Market Watch: Yen is leading

Financial and commodity markets analytics

Today, the Japanese yen asserts its dominance over the dollar. The dollar witnessed a decline to approximately JPY149.25, nearing the monthly low of JPY149.20, driven by short covering in the Japanese bond market, reduced US rates, and reports of real money. Notably, all G10 currencies display strength, alongside most emerging market currencies.
The Stoxx 600 reflects a robust performance, surging over 1%, contributing to this week's overall rise of nearly 3%. Firmness persists in US index futures, with the S&P 500 marking a 2.1% increase coming into today, concluding its third consecutive weekly advance. The NASDAQ showcases a 2.3% gain for the week, contributing to an impressive 11% rise in its three-week rally.
Gold benefits from the softer dollar and declining rates, with the yellow metal surpassing $1990, reflecting a weekly gain of approximately 2.7%.
January WTI stabilizes after a notable 4.8% slide observed yesterday.

Asia Pacific
Economic data in the Asia Pacific region reveals four notable points. Firstly, Japan's Q3 economic contraction exceeded expectations at 2.1% annualized, accompanied by a deflator rise from 3.5% to 5.1%. Secondly, China reports weak October lending, despite a notable surge in bond issuance. Thirdly, Australia experiences a slowdown in its labor market, losing nearly 30k full-time jobs in the four months through October. Lastly, South Korea sees a positive development as memory ship exports increase in October for the first time in 16 months.

The greenback faces selling pressure, reaching around JPY149.25 and approaching the monthly low near JPY149.20. BOJ Governor Ueda's comments on the pros and cons of a weak yen generate minimal market reaction.

Recent Eurozone data has not substantially altered the economic outlook. Q3 saw a contraction of 0.1%, reflecting weak economic impulses. Economists cautiously anticipate a stagnant performance this quarter.
The euro achieves a marginal new high, reaching almost $1.09, its highest point since the end of August.

Meanwhile, the UK experiences a dynamic week with economic data revealing somewhat stronger job growth, stable average weekly earnings, softer than expected October CPI (4.6%, down from September's 6.7%), and year-over-year declines in producer prices. Today, an unexpected 0.3% fall in retail sales (volume) is reported, with sterling testing the low before recovering to $1.2430 after stalling slightly above $1.25 earlier in the week.

In the US, October CPI, PPI, and industrial output report softer figures than expected. Headline retail sales see a slightly smaller decline than anticipated, and September's increase is revised slightly higher. Continuing jobless claims rise for the eighth consecutive week, reaching a two-year high, while initial claims hit their highest level since August.

The greenback retraces to around CAD1.3720 today, with a close below CAD1.3700 potentially signaling a weakening technical tone.