Markets:
- Gold up $3 to $2043
- US 10-year yields up 9 bps to 3.99%
- WTI crude down 36-cents to $72.35
- S&P 500 down 0.3%
- EUR leads, JPY lags
The ADP and initial jobless claims numbers led to a bid in the US dollar and selloff in bonds. They raised the stakes for tomorrow’s non-farm payrolls report and trimmed market-implied Fed cuts for next year.
The numbers came on the heels of some stronger European inflation numbers that highlight the ‘stickiness’ problem that central bankers will increasingly have to deal with.
In general, it was a choppy market that continues to be dominated by early-year flows. EUR/USD chopped either side of 1.0940-1.0970 while cable traced out a similar pattern in the 1.2675-1.2775 range.
In contrast, USD/JPY was bid strongly for the third day. Some of the talk is surrounding the idea that the BOJ will be slightly more patient in normalizing policy due to the earthquake but that sounds like a stretch. In any case, it was one-way traffic up to 144.85 before some slight sales as US 10s struggled to hold above 4.00%.
Commodity currencies were generally soft and didn’t pick up much even as risk appetite improved mid-day. AUD rallied in Asia and hit 0.6760 only to steadily slide down to 0.6700 as it was the group laggard. The loonie, meanwhile, finishes the day flat ahead of its own jobs report on Friday.
In equities, it has been five straight days of declines for the Nasdaq, something that never happened in 2023. That points to selling pressure on mega-cap tech, likely on profit taking after an incredible year in 2023.
In crypto, eyes remain on the SEC for a potential bitcoin ETF approval. That helped BTC to recover from most of yesterday’s losses in a 3.3% rally.