The USD is mostly little changed to start the North American session. Looking at the changes vs the USD, the.
EURUSD, GBPUSD and USDCHF are all within a pip or so of unchanged on the day. The USDJPY is higher by 0.22% as the market continues its move to the upside after rebounding on Friday and Monday. That corrective move is continuing. The AUDUSD is higher (lower USD) by 0.22% after the RBA rate decision.
In the video above, I kickstart the North American session with the technical look at the EURUSD, USDJPY and GBPUSD. What levels are in play and why for risk, targets. What are the main bias's going into the day?
The AUDUSD is higher after the RBA kept rates unchanged with the RBA Governor Michele Bullock commenting that the Board did not explicitly consider a rate hike at the latest meeting but actively discussed scenarios in which tightening might be required, particularly if inflation proves persistent. She stressed caution with monthly CPI data and said upcoming inflation and labor-market releases—especially the quarterly inflation report—will be critical for the February meeting, the next opportunity after the RBA’s summer break. While she would not put a timeline or probability on future moves, Bullock emphasized that rate cuts are not on the horizon, downside risks have not abated, and upside inflation risks are now greater. The Board remains uncomfortable with current inflation levels and will react only to sustained data trends, not one-off numbers. Her comments put February “in play,” with markets viewing it as a potential staging point for signaling a possible March rate hike, now priced with roughly 45% probability. AUDUSD jumped on the remarks.
Overnight, BoJ Governor Kazuo Ueda said the Bank is watching market movements closely, particularly the rapid rise in long-term interest rates, and signaled that it stands ready to increase JGB purchases if yields move abruptly. He emphasized that real interest rates remain very low and reiterated that any adjustment to monetary easing will depend on economic and price trends aligning with the BoJ’s forecasts. Ueda noted growing confidence in the BoJ’s policy outlook, while continuing to gather information on companies’ wage intentions for next year. He added that Japan’s tightening labor market is putting upward pressure on wages and prices, and stressed that calibrating the degree of monetary policy is essential for maintaining financial-market stability and achieving price stability.
He then added that he expects Japan’s economy to return to positive growth in Q4 and continue strengthening, supported by steady wage and price momentum and the stabilizing effects of automakers keeping export prices lower. He noted that real interest rates remain very low and stressed that the Bank will adjust the degree of monetary easing only if economic and price trends move in line with forecasts. Ueda highlighted that the outlook is gradually becoming more certain, but the BoJ is closely watching food inflation and yen weakness in case they alter inflation expectations. He also emphasized the need to monitor companies’ wage plans for next year and acknowledged that a tightening labor market is adding upward pressure on wages and prices. While he avoided commenting on specific rate moves, he said the Bank is paying close attention to the recent rapid rise in long-term yields and stands ready to increase JGB purchases if needed to counter abrupt moves. Ueda reiterated that exchange rates should follow fundamentals, and understanding how FX impacts the inflation outlook remains a “very important question” for policy.
Ueda’s comments lean moderately hawkish, though not aggressively ahead of the December 19 rate decision.
The US debt market is mixed to start the US session:
- 2-year yield 3.583%, unchanged
- 5 year yield 3.749%, -0.2 basis points
- 10 year yield 4.164%, -0.8 basis points
- 30 year yield 4.799%, -1.6 basis points
The snapshot of the US stock market shows little change
- Dow industrial average up 12.68 points
- S&P index up 4.49 points
- NASDAQ index down -2.2 points
Pres. Trump let XI know that Nvidia H200 chips would be available to China, but China may still limit the demand. Nvidia's Huang warned that if you limit the supply, they will move away from the use. That is what may be happening.
In other markets:
- Crude oil is up $0.11 said $58.99
- Gold is up $16.97 or 0.41% at $4207.61
- Silver is up $0.70 or 1.21% and $58.85
- Bitcoin is little changed and $90,512
The weekly ADP metrics will be released at 8:15 AM ET. The last weekly release showed a shedding of -13.5K.
