In recent market movements, both the US dollar and interest rates have shown persistent upward trajectories. The greenback has achieved new highs for the year against all G10 currencies except the Canadian dollar. Additionally, the US dollar experienced a marginal peak for the year against the Chinese yuan.
Concurrently, interest rates are on the rise, leading to a market reassessment that has lowered the probability of a Fed rate cut in May from slightly over 90% to about 75% since the weekend.

Equities are exhibiting a mixed performance, with Japanese and Taiwanese markets experiencing gains, while most major markets in the region saw declines. In Europe, the Stoxx 600 is showing a modest increase, while US index futures are trading with a softer bias.

The prevailing higher rates and a strengthened US dollar have contributed to a five-day low in gold prices, nearing $2020.
Despite escalating tensions in the Middle East and an expanding conflict, March WTI is extending its previous week's decline of 7.4%.

Asia Pacific
Japan's final service PMI reached 53.1 (compared to the flash estimate of 52.7 and 51.5 in December), marking a four-month high and the second consecutive monthly improvement.
The US dollar reached a marginal new high for the year, surpassing JPY148.80 earlier today.

Meanwhile, Australia's economy continues to face challenges, with the services PMI spending the second half of 2023 below the 50 boom/bust level, except for September.
Australia reported a December goods trade surplus of A$11 billion, approximately 15% lower than the 2022 average.
The Reserve Bank of Australia's meeting is set to conclude tomorrow, and the selling pressure has driven the Australian dollar to nearly $0.6485, reaching a new low since last November, with near-term risks extending toward $0.6450.

Europe
The final eurozone PMI readings have confirmed a continuing negative trend. The services PMI is at 48.4, a three-month low, remaining below 50 since last July. The composite PMI has also stayed below 50 since last May.
In response, the euro has depreciated to $1.0750 in the European morning.

According to the UK's monthly GDP calculation, the economy contracted by 0.3% in October but grew by 0.3% in November.
December and Q4 GDP reports from the UK are expected next week, and sterling is currently being sold below the bottom of the $1.26-$1.28 trading range that has prevailed since mid-December.

America
Upcoming releases include the final PMI services and composite readings, along with the ISM services report, all of which are expected to align with a narrative of robust economic momentum at the beginning of the year.

The US dollar, having found support in the CAD1.3360-5 range in the second half of the previous week, settled at a six-day high, slightly below the 200-day moving average (~CAD1.3475). Follow-through buying has propelled the greenback to nearly CAD1.3500 today.