Sunset Market Commentary – Action Forex

Markets

A looming US government shutdown starting as soon as tonight is capturing market and media attention. Policymakers had agreed on a bipartisan deal to fund spending through March 24. Enter Trump and Musk. Both urged Republicans to kill the deal, a.o. because it didn’t raise the debt ceiling. Trump otherwise has to address the issue during his own tenure. A bill that did contain such a provision was also shot down a bit later by the Republican-led House as Democrats were opposed and 38 Republicans defected. While we think the economic impact of a government shutdown is contained, it’s an unwelcome layer of uncertainty for the likes of stock markets at the eve of holiday-thinned end-of-year trading. WS already lost up to 3.5% post-Fed and opened another 1% (Nasdaq) lower today. Core bonds gained with UST’s outperforming Bunds. US yields ease between 1.8 and 6.7 bps with the move lower compounded by a slight miss in the November PCE deflators. The headline index picked up by 0.1% m/m to 2.4% from 2.3% vs 2.5% expected. The core gauge missed the bar by a similar margin, adding 0.1% m/m to 2.8%. Adding to the momentum, personal income and spending also printed a sub-consensus 0.3% and 0.4% m/m. Some Fed members came to the fore in the wake of Wednesday’s policy meeting. SF’s Daly said the economy is in a good place and is very comfortable with the projection of two rate cuts next year. She added that the rate decision two days ago was a close call. Vice chair Williams welcomed the “sizeable movement down in inflation over the past two years” but stressed the ongoing need to be data dependent in adjusting policy. He revealed himself as being one of the group that took into account some of Trump’s expected policies on trade and immigration. Cleveland’s Hammack dissented on Wednesday, calling for a status quo. She explained today she preferred to see more progress on prices before cutting again. Rates should stay high enough to modestly restrict activity “for some time”. JPY and CHF outperform against the backdrop of risk aversion. That said, the euro does gain against USD. EUR/USD rises towards 1.04. Sterling erased earlier losses following disappointing retail sales to trade unchanged at 0.828.

News & Views

The Czech National Bank kept its policy rate unchanged at 4% yesterday in a 5-2 vote, pausing the rate cut cycle which started in December of last year. The dovish wing of the board perceives stronger anti-inflationary risks associated with the weaker performance of the global and German economies. The hawkish wing referred to increased inflation momentum in services and faster wage growth. Governor Michl said that rates still remain at restrictive levels and that the board will decide at its next meetings whether to cut them or leave them unchanged. We err on the side of two more 25 bps moves in February and March. Meeting minutes, new inflation numbers (Jan 13), the preliminary Q4 GDP estimate (Jan 31) and CNB communication should provide more clarity from the beginning of next year. EUR/CZK holds withing the trading place between roughly 25 and 25.50 in place since the start of July.

The EC and Switzerland confirmed the completion of negotiations of a broad package of agreements that aim to deepen and expand the EU-Switzerland relationship. It includes an update of five agreements which already give Switzerland access to the EU internal market – air transport, land transport, the free movement of persons, conformity assessment and trade in agricultural products. Each agreement will reflect the evolution of EU legislation in the area concerned and will ensure it is updated dynamically. The agreements will include dispute resolution provisions and State aid disciplines will apply where relevant.

Related Posts

Court remands forex trader over alleged fraud of US$300,000 and GH¢10.4 million

Court remands forex trader over alleged fraud of US$300,000 and GH¢10.4 million

Có thể bạn quan tâm FX option expiries for 20 December 10am New York cut South Korea expands foreign banks’ access to FX market Euro Languishes Near…

AUD/USD Weekly Forecast: Neutral Bias Amid Subtle Policy Shifts

AUD/USD Weekly Forecast: Neutral Bias Amid Subtle Policy Shifts

Có thể bạn quan tâm US Dollar rally pauses ahead of Manufacturing PMI data EUR/USD Analysis Today 31/12: Ends 2024 Weak (Chart) China’s new forex rules require…

USD/CAD Weekly Forecast: Buyers Lead as Fed to Ease Gradually

USD/CAD Weekly Forecast: Buyers Lead as Fed to Ease Gradually

Có thể bạn quan tâm Euro Stabilizes as Spain Posts Strong Job Data Silver (XAG/USD) Climbs to $29.36: Key Trends and 2025 Forecast Gold Growth Halted But…

Gold Growth Halted But With Upside Risks

Gold Growth Halted But With Upside Risks

Có thể bạn quan tâm Choppy action continues as markets remain in holiday mood Bangkok Post – Forex-3D scammers get nearly 50,000 years each FXCess Launches A…

Private sector investment faces challenges despite positive forex trends

Private sector investment faces challenges despite positive forex trends

Có thể bạn quan tâm Canadian Dollar Eyes GDP – Action Forex USD/CAD Forecast: Loonie Faces Stormy Skies Ahead Bitcoin at Key Support (Chart) FXCess Launches A…

Gold Price Forecast: Can Gold Break $2,700 Resistance Coming Week?

Gold Price Forecast: Can Gold Break $2,700 Resistance Coming Week?

Có thể bạn quan tâm China Tightens Crypto Oversight with New Foreign Exchange Rules: Report Dax Forecast Today 16/12: Builds Pressure (Video) China Enforces Stricter Crypto Forex…

Leave a Reply

Your email address will not be published. Required fields are marked *