The US$ has reversed the mild gains of the previous session, under pressure against all major counterparts, particularly the Jpy after a Bloomberg report that officials reviewing China’s foreign-exchange holdings have reportedly recommended slowing or halting purchases of U.S. Treasuries. The Jpy has been the strongest currency following the China headline, which added to the news on Monday that the BoJ will cut its JGB purchases, increasing speculation that the BOJ is preparing to trim its stimulus measures. In other markets, the winning streak has ended in the stock markets, with the major indices taking a bit of a breather and ending the day mildly lower. The US 10 year yield briefly spiked to 2.599% although it has since come back a little, currently at 2.55%. WTI remains strong, after a larger than expected inventory drawdown, while the metals spiked higher on the back of the weaker dollar, before giving up some of their gains.
Thursday will begin with the November Australian Retail Sales (exp 0.4%), with the other Asian data being the China New Loans and the Japan Leading Economic Index and Coincident Index. Europe will look to the ECB Monetary Policy Meeting Minutes and the EU Industrial Production, while the US will focus on the December PPI (exp 0.2% mm, 3.0% yy), the weekly Jobless Claims and a speech by the Fed’s Dudley.
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