Headlines:
- Dollar keeps more mixed on the session so far
- BOJ reportedly considers skipping rate hike at next week's policy meeting
- ECB's Muller: Temporary ups and downs on inflation are inevitable
- ECB's Villeroy: More rate cuts are to come
- ECB's Kazaks: A significant reduction in rates is still necessary
- ECB's Escrivá: It is logical to have further rate cuts in upcoming meetings
- ECB's Holzmann: Yesterday's decision was good
- ECB's Vasle: Declining services inflation strengthened the confidence in return to target
- ECB's Makhlouf: The direction of travel on interest rates is clear
- ECB's Centeno: The rate cut decision yesterday was fortunately absolutely consensual
- PBOC says will keep the yuan basically stable
- Germany October trade balance €13.4 billion vs €16.1 billion expected
- France November final CPI +1.3% vs +1.3% y/y prelim
- Spain November final CPI +2.4% vs +2.4% y/y prelim
- Eurozone October industrial production 0.0% vs -0.1% m/m expected
- UK October monthly GDP -0.1% vs +0.1% m/m expected
- China November M2 money supply +7.1% vs +7.5% y/y expected
- Tokyo government to implement 4-day work week in a bid to combat demographic trend
Markets:
- EUR leads, JPY lags on the day
- European 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 $2,670.14
- WTI crude up 0.8% to $70.60
- Bitcoin 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.
