Today marks the final trading day of the year. As is customary, it’s a period sandwiched between the Christmas holiday and the New Year when active trading is challenging. This week, we have seen a trend of a weaker US dollar and a stronger yen. Yesterday, the dollar was bought back around the London Fixing, but there hasn’t been a significant change in the overall trend. Expectations for an early rate cut by the US Federal Reserve in the coming year remain strong in the market.
On the other hand, it seems that expectations for the Bank of Japan to lift negative interest rates are becoming more standardized. However, Governor Kuroda has repeatedly made remarks that seem to imply uncertainty about the timing, which has, in fact, become a source of market disturbance. It’s advisable to be prepared for nervous price movements, especially in USD/JPY, in the early part of the coming year.
Today, fitting for year-end, there are hardly any scheduled events. In terms of economic indicators, we have the UK Nationwide House Price Index (December), KOF Swiss Leading Indicator (December), South African Trade Balance (November), Brazilian Employment Statistics (November), and the US Chicago Purchasing Managers’ Index (PMI) (December) among others. The Chicago PMI is expected to decline from the previous 55.8 to 50.0.
Regarding speaking events, there are no scheduled speeches by financial authorities. However, there might be reports, such as interviews, similar to yesterday’s statement by Harald Holzmann, Governor of the Austrian Central Bank. The US bond market will have shortened trading hours. The latter half of the NY market could be challenging to gauge.
I had expected increased cryptocurrency buying towards the year-end, but currently, profit-taking selling pressure seems to be prevailing. However, the US Securities and Exchange Commission (SEC) has a deadline of January 10th to determine the approval or disapproval of Bitcoin physically-backed ETF applications. It is anticipated that cryptocurrency buying interest will persist as the deadline approaches.