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Markets Update: APAC Mixed, JPY Weakens on BoJ, US Rate Cut Talk Emerges, Red Sea Tensions Simmer.
Economic Calendar
Global Markets Roundup: 19 Dec 2023
Asia-Pacific equities ended the session mixed after a slow start, lacking direction from quiet news flow and the Bank of Japan's (BoJ) unchanged monetary policy. The Japanese yen (JPY) weakened against major currencies after the BoJ unanimously kept its interest rates and Yield Curve Control (YCC) unchanged. While acknowledging recent inflation cooling, the bank maintained its forward guidance, leaving investors to wait for more hawkish signals. In the US, San Francisco Fed President Mary Daly, a 2024 voter, sparked controversy by suggesting the Federal Reserve (Fed) could begin considering rate cuts next year due to improved inflation this year. This unexpected view contrasts with the current narrative of continued tightening, and further Fed commentary will be closely watched. Geopolitical tensions simmered as the US and its allies reportedly agreed to form a Red Sea naval task force. Meanwhile, Yemeni Houthi officials warned they are prepared to confront any potential coalition in the region.
The Australian ASX 200 kicked off with gains fueled by its gold and energy sectors, unfazed by the release of the RBA minutes. The Nikkei 225 started subdued but surged after the BoJ unanimously kept rates on hold, providing a predictable end to the year's monetary policy decisions. However, the Hang Seng and Shanghai Composite indexes remained in the red throughout the session. The Hang Seng continued to grapple with its beleaguered property sector, while the Shanghai Comp found limited relief from another sizeable liquidity injection by the PBoC. European equity futures Euro Stoxx 50 signaled a slightly firmer open, suggesting a potential rebound after Monday's decline.
FX Yen tanks: USD/JPY spikes to 143.78 after BOJ maintains policy, sending the Yen lower as investors seek higher returns. DXY strengthens: Dollar Index benefits from Yen weakness, reaching session highs of 102.63 despite earlier tight range. EUR/USD, GBP/USD muted: Both pairs confined to narrow ranges overnight. AUD and NZD edge higher: AUD gains modestly following RBA minutes hinting at potential pause in rate hikes.
FIXED INCOME UST futures flat:Â Yields hold steady after previous day's sell-off. Bund futures pull back:Â Gains fade after initial rise following BOJ decision. JGB futures surge:Â Jump initially then retreat amid reports of front-loaded reduction in 20-year bonds due to weak demand.
COMMODITIES Crude oil cools: Oil prices take a breather after strong rally, awaiting fresh catalysts. Gold pressured: Weakens slightly with the Dollar but finds support near key moving average. Copper flat: Base metal struggles to break above resistance level.
Looking ahead, key events include:
Eurozone Harmonized Index of Consumer Prices (final)
US Building Permits and Housing Starts
Canadian Consumer Price Index
Japanese Trade Balance
National Bank of Hungary monetary policy announcement
Fed Presidents Raphael Bostic and Austan Goolsbee speeches
Bank of England Deputy Governor Jon Cunliffe speech
ECB Executive Board Member Isabel Schnabel and Vice President Luis de Guindos speeches
UK Supply
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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