NIKKEI Analysis: Japanese Stock Market Outlook

In the first half of 2023, the Japanese stock market was dominated by bullish sentiment due to (still) negative interest rates — while the rest of the G7 countries raised their rates to combat inflation.

Yen Pushes Higher, GDP Softer than Expected

The Japanese yen continues to show strong swings. In the European session, USD/JPY is trading at 143.94, down 0.16%. Earlier, the yen gained as much as 1.1% but couldn’t consolidate and surrendered almost all of these gains.

Euro Flat as German Inflation Declines

The euro has edged lower on Friday. In the European session, EUR/USD is trading at 1.0774, down 0.17%. The euro has struggled lately against the US dollar and has slipped 2.2% since November 28.

Australian Dollar on a Roller-Coaster, US NFP Looms

It has been a roller-coaster week for the Australian dollar. After declining 1.88% early in the week, the Aussie rebounded on Thursday and gained 0.80%. Today’s US nonfarm payrolls report could result in further volatility from the Australian dollar in today’s North American session.

US: Job Growth Rebounds in November, Unemployment Rate Ticks Lower

Non-farm payroll employment rose by 199k in November, slightly ahead of expectations calling for a gain of 185k. Employment figures for September were revised lower by 35k, while October numbers were unchanged. 

Sunset Market Commentary

The diptych of today’s US payrolls and next Tuesday’s US November CPI are the ultimate input for the Fed policy decision next Wednesday. Even as central bankers in their toolbox switched forward guidance for data dependency, the new projections/dots still will be key when investors make up their mind on the Fed’s intentions in 2024. Markets are sure that a final additional hike guided in the September SEP is now without any ground.

Week Ahead – Will the Central Bank Bonanza Kill the Festive Joy or Fuel It?

The Federal Reserve is almost certain to keep its policy rate unchanged on Wednesday as the US economy finally appears to be losing some steam and inflation is coming under control. Chair Powell has set the bar high for raising rates again, while investors have gone a step further and completely priced out any chance of additional tightening.

FX Year Ahead 2024: As the Race to Cut Begins, Which Currency Will Come Out the Winner?

After two consecutive years of gains, a correction in the mighty US dollar was well overdue in 2023. The greenback started the year being taunted by the persistent expectations of a dovish pivot by the Federal Reserve. But those bearish forecasts have not fully materialized as the dollar is on track to finish the year virtually unchanged. Even now, when there is a high probability that a Fed rate cut is just months away, plotting a downwards path may not be very straightforward for the bears.

Fed Preview: Low-Key Optimism

We do not anticipate the Fed to make changes to its monetary policy in the December meeting, in line with broad consensus and market expectations.

Bank of England Preview

We expect the Bank of England (BoE) to keep the Bank Rate unchanged at 5.25% on 14 December. This is in line with current market pricing. We expect the vote split to be 6-3 with Greene, Haskel and Mann once again to vote for a 25bp hike and the rest of the MPC to vote for an unchanged decision. Note, this meeting will not include updated projections nor a press conference following the release of the statement.