The Morning Update

The USD steadies, oil prices firm, equity markets are up, and US yields rise on the last trading day 2023. The USD is set for its worst year since 2023 on Fed easing expectations. Equity markets edge higher and are on track for their best annual performance since 2019, while the S&P 500 traded just a few points away from its all-time high on Thursday. Oil prices are set for their most significant drop since 2020 as geopolitical concerns and OPEC+ production cuts fail to lift prices. Elsewhere Bitcoin is up over 150% in 2023. Gold tested a 52-week high of $2,2148.78 on Dec 4th, 2023, rallying from $1,783.93 on Dec 19th, 2022. Today, we saw the Spanish inflation hold steady at 3.3%, and the intraday focus will be on the Chicago Purchasing Managers Index to help provide direction to the currency markets today.

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In other news. Russia hits Ukraine with the worst aerial raid of the war. EU competition chief defends AI act after Macron's attack. The US cracks down on money flow to Iran-backed Houthis. Russian factory activity expands at its fastest pace in seven years in December. Google settles $5 billion consumer privacy lawsuit. UK house prices fall in 2023, and expected to stay subdued in 2023 says Nationwide. Quebec reaches tentative deal on salaries with union representing 420k workers.

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In currency markets. The USD looks set to snap a 2-year winning streak on 2024 Fed rate cut expectations. On the last trading day of 2023, we reviewed the performance of currency markets 2023 vs USD. CNY is ending down 3% vs. USD., while Asian currencies are up 1.5% on average vs. USD. Trading currencies were mixed vs. the USD, with SEK up 3.9%, CHF gaining 9.4%, MXN rallied 12.9%, while the NOK Fell 3.7% and JPY & ZAR tumbled over 8% vs.USD in 2023.

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In commodity markets. In 2023, Oil prices fell 8.75%, Gold prices are up by 10.4%, Silver prices are up by just 0.5%, Copper prices are up by 4.8%, and Natural Gas prices dropped by 38%.

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CAD continues to weaken from its 5-month high of 1.3174 on Wednesday as commodity prices remain under pressure and the USD attempts to firm on year-end trading demand. Domestically, two monthly indices measuring business confidence indicate that confidence levels remain low within the domestic market due to increased costs and reduced consumer demand. In 2023 CAD has posted a modest 2.2% gain vs USD.

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EURCAD edges higher in quiet trading, and year to date, the Euro has advanced 1.3% vs the Loonie.

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EUR holds above 1.1050 after failing to advance beyond 1.1120 on Thursday. The USD recouped some lost ground as year-end trading in thin markets favors the greenback despite lacking market-moving economic data. In 2023 Euro advanced 3.4% vs. USD.

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GBPEUR holds steady on the last trading day of 2023, while year to date, the pound has advanced 1.8% vs. the single currency.

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GBP experienced a volatile two-day trading session, which has seen the pound fluctuate between a 1.2827 high and a low of 1.2697 as traders adjust positions into the last trading day of 2023. In 2023 the pound has rallied 5.2% vs USD.