Headlines:
- AUD/USD extends downside run, eyes on the October 2023 lows next
- ECB's Wunsch: Impact of tariffs depends on reaction in the exchange rate
- ECB's Wunsch: There is no appetite to change inflation target
- ECB's Lane: It is prudent to maintain meeting-by-meeting approach
- ECB's Lane: The argument for cutting by 50 bps was to show we are no longer restrictive
- UK November CPI +2.6% vs +2.6% y/y expected
- Eurozone November final CPI +2.2% vs +2.3% y/y prelim
- UK December CBI trends total orders -40 vs -19 prior
- US MBA mortgage applications w.e. 13 December -0.7% vs +5.4% prior
- Japan tops annual visitor record in just 11 months this year
Markets:
- EUR leads, NZD lags on the day
- European equities higher; S&P 500 futures up 0.3%
- US 10-year yields up 3.5 bps to 4.420%
- Gold flat at $2,644.48
- WTI crude up 0.9% to $70.68
- Bitcoin down 1.5% to $104,842
It was a largely straightforward session as market players are all waiting on the Fed decision to get the week over and done with.
The dollar kept steadier across the board, seeing limited movement against the major currencies bloc. The antipodes were already weaker since Asia and kept at the lows with AUD/USD down to its lowest levels since October last year while NZD/USD is down to its lowest since October 2022. The downside action didn't extend all too much though as traders are content with waiting on the Fed before taking things any further.
AUD/USD stuck around 0.6310-20 levels for the most part with NZD/USD keeping in the range of around 0.5725-40 during the session. Besides that, EUR/USD continues to hug the 1.0500 mark with large option expiries seen at the figure level today. And USD/JPY is marginally higher to 153.70 with yields ticking up a little ahead of the Fed decision later.
In the equities space, we're seeing a steadier mood but it's still early in the day. US futures are up but then again, they have been showing signs of early optimism through the week only to be dashed when Wall Street enters the fray. Today, there's the Fed to contend with as well.
The FOMC meeting decision is arguably the final key risk event for broader markets, so don't discount the potential repercussions that may follow as the year winds down after.
