The US dollar is predominantly exhibiting a narrow mix against the G10 currencies. Sterling stands out as the exception, currently down approximately 0.35% following the softer-than-anticipated CPI, which has ignited speculation regarding a potential rate cut. The 10-year Gilt yield has decreased by seven basis points, whereas the majority of European bond yields are showing slight variations, with changes of less than one basis point. Most emerging market currencies are exhibiting weakness. The Dollar Index has experienced an increase for the fourth consecutive session. The ongoing volatility in gold and rare earth equities persists today. Gold, having reached a record high slightly above $4381 on Monday, is now nearing the $4000 mark today, testing the 20-day moving average (~$4019) for the first time in two months. The asset has shown recovery and is currently trading around $4070 in the European morning session, following a close near $4125 yesterday.
Equities are predominantly down, although the Asia-Pacific markets displayed a mixed performance. The performance of Japanese indices was varied, whereas the markets in China, Hong Kong, and Taiwan experienced declines. South Korea and India experienced gains, whereas profit-taking in Australia led to a decline in the ASX 200 from its record high. Europe’s Stoxx 600 has declined for the first time this week, reversing yesterday’s 0.20% gain. US index futures are exhibiting a slight divergence. The US 10-year Treasury yield has decreased to below 3.96%. Last Friday’s low was approximately 3.93%.
On Monday, December WTI reached a low just under $56 and is currently trading at a four-day high, slightly exceeding $58. The Dollar Index is experiencing an upward trend for the fourth consecutive session today. The asset has reached the (61.8%) retracement level of the decline from the monthly peak observed on October 9. The subsequent proximate target is identified at approximately 99.20.
The prevailing sentiment in the event markets suggests that the likelihood of the US shutdown exceeding the record of 35 days established during President Trump’s first term is quite high. Today, the present one becomes the second longest. An off-ramp remains elusive, although reports indicate that Republican leaders are discreetly engaging in discussions with their senior ranks and White House officials regarding the potential structuring of an extension for essential Affordable Care insurance subsidies before the year’s end.