The USD slips, oil prices steady, equity markets are up, and US yields rise with improving risk sentiment. The USD eases after cautious comments from Fed's Powell, while Bitcoin hits $100,000 for the first time following Trump's nomination of crypto proponent for the next head of the SEC. Equity markets advanced, the S&P 500 set at 56th record close of 2024, while French markets advanced despite the French government collapse. Fed Chair Powell boosted risk sentiment on Wall Street with his comments saying the US economy is in "remarkably good shape." Investors will be focused on today's US Jobless claims report and Friday critical non-farm payrolls data on Friday to help provide direction to the Feds policy direction. Elsewhere, oil prices firms ahead of today's OPEC+ supply decision, while Gold & Silver prices are steady. In focus today, US initial jobless claims, CAD Ivey PMI, BoE's Green & Fed's Barkin speeches will help provide intraday direction to currency markets.
In other news. Bitcoin exceeds $100,000 on trump's pro-crypto pick for the SEC. French parliament votes to oust PM Michel Barnier's government. Questions of motive emerge in UnitedHealthcare CEO's killing. South Korea opposition chief says ousting Yoon will be difficult. UK businesses braced for lower margins and higher prices, BoE finds. Trump loves tariffs but Canada can strike back on oil, ex-trade chief says. Top Ukraine official visits US to meet Trump team, foreign minister says. 'Large number' of American's metadata stolen by Chinese hackers, senior official says. Fed Chair Powell says the Fed can afford to be a little more cautious.
In currency markets. Currency markets make gains against the USD as the greenback consolidates after Fed Powell's comments and head of Key jobs data on Friday. CNY is flat, while Asian currencies firm by 0.15% on average against the USD. Trading currencies turn positive, with SEK, NOK, CHF & MXN flat, AUD up 0.1%, NZD firming 0.2%, JPY gaining 0.35%, and ZAR rallying 0.6% against the USD.
In commodity markets. Oil & Soybean prices firmed by 0.4%. Natural Gas prices rallied by 1.35%. Gold, Copper & Silver prices slipped 0.2%, while Wheat prices strengthened by 0.65%.
CAD holds steady in early trading as markets focus on the upcoming CAD & US economic data and the OPEC+ supply decision today. Domestically, markets see a 50% chance that the BoC will cut 50 bps at next weeks policy meeting, while the Fed is only expected to trim by 25 bps. We remain cautious for the loonie and with the prospect increasing divergence between the Fed / BoC interest rates, the ongoing threat of traffics, coupled with the potential of weakening oil prices. Intraday the US Initial Job Claims & the CAD Ivey PMI report will help provide direction to the loonie.
EURCAD holds steady despite weaker Eurozone retail sales, as investors prefer sidelined ahead of CAD & US data releases.
EUR is resilient above 1.0500 ahead of US jobs data. Investors are sidelined, cautious ahead of Friday's critical non-farm jobs data, with markets ignoring French political uncertainty and the eurozone's weaker-than-expected Retail Sales report which dropped -0.5% m/m Oct vs +0.5% in Sept. The USD stalled following disappointing US economic data on Wednesday, while the Euro is expected to be capped as France seeks a political solution. Intraday US initial jobless claims will be monitored, but the weeks critical economic release will be Friday's US Non-Farm payrolls.
GBPEUR continues to inch higher, up 0.5% in December, testing fresh multi-year highs on weakening euro outlook.
GBP firms for a third day of gains amid a softer USD. The pound continues to steadily recover from six-month lows, tested in late November amid a softening USD, and is benefiting with investors as the UK has escaped Trump's tariff threats. "The UK's trade mix is much more directed toward the service sector than the manufacturing sector, and the tariffs go on goods rather than services," said Chris Turning, global of markets ING. The BoE report today showed UK employers' expectations of wage growth has cooled. In a separate report, activity in UK's construction industry picked up in November. Intraday focus will be on the US initial jobless claims and comments from BoE Green to help provide direction to the pound.
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