Daily market analysis

Forex Market Analysis: Unemployment, Stocks, BOJ Policy, and Oil Trends 7 December 2023

December 8, 2023

CURRENCIES:

Unemployment Claims:

  • Thursday morning brings the release of unemployment claims. Revisions higher in recent reports suggest a potential economic downturn. A significant miss could trigger a market rally, similar to the reaction to the last GDP report.

STOCK MARKET:

  • Market Movement and Speculation:
  • Stocks experienced a decline, and bond yields rose amid speculation that the Bank of Japan might abandon the world’s last negative interest-rate regime.
  • Currency and Yield Impact:
  • The yen strengthened by 1% against the dollar, and Japan’s 10-year yield surged up to 13 basis points, reflecting investor speculation on earlier-than-expected interest rate increases.
  • Global Market Response:
  • European stocks opened lower in response to the Bank of Japan’s potential policy shift.
  • The yield on 10-year US Treasuries increased by seven basis points, while the dollar declined after four consecutive days of gains.
  • Equity Market Performance:
  • The S&P 500 (^GSPC) declined by 0.39%, closing at 4,549.34.
  • Deutsche Bank AG’s Jim Reid noted a significant shift in market sentiment, attributing it to the Bank of Japan’s comments on the potential end of the negative interest rate policy.
  • Bank of Japan’s Policy Impact:
  • Overnight-indexed swaps at one point on Thursday indicated an almost 45% chance of the Bank of Japan terminating the negative interest rate policy this month.
  • Upcoming Economic Data and Federal Reserve Outlook:
  • Traders are closely monitoring Friday’s US jobs report following disappointing private payrolls data.
  • Federal Reserve policymakers are meeting next week for the last time in 2023, with no expected changes in the federal funds rate target but potential impacts on market expectations.
  • Inflation and Central Banks:
  • Prashant Newnaha, a rates strategist at TD Securities, noted a shift in inflation fears, stating that central banks may need to cut to prevent real rates from being too high and restrictive.

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COMMODITIES:

  • Oil Market Stability and OPEC+ Actions:

Oil stabilized after a five-day losing streak, despite OPEC+’s plans to limit production through 2024.

  • Brent crude rose 0.9% to $74.94 a barrel
  • Spot gold rose 0.2% to $2,029.03 an ounce

Styliana Charalambous

Market Analyst

My name is Styliana Charalambous, possessing a professional qualification as a Chartered Certified Accountant and a Bachelor’s Degree in Accounting and Finance. Highly motivated financial analyst with expertise in audit and investment strategies. I have several years of experience in the finance industry, as an audit supervisor at KPMG and the Head of Investment & Market Research in a multinational Fintech company.

Passionate about personal finance, investing, and creating finance content on social media. Lecturer in Accounting & Finance at Canterbury Christ Church University. I am the Founder and CEO of Selfmade Academy, an organization that helps thousands of students worldwide to plan for their financial future and make smart decisions about their money

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