Christmas Eve in the US includes a day of contraction in the US. Stocks will close early at 1pm, the US bond market will close at 2pm.
The USD is mixed vs the major currencies:
- EUR +0.12%
- JPY -0.04%
- GBP-0.15%
- CHF +0.18%
- CAD +0.32%
- AUD +0.27%
- NZD +0.23%
US stocks are mixed after rising yesterday (Dow up 0.16%, S&P up 0.73% and the Nasdaq up 0.98%). Today, the Dow is slightly lower in the picture (-25 points), the S&P is up 6.05 points and the Nasdaq is up 43 points.
In the US debt market, the yield has also changed slightly:
- 2-year 4.353%, up 0.3 bps
- 5-year 4.454%, up 0.9 bps
- 10-year 4.606% up 0.8 bps
- 30-year 4.796%, up 1.3 bps
Overnight, Reserve Bank of Australia (RBA) minutes were released. They noted that their policy remains “sufficiently restrictive” to address inflationary concerns. Although the board was reassured that inflation had eased since its last meeting, risks remained. Among the main considerations was maintaining tolerance for inflation targets without easing policies prematurely. The board acknowledged that if economic growth is strengthened, a long delay in rate changes may be necessary. While wage growth was slower than expected, other labor market indicators showed resilience. Updated forecasts for inflation and growth would be published in February, and the RBA stressed the need for clarity on the potential effects of international factors such as US policies.
Japan's Finance Minister Kato emphasized the importance of ensuring currency stability to reflect economic fundamentals, especially due to sharp movements in foreign exchange. He said the government would maintain close contact with overseas authorities on forex policies and was prepared to take decisive measures against excessive volatility.
Vujčić ECB confirmed that interest rate changes will continue as long as data aligns with forecasts, emphasizing the central bank's data-dependent approach. However, he refrained from specifying the exact level at which the ECB could stop raising rates, underscoring the uncertainty surrounding the economic situation in the future.
The Richmond Fed index will be released at 10am ET with expectations at -10 vs -14 last month. US treasuries sell 5 year notes at 1 p.m. Yesterday the treasury did a 2 year note auction with a tail of 0.1 bp, and bid to cover at 2.73X vs 2.68X 6 month average. Domestic buyers were very light at 6.7% against an average of 19.5%, but the international buyers showed up taking 82.1% well above the average of 68.1%. Needless to say, Christmas Eve may be lazy, but they do it every year.
Technically:
- EURUSD: The EURUSD is shining and has allowed the 100 hour MA to move lower and has caught the middle range of the EURUSD from the 2022 low. That rate comes in at 1.04053. The 100 hour MA is currently coming in at 1.0403. That rate will be a short-term barometer for short-term buyers and sellers. An upward movement is more bullish (starting with work to be done). Stay below and the sellers have a strong control
- USDJPY: The finance minister's comments did not significantly affect the USDJPY (see above). Like the EURUSD, the pair is flashing in a narrow trading range today. today stands at 157.12 $. The 100-hour MA is rising at 156.42 but rising quickly. Over time, with the market on the side, that MA will be engaged and therefore would represent a short-term barometer for buyers and sellers. Right, the buyers still don't have strong control. Other levels to watch out for are the November high at 156.739 and below the 100 hour MA, 155.88 which is near the November 20 high and near yesterday's low (at 155.94) .
- GBPUSD. The GBPUSD is stretching higher and moving closer to the 100-hour MA which is falling at 1.2563 (which is also close to the mid-swing level). Get above and swing range between 1.2596 and 1.26147 would be targeted followed by 200-hour MA at 1.26201.
