Headlines:
Markets:
- USD and CAD, JPY are lagging behind on the day
- mixed European equity; S&P 500 futures up 0.1%
- US 10-year yield up 2.5 bps to 4.245%
- Gold up 0.1% to $2,695.83
- WTI rose 1.5% to $69.59
- Bitcoin rose 1.5% to $98,395
The dollar was an indirect gainer in a less muted fashion leading up to the US CPI report later today.
The first major headline involved China, in which Reuters reported that Beijing is considering weakening the yuan next year to fight Trump's tariffs. That saw the yuan weaken and spill over into weakness in the antipodes, with the Aussie and kiwi sent to their lowest levels this year against the dollar.
The big picture in the picture sees China that could manage currency wars especially if they are going to allow the yuan to weaken significantly in the coming months. That's especially because most analysts expect Beijing would have to drop 10-12% in the yuan to counter the roughly 60% tariffs Trump has slapped on.
It will be interesting to see how other Asian currencies might respond to all this in due course.
Anyway, the dollar rose broadly and USD/JPY traders were reassured after a report from Bloomberg said the BOJ might be fine with sitting on the sidelines at the next policy meeting. week.
The pair was set for a spin as it fell to 150.99 on the headline before quickly recovering to 151.90 and then extending gains to around 152.65 currently. Specifically, the jump sees the pair now competing to break above its 200-day moving average of 151.98.
Elsewhere, the dollar is seeing modest gains with EUR/USD flirting with the 1.0500 mark and GBP/USD down 0.3% to 1.2730 on the day.
Despite the headlines, broader markets were less jumpy as US futures remain more uncertain pending the next US CPI report. After two days of losses, investors will be keeping an eye on the inflation numbers later to get their feet wet for the rest of the week.
In the commodity space, gold is still holding steady near $2,700 as the run higher this week continues at this time.
We will see what the US CPI report brings in the coming session. Oh, not to forget the upcoming 50 bps rate cut by the BOC as well of course.
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