The USD is weak, oil prices ease, equity markets are mixed, and US yields rise as traders focus on 2024 rate cuts in the US. Currency markets test 5-month highs vs. USD, equity markets hovered around near 2-year highs, and bonds are set for their best 2-month rally on record as investors position themselves for Fed rate cuts in 2024. Elsewhere, gold prices retest near 2-year highs, oil prices weaken as Red Sea shipping disruptions start to ease, and bitcoin inched higher through $43k amid renewed speculation that the US SEC is getting closer to approving EFT products. Intraday markets will be focused on US Initial Jobless Claims and Pending Home Sales to help provide direction to currency markets today.
In other news. Washington proposes a G7 plan to confiscate $300 billion in Russian assets. Spain extends windfall tax on banks and energy companies. China's Xiaomi unveils its first electric car and plans to become a top automaker. Apple can temporarily sell smartwatches after US appeals court win. Russia warns Japan over providing Patriot air defense systems to Ukraine. Bulk carrier hits mine in Black Sea, two people injured, Ukraine says.
In currency markets. The USD remains under pressure as investors increase bets that the Fed will ease interest rates in 2024. The South African rand weakens in quiet markets ahead of local economic releases on Friday. Commodity currencies extend gains on the prospect of lower US interest rates. CNY rallies 0.6%, while Asian currencies strengthen 0.35% on average vs USD. Trading currencies are mixed, with ZAR tumbling 1.2%, NOK slipping 0.1%, AUD & USD flat, SEK firming 0.15%, MXN gaining 0.35%, and CHF & JPY rallying 0.75% vs USD.
In commodity markets. Oil prices weakened by 1.5%, Natural Gas prices slipped by 0.1%, Gold and Silver prices dipped by 0.3%, Copper prices weakened by 0.9%, Wheat prices are up by 0.1%, and Soybean prices eased by 0.2%.
CAD prices slipped off 5-month highs despite continuing USD weakness, as easing pricing across the commodity markets takes some of the shine off the loonie. With no fresh Canadian economic data released this week, investors will look to the US jobs data to help provide intraday direction to the loonie.
EURCAD strengthens as weakening commodity prices pressure the CAD in early trading.
EUR breaches 1.1100 on the back of a weakening USD. Euro extends to a multi-month high as the uptrend is driven by the prospect of an increasingly dovish Fed stance on US interest rates in 2024. The focus will be on the US's initial Jobless claims today and, on Friday, Spain's preliminary inflation figures for December to help provide direction for the Euro this week.
GBPEUR weakens to a fresh 5-week low, down nearly 1% as investors return to support the Euro.
GBP tests 1.2800 amid continuing USD weakness. The pound briefly breached 1.2800 in early trading due to persistent USD weakness on increasing dovish bets that the Fed will ease interest rates in 2024. Markets remain thin, with many investors taking an extended Christmas break. Intraday will focus on US data releases to provide some intraday direction to currency markets today.
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