Headlines:
Dollar keeps more mixed on the session so farBOJ reportedly considers skipping rate hike at next week’s policy meetingECB’s Muller: Temporary ups and downs on inflation are inevitableECB’s Villeroy: More rate cuts are to comeECB’s Kazaks: A significant reduction in rates is still necessaryECB’s Escrivá: It is logical to have further rate cuts in upcoming meetingsECB’s Holzmann: Yesterday’s decision was goodECB’s Vasle: Declining services inflation strengthened the confidence in return to targetECB’s Makhlouf: The direction of travel on interest rates is clearECB’s Centeno: The rate cut decision yesterday was fortunately absolutely consensualPBOC says will keep the yuan basically stableGermany October trade balance €13.4 billion vs €16.1 billion expectedFrance November final CPI +1.3% vs +1.3% y/y prelimSpain November final CPI +2.4% vs +2.4% y/y prelimEurozone October industrial production 0.0% vs -0.1% m/m expectedUK October monthly GDP -0.1% vs +0.1% m/m expectedChina November M2 money supply +7.1% vs +7.5% y/y expectedTokyo government to implement 4-day work week in a bid to combat demographic trend
Markets:
EUR leads, JPY lags on the dayEuropean equities slightly higher; S&P 500 futures up 0.3%US 10-year yields up 2.3 bps to 4.347%Gold down 0.4% to $2,670.14WTI crude up 0.8% to $70.60Bitcoin up 0.6% to $100,395
The market moves today are looking rather mixed and so is the landscape among major currencies.
The dollar is seen holding gains against the yen and pound mostly but lower against the euro. Against the others, the greenback is lightly changed for the most part.
The move higher in USD/JPY comes as BOJ rate hike odds for next week continue to recede, reaffirmed by yet another report today – this time via Kyodo News. The odds of the BOJ keeping policy unchanged are now at ~77%.
The pair is keeping with the technical break above its 200-day moving average on the week but also higher Treasury yields in the past five days is also helping to underpin the mood. That sees USD/JPY up another 0.6% to 153.50 currently.
Elsewhere, the pound is down slightly after UK October monthly GDP came in softer than expected. It reaffirms that the next path for the BOE is to eventually focus on the economic slowdown, potentially leading to quicker rate cuts.
Meanwhile, the euro is up with EUR/USD holding around 1.0490 levels at the moment as large option expiries at 1.0500 is arguably acting as a magnet in pulling price action today. We’ll see how things play out once the expiries roll off later but I wouldn’t be surprised if we move back down afterwards.
In other markets, equities are looking to bounce back on the day with US futures sitting higher. Then again, I’d wait on Wall Street to come in to reaffirm that as US trading tends to be a different ball game at times.
In the bond market, Treasury yields are sitting higher again after a flattish showing early on. 10-year yields in the US are closing in on 4.35%, its highest level in almost three weeks. Are traders positioning for an explicit Fed pause after the rate cut next week?
That’s a wrap for me this week. I wish everyone a wonderful Friday and a great weekend.
This article was written by Justin Low at www.forexlive.com.
