Summary:
Global share markets edged lower on Friday as most U.S. megacap stocks slipped, while the dollar soared against the yen after Reuters reported the BOJ is leaning toward keeping its dovish monetary policy next week.
Global share markets edged lower on Friday as most U.S. megacap stocks slipped, while the dollar soared against the yen after Reuters reported the BOJ is leaning toward keeping its dovish monetary policy next week.
Gold prices fell as the dollar rebounded to its highest in more than a week. Oil prices edged higher, buoyed by evidence of tightening supplies and economic stimulus in slow-recovering China.
More investors are now embracing the probability of a soft landing, with many companies well financed at lower interest rates so that higher rates - the Fed's terminal rate is expected to rise to 5.25%-5.5% next week - will not cause a credit crunch as in the past.
Commodities
Oil prices rose nearly 2% to record a fourth consecutive weekly gain, buoyed by growing evidence of supply shortages in the coming months and rising tensions between Russia and Ukraine that could further hit supplies.
Meanwhile, U.S. energy firms last week reduced the number of oil rigs by seven, their biggest cut since early June, energy services firm Baker Hughes said. At 530, the U.S. oil rig count, an early indicator of future output, is at its lowest since March 2022.
UAE Energy Minister Suhail al-Mazrouei told Reuters that current actions by OPEC+ to support the oil market were sufficient for now and the group was "only a phone call away" if any further stEPS were needed.
Forex
BOJ policymakers prefer to scrutinize more data to ensure wages and inflation keep rising before changing the policy, five sources familiar with the matter said. The report added there was no consensus within the central bank and the decision could still be a close call.
‘All expectations are for them to keep yield curve control as is and no changes to rates, but maybe a little upgrade on their inflation outlook,’ said Edward Moya, senior market analyst at OANDA in New York.
However, ‘the chances that we could get a surprise should remain on the table,’ Moya added. ‘The BOJ is potentially going to be a major market-moving event because time’s running out on the BOJ to really set up a policy shift.’
Fed funds futures traders are pricing in 33 basis points of additional tightening this year with rates expected to peak at 5.41% in November. The pound fell for a sixth day versus the dollar - its longest stretch of daily losses since last September.
Sterling remained flat amid weak UK economic data and holiday trading, with a bearish outlook, though market movement remains limited.
2024-12-26
The Australian dollar stays near a two-year low despite China's stimulus plans, with strong fiscal support and robust iron ore demand offering relief.
2024-12-25
The euro is near a two-year low, with weak eurozone growth, falling German confidence, and the ECB cautious on easing despite inflation stabilization.
2024-12-24
