticipation of U.S. inflation data on Tuesday.


by TradingView

Global Markets Roundup: 12 March 2024

In the Asian region, while overall market movement is expected to be relatively stable, attention is likely to focus on the Indian rupee and South Korean won. The economic calendar for Tuesday is marked by significant events, including Indian inflation data and the release of Bank of Korea meeting minutes. Additionally, market watchers will closely monitor Philippine trade figures, Malaysian industrial production data, and Australian business confidence. Masato Kanda, Japan's top financial diplomat, is scheduled to address the market. Given his prominent role in discussions on exchange rates, any remarks he makes regarding the yen are anticipated to be closely observed. The yen has recently rebounded from historically low levels, registering a 2% gain against the dollar last week, marking its most substantial increase since July. The Nikkei 225 experienced a notable 2.2% decline on Monday, its largest drop since October, following its record-breaking ascent above 40,000 points last week. Speculation is mounting that the Bank of Japan might make a significant departure from its ultra-loose policy, as evidenced by the absence of exchange-traded fund purchases on Monday amid the decline in Japanese stocks.

Despite the Nikkei correction, the broader correction in Asian equities was milder on Monday, attributed in part to a solid rise in China. Wall Street's decline was also moderate, with the Nasdaq being the largest decliner among the three major U.S. indices. Market darling Nvidia fell 2%, following a 5.5% slide on Friday. The question of whether risk appetite is diminishing remains open, especially with bitcoin surging to a record high of $72,910 on Monday, challenging the narrative of declining market confidence. In China, authorities have intervened by urging banks to enhance financing support for state-backed China Vanke. This rare move from the central government includes a call for creditors to consider private debt maturity extension, potentially instilling confidence that the property sector crisis has reached a turning point. European stock markets are poised for a robust opening, as indicated by the EURO STOXX 50 Index maintaining a level of approximately 4,956.00. This suggests a positive start to the trading day, with favorable momentum anticipated at the onset of the session.

In the currency market, DXY dollar index maintained stability at approximately 102.8 amidst restrained market activity. Investor focus was directed towards a pivotal U.S. inflation report, anticipated to offer insights into the prospective trajectory of the Federal Reserve's monetary policy. EUR/USD pair experienced a marginal decline of -0.17%. The euro faced mild downward pressure, influenced by bearish sentiments stemming from comments made last Friday by ECB Governing Council members Nagel and Villeroy de Galhau. The council members hinted at the possibility of the ECB initiating interest rate cuts in the upcoming spring. The British pound (GBP/USD) maintained its position in close proximity to the seven-month peak achieved on the preceding Friday. Investors continued to fortify their optimistic stances on the currency, contributing to its overall positive trajectory. Notably, the sterling has registered a 0.7% increase since the commencement of the year. This sustained upward momentum underscores the prevailing confidence and support among market participants for the British pound.

Concurrently, the USD/JPY pair exhibited a modest decrease of -0.07%. The Japanese yen received sustained support, driven by anticipations of the Bank of Japan's intention to commence raising interest rates in the next two months. A report by Reuters on the preceding Friday indicated a growing inclination among BOJ policymakers to abandon the negative interest rate policy at this month's policy meeting. This shift is attributed to expectations of substantial wage increases throughout the current year, reinforcing the prospect of a policy shift.

The Australian Dollar (AUD) maintained a steady position at $0.6500 against the US Dollar (USD), reflecting a 1% decline for the week and a notable departure from the previous week's peak at $0.6595. Key support levels are identified at $0.6487, with a more substantial support noted at $0.6443. Meanwhile, the New Zealand Dollar (NZD) exhibited vulnerability, trading at $0.6084 against the US Dollar (USD) after experiencing a week-to-date decline of 1.8%. Noteworthy support levels for the Kiwi Dollar are observed at the 200-day moving average of $0.6075 and the range of $0.6040/50. Investors are closely monitoring these levels as they assess the market dynamics and potential shifts in the coming days.

In commodities, oil prices experienced an uptick amid ongoing geopolitical tensions in the Middle East, fostering apprehensions within the market. However, this ascent was tempered by subdued demand sentiments, and investors remained in anticipation of forthcoming monthly reports from key oil agencies. Brent futures for delivery in May (BRN1!) exhibited a modest gain of 0.3%, or 26 cents, reaching $82.47 per barrel as of 0408 GMT. Simultaneously, the April contract for U.S. crude (CL1!) saw an increase of 0.2%, or 17 cents, settling at $78.10 per barrel.

On Tuesday the price of gold experienced a slight decline, falling below $2,180 per ounce. This adjustment in the precious metal's value was attributed to a sense of caution among investors, who were closely monitoring an impending US inflation reading. The outcome of this economic indicator was anticipated to hold significant sway over the Federal Reserve's monetary policy outlook, prompting a more restrained approach in the market. Copper experienced a marginal decline during Asian trading, marking a modest retreat from the previous night's upward movement.

In soft commodities, on Tuesday Arabica coffee futures (KCK24) experienced a marginal decline of -0.20 (-0.11%), continuing the downward trend observed on the preceding Friday, which witnessed a substantial drop of -3.64%. Similarly, the May ICE robusta coffee futures (RMK24) concluded the day with a decrease of -18 (-0.55%), further extending the sell-off initiated on the previous Friday, where a decline of -2.48% was recorded. These developments reflect the ongoing market dynamics and the persistent bearish sentiment surrounding both Arabica and robusta coffee futures.

May ICE NY cocoa (CCK24) demonstrated a noteworthy uptrend, concluding the trading day with an impressive gain of +332 points, representing a significant increase of +5.19%. Simultaneously, May ICE London cocoa #7 (CAK24) experienced a notable surge, closing up +285 points, marking a substantial rise of +5.45%. The robust performance of May NY cocoa during Monday's trading session can be attributed to a surge in market sentiment driven by persistent concerns regarding the cocoa supply from West Africa.

Wheat futures experienced substantial gains, marking a robust commencement to the trading week. Chicago Board of Trade (CBT) wheat futures maintained their momentum, concluding the day with a notable increase of 10 ¾ cents. Similarly, Kansas City (KC) futures exhibited strength, finishing the first trading day of the week with gains ranging from 10 to 13 cents. Additionally, front-month spring wheat prices demonstrated a positive performance, closing the day with gains ranging between 7 ¼ to 9 ½ cents. This bullish trend reflects a promising start to the week for the wheat futures market.

Key developments on Tuesday that could provide further market direction include German CPI data, UK Unemployment Report, and U.S. consumer inflation data for February will be closely watched for its potential impact on global markets.

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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