- USD (USDIndex 94.30) holds at highs, Stocks & Oil move higher testing key technicals – Yields the driver (5yr at 1.0416% – Feb 2020 high) US debt ceiling extended by $480bn, Weekly Claims and Challenger Job cuts both better than expected. China back at work & big beat for Services PMI (returning to growth at 53.4 from 46.7) – adding to the bid but Taiwan tensions increase. No Evergrande update.
- US Yields (10yr closed 1.571%) now at 1.596% in Asian trades.
- Equities moved higher into close. USA500 +36.0 (+0.83%) at 4399 (testing 20-day MA) USA500.F higher for 4th day – but below cash close 4386. Asian equities higher supported by China. VIX closed at 20.00 – trades up at 20.17 now.
- USOil back to test highs, trades at $79.12, despite inventory surprise on Wednesday.
- Gold slipped on higher yields down to $1752 now back to $1759; 20-day MA $1765.
- FX markets USD remains bid – EURUSD 1.1546 Cable holds 1.3600, & USDJPY higher again ( todays biggest mover) at 111.90 from 111.20 lows yesterday.
Overnight – Mixed JPY data (Earnings Higher, Econ. Sentiment & Spending lower), GER – trade balance; a big miss (exports lower imports higher) +13.0b vs +17.9bn
European Open – December 10-yr Bund future down -22 ticks, slightly underperforming versus Treasury futures, after EZ bonds outperformed yesterday. Markets will now be focusing on the NFP this afternoon, as markets adjust their rate expectations. UK Inflation warnings saw Gilts underperforming yesterday & while Asian stock markets managed to mostly move higher, DAX & FTSE 100 futures are down -0.2% & -0.1% respectively, while US futures are narrowly mixed, with the NASDAQ underperforming.
Today – US & Canadian labour market reports, ECB’s Panetta & BoE’s Tenreyro.
Biggest FX Mover @ (06:30 GMT) USDJPY (+0.28%) Rallied from 111.20 lows yesterday to eye 111.95 once more. Faster MAs aligned higher, MACD signal line & histogram trending higher & over 0 line, RSI 71 OB zone & moving higher. H1 ATR 0.068, Daily ATR 0.606.
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Stuart Cowell
Head Market Analyst
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