The surprise moves by the BOJ earlier in the day kept the Japanese yen supported until the U.S. session while the dollar got back on its feet thanks to higher bond yields.
Crude oil surged past its 2015 high but failed to take the positively-correlated Loonie along with it as Canada reported a downbeat housing starts figure.
- U.S. NFIB Small Business Index down from 107.5 to 104.9 vs. 108.4 consensus
- Canadian housing starts slipped from 252K to 217K vs. 240K forecast
- FOMC member Kashkari: Economic recovery has been “frustratingly slow”
- U.S. JOLTS job openings down to 5.88M in Nov vs. 6.05M estimate
- U.S. Oct JOLTS job openings downgraded from 6.00M to 5.93M
Bonds and stocks hit new records
Wall Street spent another day in the green as equity indices chalked up more record highs while followed suit.
- Dow 30 index is up 102.80 points to 25,385.80 (+0.41%)
- S&P 500 index is up 3.58 points to 2,751.29 (+0.13%)
- Nasdaq is up 6.19 points to 7,163.58 (+0.09%)
The U.S. 10-year note hit 2.546% which is its highest level since March last year while the 3-year note jumped to 2.074% – its highest level since issuance in 2007.
Analysts attributed these gains to positive expectations for the earnings season kicking off on Friday and continuing all the way until next week. To top it off, the good vibes surrounding tax reform are still present.
Risk-on vibes may have also been spurred by the World Bank’s decision to upgrade growth forecasts for Japan, Europe, China, the U.S., and the rest of the world for this year.
Weak U.S. medium-tier data
It wasn’t all good in the ‘hood for Uncle Sam, though, as economic figures actually printed weaker than expected results during the session.
The NFIB Small Business Index for December fell from 107.5 to 104.9 instead of chalking up another improvement to 108.4. Components of the report indicated that fewer companies expect economic conditions to improve, have plans to increase inventories, and intend to ramp up hiring compared to the previous month.
Meanwhile, the JOLTS job openings report for November showed a lower read of 5.88 million versus the estimated 6.05 million figure. To make things worse, the October reading was downgraded from 6.00 million to 5.93 million to reflect a lower level of job opportunities available.
Of course this can also be seen as an indication of a tightening labor market, which often results to higher wage pressures down the line.
Major Market Mover(s):
Yen bulls continued their charge for the rest of the trading day, catching a few more gains on the heels of the BOJ’s adjustments to bond purchases.
GBP/JPY broke below support at 152.50 then slipped to a low of 151.96, EUR/JPY fell to a low of 134.04 before pulling up slightly, AUD/JPY is down to 88.00, and NZD/JPY dropped to a low of 80.46.
The scrilla managed to squeeze out a few gains against its rivals as U.S. equities and bond yields soared higher.
USD/JPY was able to pull up from a low of 112.36 to a high of 112.78, EUR/USD is down to 1.1934, GBP/USD found support at 1.3505 then recovered to 1.3520, and USD/CHF is up to a high of .9842.
Watch Out For:
- 1:30 am GMT: Chinese CPI y/y (increase from 1.7% to 1.9% expected)
- 1:30 am GMT: Chinese PPI y/y (drop from 5.8% to 4.8% expected)