The significant decline in global equities following the unexpected turnaround in the US yesterday stands out as the key event today. The major markets within the Asia Pacific region experienced a decline exceeding 2% today. Europe’s Stoxx 600 has declined by over 1%. The asset is experiencing a decline for the sixth time in the last seven sessions. Following significant losses earlier, US index futures have shown signs of recovery during the European morning session. The S&P futures are slightly lower, while the Nasdaq futures have decreased by approximately 0.25%. Bonds are experiencing a haven bid, with JGBs showing a rally at the very long-end for the first time in over two weeks. European bond yields decreased by 2-5 basis points. Moody’s is poised to reveal the outcomes of its assessment of Italy’s debt rating today, with the potential for an upgrade on the horizon. The 10-year US Treasury yield stands at approximately 4.06%, reflecting a decrease of a few basis points. This represents a new low for the month.

The dollar exhibits general strength; however, the yen stands out as the strongest currency. This shift is driven by the clear possibility of significant intervention, which has prompted some, though limited, short covering activities. The New Zealand dollar ranks as the second strongest within the G10 currencies, appreciating approximately 0.2%. The RBNZ is anticipated to lower rates in the upcoming week. Most emerging market currencies are experiencing declines, with the Indian rupee down approximately 0.80% and the South African rand down around 0.60%. Gold is currently not attracting a safe haven bid and has declined to a three-day low just under $4023. It is currently positioned near the 20-day average in Europe at approximately $4039. January WTI has reached a selling price of nearly $57.40, marking its lowest point in approximately 4.5 weeks.

The Dollar Index reached the month’s peak yesterday (~100.35), marking the highest level since late May. It has closed above the 200-day moving average for the second consecutive session, marking the first occurrence since early March. The momentum indicators are experiencing an upward pull, driven by the fourth advance observed in the last five sessions. The price is primarily consolidating within the range of 100.00 to nearly 100.25. The subsequent significant technical level is approximately 101.55, representing the (38.2%) retracement of the decline observed this year. The US reported yesterday that nominal average hourly earnings increased by 0.2% in September, maintaining a consistent year-over-year rate of 3.8%. Today, the Bureau of Labor Statistics will release data on real earnings, and an inflation rate will be calculated through interpolation. In August, the disparity between average hourly earnings and real earnings stood at 3.0%, while the Consumer Price Index for August recorded a rate of 2.9%. The preliminary November PMI is anticipated to show a decline; however, last month the composite PMI stood at 54.6, aligning with the second highest level of the year and slightly exceeding the Q3 average. The average for the year up to October stands at 53.3. The Federal Reserve officials today (Williams, Barr, Jefferson, and Logan) have all made recent statements, and their perspectives are widely recognized. While Logan is the sole speaker not participating in the vote this year, any remarks regarding the balance sheet will be significant.

The euro enters today with a five-day losing streak in tow. It approached $1.15 yesterday and it held, possibly supported by larger options positioned at that level, with another set for approximately 1.6 billion euros expiring today. Additionally, there is another 1.25 billion euros at $1.1535 that will also roll off today. The price has been constrained just above $1.1550 today, and following the lackluster PMI, it has been pushed down to nearly $1.1510. A breach of $1.1500 may trigger a shift towards the $1.1470-80 range. The preliminary PMI for the eurozone in November has been reported. The manufacturing PMI decreased to 49.7, down from 50.0. One year prior, the figure stood at 45.2. The services PMI increased slightly to 53.1, up from the previous 53.0. In November, it decreased to 49.5, down from 51.6. The composite decreased to 52.4 from 52.5, marking the highest level since May 2023. It marked the first instance since May that there was no improvement. In a separate analysis, EMU negotiated wages experienced a modest increase of 1.87% in Q3, a decline from just over 4% in Q2. The increase recorded is the smallest since the third quarter of 2021.

The Australian dollar approached it on an intraday basis on Wednesday; however, it concluded below the 200-day moving average for the first time since late May, trading at nearly $0.6435 yesterday and dipping slightly below $0.6425 today. Proximity to support is identified near $0.6400, aligning with the (38.2%) retracement of the current year’s upward movement. Australia’s preliminary composite PMI increased to 52.6, up from 52.1. The average stood at 53.9 in Q3, an increase from 51.0 in Q2 and 50.4 in Q3 24. The manufacturing PMI increased to 51.6, up from 49.7 in October. It reached a high of 53.0 in August and was recorded at 47.3 in October 2024. The services PMI reached its highest point in August at 55.8 and increased in November to 52.7, up from 52.5. The market exhibited a characteristic lack of response.