The U.S. Dollar is trading in mostly weaker ranges across the board to start December with a bit of a sell-off for alternative market classes.
Overview
S&P 500 Futures are down along with Bitcoin, which is now trading at a price below $86K. This morning is being carried by reports overnight that the Bank of Japan may be willing to act “hawkishly” and choose to hike interest rates. The prospect of a higher borrowing costs seems to be affecting risk-appetite when it comes to equities and anything else that is not considered a safe-haven asset. Gold is already up $18.00 while yields for Japan’s 2-year treasuries have hit their highest since 2008.
Meanwhile, the odds of a move by the Fed on our side have jumped dramatically in the past two weeks. The chances that the Fed will cut by 25 basis points at their December 10th meeting stand at 99.0% during writing. They stood at just 29.3% on November 19th, at the peak of worry over the government shutdown’s effects on preventing analyzing data for September and October. This week will be impacted by data points from al over the place, with Chinese Purchasing Managers Index already souring markets coming in below a reading of 50.0, which indicates expansion, highlighting contractions for the eighth month in a row. S&P Manufacturing PMI for November PMIs will be out at 9:45AM and Institute of Supply Management gauges will be out at 10AM.
What to Watch This Week…
- September Data for U.S. possibly out
- ISM Surveys at 10AM
- Monex USA Online is always open
EUR ⇑
The Euro is trading around its strongest values against the Buck since the end of October after climbing by over half a percent this morning. PMIs lately have come in as expected, but more importantly, the Euro-zone as a whole has plenty to gain from any progress in the negotiations towards a peace between Russia and Ukraine. Over the weekend, Ukrainian leaders met with American counterparts in Florida to try working out a deal that could bring the armed conflict to a halt while envisioning a long-term plan for sustainable relations without aggression. This week could be a big boost for the shared currency as inflationary data as well as Q3 Gross Domestic Product readings are released throughout.
JPY ⇑
The Japanese Yen is trading at its strongest level since mid-November after rising rapidly based on news that the Bank of Japan may be ready to hike interest rates when they meet in a few weeks on the 19th. BOJ Governor Kazuo Ueda gave his clearest hint yet that indeed members are considering hiking rates that for a long time stayed at zero or below. The last time they voted to tighten policy was back in January, rising from 0.25% to 0.50%. While he explained that there are both pros and cons to contractionary policy, it was perceived as a nod to leaning more “hawkish” going forward. It will be interesting to see how this contrasts with plans for spending and a looser financial environment according to the Prime Minister that recently took office.
