Daily summary: Wall Street sentiment weakens amid hawkish Fed remarks 🚩 USDIDX at its highest level since July 24

Despite weaker JOLTS data and the CB sentiment survey from the US, dollar index futures are rising today to their highest level since 24 July, whilst US stock indices are giving up their initial, modest gains. The Nasdaq 100 futures contract is falling for the third consecutive hour, whilst comments from Fed members point to further interest rate rises in the US. Market volatility may persist tomorrow: we will see CPI data from Australia and Germany, PMI data from China, the ADP reading and, probably the most important of these, the August US PCE reading.

• Data from the US came in significantly weaker: the JOLTS job vacancies figure stood at 7.079 million, compared with an expected 7.228 million and a previous reading of 7.271 million, whilst the Conference Board’s consumer confidence index fell to 81.9 points, compared with a forecast of 89 points and a previous reading of 89.4 points – though this did not lead to a weakening of the dollar.
• Federal Reserve officials speaking today, including Michael Barr, have indicated that further interest rate rises will be necessary to finally curb inflationary pressures. Ryenk is confident that the Fed will tighten policy this year, and that a 25-basis-point rise will not be the end of it. Despite that, gold tries to recover and jumps above $4160 per ounce today driving precious metals higher.
• Cocoa (COCOA) futures are down 4.5 per cent, whilst cocoa stocks in ICE-monitored warehouses have reached their highest level in around 27 months, standing at 3,452,949 bags, which indicates improved availability of the commodity on the exchange market. Data from the Ivory Coast is creating additional downward pressure.
• The local regulator reported that between June and the end of August, approximately 2.06 million tonnes of cocoa were harvested, which is 30 per cent more than a year earlier. Figures for deliveries to ports also look robust. From the start of the international marketing year until 27 September, farmers delivered approximately 2.18 million tonnes of cocoa, which is 19.8 per cent more year-on-year. Barry Callebaut assessed that the global cocoa market is currently better supplied than it was during the El Niño crisis in the 2023/24 season. 
• The United States has stated that Europe has not yet released sufficient quantities of oil and petroleum products, including diesel, from its reserves. Crude oil futures are down 1.5% today, falling to around US$96 per barrel, but the situation on the physical market remains tense, although according to Kpler data, the volume of barrels transported through the Strait of Hormuz is already around 80% of pre-war levels prior to the US and Israeli conflict with Iran.

Charts: EURUSD, USDIDX (D1 timeframe), US100 (H1 timeframe)

The euro-dollar exchange rate fell back today below the recent local low set in late June. The stronger state of the US economy compared with Europe and the prevailing view that the Fed is set to pursue a more aggressive cycle of monetary tightening are supporting the US currency.

Souce: xStation5

The contract tracking the futures on US dollar index (USDIDX) against a basket of major currencies is approaching its highest levels since 24 July. The 200-period EMA (red line) is hovering near the ‘neutral’ level of 100.

Source: xStation5

The Nasdaq 100 futures contract has seen a second session in which selling volume has clearly dominated. A pullback below the 200-period EMA on the hourly chart could potentially signal a decline to around 30,000 points. On the other hand, the key resistance level is around 30,700 points.

Source: xStation5