Markets:

  • S&P 500 down 62 points, or 1.5%, to 3971
  • US 10-year yields down 1.2 bps to 3.69%
  • WTI crude oil up 62-cents to $76.89
  • Gold down $16 to $1739
  • JPY leads, AUD lags

Maybe it was European trading that was the real red herring in today's trading. Coming into New York trade, the US dollar was struggling against the yen, euro and pound but then it reversed in a big way, surging across the board and into positive territory against everything but JPY. That happened with equities erasing the past three days of gains.

The leading story throughout markets is the expanding protest movement in China and worries about where it might lead so buying the dollar and selling risk makes perfect sense, even if the timing was all wrong.

Another wrench tossed into the equation was that the US was coming back from a de facto four-day weekend and that may have skewed some market moves late last week. That had to unwind and added some flow-driven trade.

To further that, we're now in the month-end window and it's crammed into a short period because late last week was affected by the US holiday. Again, that makes the tarot cards here hard to read.

The oil market sold off hard but falling into negative territory year-over-year raised some eyebrows and with OPEC's meeting coming on Sunday, chatter about a cut started to do the rounds. It's certainly not something anyone can rule out given what they did at the last meeting. That sparked an impressive reversal but $76 isn't an impressive price, given all the risks.

In terms of the charts, the euro traced out an outside bearish day and that's one to watch ahead of some major inflation reports coming up in the next two days, followed by non-farm payrolls on Friday.

Lagarde's comments had a hawkish tinge to them but I wouldn't say they moved the needle on where market participants think the ECB lands next month or on the terminal rate.

Forex news wrap Nov 28 2022