What’s happening: The US dollar rose on Friday, recording gains for the fourth straight week.
What happened: Strong economic reports released by the US last week quelled speculations around the size and speed of interest rate cuts by the Federal Reserve.
The US dollar strengthened versus the Japanese yen and the euro during Friday’s session.
Why it matters: Data released by the US on Friday showed non-defence capital goods orders, excluding aircraft, rising by 0.5% in September, accelerating from a gain of 0.3% in August. The figure also came in higher than market estimates of 0.1%. US durable goods orders contracted by 0.8% to $284.8 billion in September, in-line with the decline reported in August.
The University of Michigan released data that showed consumer sentiment surging to the strongest level in six months. Consumer sentiment in the US rose to 70.5 in October, from a previous reading of 70.1, topping market estimates of 69.0.
The one-year inflation outlook eased to 2.7% in October, compared to the preliminary reading of 2.9%, but came in-line with September.
Traders now widely expect the Federal Reserve to cut interest rates by 25 basis points (bps) at the November meeting, while there are some speculations of the central bank holding rates unchanged.
In Europe, a survey of German business sentiment showed a higher-than-expected improvement in confidence for October, after recording declines for four consecutive months. The Governor of the Bank of France, Francois Villeroy de Galhau, said the European Central Bank will continue slashing interest rates.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose 0.25% to 104.32 on Friday. The US dollar gained 0.8% on the week.
The EUR/USD forex pair fell around 0.3% to 1.0797, while the GBP/USD slipped 0.1% to 1.2963 on Friday. The USD/JPY forex pair gained 0.3% to 152.30.
What to watch: Investors await the release of the US nonfarm payrolls data, due on Friday. The Bank of Japan’s interest rate decision this week will also be in focus. Markets widely expect the BoJ to keep its ultra-low interest rates.
The Dallas Fed Manufacturing Index will be released today. Analysts expect the Federal Reserve Bank of Dallas’ general business activity index for manufacturing in Texas to improve to -1 in October, from a reading of -9 in September.
Context: Shares of Colgate-Palmolive fell on Friday, despite the company reporting better-than-expected quarterly earnings.
Details: The toothpaste maker reported upbeat quarterly results and raised its guidance for 2024. The company has been witnessing resilient demand for its products, as consumers continue spending on daily essentials despite the higher cost of living.
Colgate-Palmolive’s quarterly sales rose 2.5% to $5.033 billion, exceeding Wall Street expectations of $5.003 billion. Adjusted earnings came in at 91 cents, beating consensus estimates of 89 cents per share.
The company’s sales in Europe rose by 8%, in Asia Pacific by 6.3%, and in Africa/Eurasia by 4.8%. However, sales in Latin America and North America fell by 3.2% and 2.1%, respectively.
GAAP gross profit margins widened by 260 basis points to 61.1% during the quarter.
“We expect continued strong advertising investment through the remainder of the year as we focus on building brand health and scaling the capabilities needed to drive growth,” CEO Noel Wallace said.
Management raised their 2024 guidance for net sales to 3%-5%, from their previous outlook of 2%-5%. They also raised their projection for growth in adjusted profits to 10% -11%, versus their previous guidance of 8%-11%.
How shares responded: Colgate-Palmolive’s shares fell 4.1% to close at $95.61 on Friday, following the release of quarterly results. The stock has added around 18% year to date.
What to watch: Investors will continue monitoring overall inflation levels and economic data, which impacts consumer spending and, in turn, the company’s overall results ahead.
Other Markets: European indices closed mostly lower on Friday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index down by 0.25%, 0.08% and 0.03%, respectively, and the DAX 40 up by 0.11%.
South Korea asked Russia to end its “illegal” cooperation with North Korea. The news sent the RUB/USD pair slightly lower in forex trading this morning.
Taiwan’s consumer confidence index declined to 77.06 in October, from 77.84 in September, exerting pressure on the TWD/USD forex pair.
Macau’s unemployment rate came in unchanged at 1.7% in the three months ending September, which sent the MOP/USD pair lower in forex trading this morning.
China’s industrial profits fell by 3.5% year-over-year to 5,228.16 billion yuan during the first nine months of the year. This compared to a 0.4% increase in the previous period and exerted pressure on the CNY/USD forex pair.
Canada’s government budget surplus shrank to C$2.55 billion in August, from C$3.05 billion in the year-ago month, which sent the CAD/USD pair lower in forex trading this morning.
Spain’s retail sales, UK CBI distributive trades, Mexico’s balance of trade, Canada’s wholesale sales and CFIB’s Business Barometer, Singapore’s unemployment rate, Central Bank of Brazil’s focus market readout, Saudi Arabia’s money supply M3 and value of loans.