Dow Hits its 17th Record Close since the Election, US Bond Yield Rise

On rather low volume, thanks to the re-holiday liquidity drain, the financial markets in the United States moved higher as the Dow Jones Industrial Average continues to march towards 20,000.

At session highs the Dow Jones was within 13 point of hitting that milestone before it closed up 90 points after hitting a new intraday high. Financial stocks like Goldman Sachs helped to buoy to exchange. The Dow is now 25 point away from 20,000.

Global stocks and currencies are trading quiet on Wednesday morning as markets await the holidays. Oil edge higher on expected oil inventory to trade $53.72 per barrel, up 0.81%, natural gas also rise 2.88% amid inventory report and political concerns over gas supply.

However, we should put this move into some perspective. It is not about hitting that above mentioned milestone as we have had a strong rally since the election. Since November 8 the Dow has surged nearly eight percent and notched 17 record closes.

The global benchmark, the S&P 500 was up 0.3 percent as financial plays rose one percent. The tech heavy Nasdaq Composite gained 0.5 percent after hitting a new all-time high earlier in the day.

One of the biggest reasons for the markets to be moving higher, despite geopolitical tensions like the terror attack in Berlin, is the lack of economic data and the light volume before the holiday break. The lack of economic news has given the bulls the reigns to move the markets higher. As the week continues into Christmas and next week into the New Year, investors will be hard pressed to find a catalyst. There is not a lot that can end the current bull market.

Looking at the US Treasuries and currency markets, the selloff in the 10 year note continued pushing the yield towards 2.5597 percent. The shorter term two year note yield rose to 1.2326 percent.

The Treasury yields, in turn, held to support the US Dollar. The Dollar index rose 0.12 percent during the US trading session. The EUR/USD Forex market is trading at 1.039 and the yen was fetching 117.80 against the Dollar.

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Trump Stock Market Rally Continues, US Dollar is on Fire

On Monday, US financial markets drifted higher on low volume trade. Traders bought some recently less-favored sectors and some post-election play lagged as the Electoral College confirmed Donald Trump would be the next President of the United States. US futures continue to rise on Tuesday morning along with most global indices.

The US Dollar strength continues on Tuesday morning as the greenback climbs versus most currencies. US dollar index trades at 103.34. USD/JPY climbed to 118.70, 0.90% after BoJ left interest rate unchanged. EUR/USD is trading below 1.04.

What we saw was a technicality of overflow in equities. People picked up plays that had been lagging and overall gains on the markets have been coming smaller and smaller. Telecommunications, which are the second best performer on the S&P 500 since the election led gainers rising 1.1 percent. This was followed by real estate, industrials and technology stocks.

Both real estate and technology plays are two of the biggest laggards since Election Day. Financial stocks are the top performer and have been clinging on to slight gains while energy stocks have been the third worst performer since the election and moved lower on Monday.

There is still a lot of consolidation in the equity markets and the path of least resistance is higher. This means we could still see the S&P 500 tack on some solid gains this week into the New Year.

As far as technology plays were concerned, the Nasdaq 100 hit a new all-time intraday high while all three of the major indices came within three quarters of percent of their record highs.

Turning to economic news, the flash Markit PMI for December printed at 53.4. This was down from the 54.6 print for the month of November.

Federal Reserve Board Chair Janet Yellen said that the US had its strongest job market in a decade. There are also signs that wage growth is starting to pick up. These comments came at a speech she was giving at the University of Baltimore commencement ceremony.

Last week, the Federal Reserve raised its Fed Funds rate for the second time in a decade. They also surprised the markets by steepening their rate hike path in 2017 to three rate hikes. Investors were expecting two.

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Gold Moves Treads Water ahead of the FOMC

The price of gold seems to have found some short term support and is moving up from the month low near $1,151.07 per ounce. The rebound, albeit a small and unconvincing one which is barely treading water, comes just before this Wednesday’s Federal Open Market Committee (FOMC) monetary policy decision. This announcement will directly influence, not only the price of the yellow metal, but the US Dollar.

Right now, if you look at the below daily MT 4 chart, the price of gold remains in a short-term down trend. Price action is well below the 200 day moving average as well as the 10 period exponential moving average (EMA) which is near 1,173.55. Should Dollar strengthen, then gold will continue to move lower. Should the US Dollar weaken, then gold should move higher and towards the 200 day moving average at $1,276.30 per ounce.

Gold Moves Treads Water ahead of the FOMC

This morning, gold was little changed after inching higher yesterday. The FOMC is beginning their two day policy meeting later in the day.

Spot gold was steady at $1,162.40 an ounce at 2:40 am GMT, after moving 0.4 percent higher yesterday. US gold futures were down 0.1 percent, at 2:40 am GMT, to $1,165.00 per ounce. The price of spot gold has bounced up from a 10 month low of $1,151.35 per ounce, reached in yesterday’s session. The price of spot tracked US Treasuries which came off their highs as the US Dollar fell.

Gold is very sensitive interest rates. Rates lift the opportunity cost of holding non-yielding assets like the yellow metal and with the increasing likelihood of the Fed raising interest rates at their FOMC meeting, investors continue to move out of the bullion.

The Fed is likely to raise rates for the first time this year from 0.25 percent to 0.50 percent. This would be a 25 basis point increase.

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Macau Limits ATM Withdrawals

Asian markets were mixed this morning in Asian and Pacific Rim trade despite the ongoing post-election rally in US stocks. There is regional turmoil as South Korea’s president could be impeached.

In South Korea, the Kospi Composite Index fell half a percentage point as investors are waiting on the fate of the country’s sitting President Park Geun-hye who is facing a historic vote of impeachment by the country’s parliament. Park is embattled with an influence peddling scandal and investors are expecting the parliament to impeach. Some members of Park’s Saenuri Party are onboard to impeach as well. Even if the parliament votes to impeach, it could take up to 180 days to review in front of the Constitutional Court before new elections. This could mean more political uncertainty in the short term for the country.

As of 10:30 am HK time the Korean won was trading at 1.167.20 against the US Dollar. It closed at 1,161.3 the session before.

In China, the newspaper South China Post reported that Macau will be slashing the withdrawal limit for China UnionPay ATM card members. The withdrawal limit will be cut from 10,000 to 5,000 Macanese patacas ($625). This will go into effect midnight Saturday. This comes after a report that in one month alone, 10 billon patacas were made with UnionPay withdrawals.

In Europe, the European Central Bank surprised the financial markets on Thursday by announcing it was going to extend its current quantitative easing program until April 2017. However, the ECB was going to reduce the size of its bond purchases from €80 billion per month to €60 billion. The program was due to conclude in March 2017 and investors thought the central bank would extend the QE program until at least December 2017.

After the announcement, the euro came under pressure. The EUR/USD Forex market fell from a level near $1.08 to $1.059 this morning in Asian trade hours.

Asia Follows the Rally on Wall Street

This morning in Asia, as well as the Pacific Rim, markets were mostly upbeat as they followed the rally on Wall Street overnight. Once again, US financial markets hit record highs. Investors were also buoyed by data out of China as trade data came in better-than expected.

In Australia, the S&P ASX 200 jumped over 1.2 percent. Subsectors like materials was up 1.5 percent and financials rose 1.7 percent. This morning Australia reported their trade balance for October. The deficit came in at A$1.541 billion, which was wider than the expected A$800 million forecasted.

In Japan, the benchmark Nikkei 225 was up more than one percent at one point, but a stronger yen saw the market pair some gains closing up 0.85 percent. As of 12:10 am HK time, the USD/JPY Forex market was trading at 113.30. The yen was closer to ¥114 yesterday.

Japan also released economic data this morning was their third quarter gross domestic product (GDP) was revised down from 2.2 percent to 1.3 percent (annually). Economist expected the Q3 GDP to be revised up to 2.4 percent.

The largest data release his morning came out of regional powerhouse, China. They released their dollar denominated trade data this morning. Imports grew at their fastest annual pace since September 2013 at 6.7 percent. Exports were up 0.1 percent. Analysts expected November exports to fall 5 percent and imports to fall 6.2 percent for the month of November.

Looking at today’s broader Forex markets, the European Central Bank (ECB) is scheduled to release their monetary policy decision. They are expected to announce a six month extension of their QE bond buying program. This morning, the EUR/USD Forex market was, as of 12:10 HK time, trading at 1.0775. Last week the euro was trading at $1.065.

The US Dollar index, which measures the Dollar against a basket of other currencies up trading at 100.03 at 12:10 HK time. The Dollar was closer to $101 last week at this time.

The Yen Holds Steady, Shares of SoftBank Soar

Today’s trading in Asia saw markets trade mostly higher. Australia struggled after a weak gross domestic product (GDP) report. Shares in Japan’s benchmark stock exchanged moved higher after US President-elect Donald Trump deal with SoftBank to invest in the US economy and create new jobs.

In Australia, the ASX 200 was up about 0.91 percent. The benchmark saw broad base gains through most of its sectors, except energy which fell 0.7 percent. Australia, this morning reported that their third quarter GDP grew, quarter on quarter, at 0.5 percent and 1.8 percent on the year. This was below the 2.5 percent growth rate economists had expected. The GDP for the second quarter was revised up to 0.6 percent from the original 0.5 percent print. The third quarter decline was the biggest since 2008 and could change the Australian central bank’s outlook on monetary policy going into the New Year.

After the news came out the AUD/USD Forex market lost 0.5 percent to trade at 0.7420 as of 9:00 am GMT time.

The Nikkei 225, Japan’s benchmark, was higher this morning as shares of SoftBank jumped 3.6 percent. The bank reached an agreement with President-elect Donald Trump to invest $50 billion in the United States and help create 50,000 jobs over the next four years. The paperwork from Trump’s meeting also featured the logo of Foxconn, also known as Hon Hai. They supply Apple’s iPhones. It is not clear as what their role is at this time but shares of this Taiwanese listed firm were up over 0.8 percent.

Looking at the broader currency market, this morning, the US Dollar index, which tracks the US Dollar against a basket of other currencies was at 100.59. The index was closer to 101.50 last week. The USD/JPY Forex pair was steady near the key ¥114 level. This Forex market, as of 9:00 am GMT time was trading at 114.31.

RBA Holds Rates; Asia moves Higher, Global Stocks Mostly Higher

This morning, the financial and equity markets in Asia and the Pacific Rim moved higher. The Central Bank of Australia (RBA) kept its headline cash rate the same and investor uncertainty with the failed Italian referendum vote is fading.

In The Down Under, the S&P ASX 200 was up nearly 0.52 percent thanks to strength in the materials sub-index which rose over one percent. The heavily weighted financial sub-index was up 0.85 percent.

This morning the Reserve Bank of Australia, held its last monetary policy review and decision for the year. The central bank held its main cash rate at 1.5 percent, as expected. The RBA also stated, in the post policy statement, that the rising Australian Dollar could pose a risk for the country’s economic transition. The country is moving away from a resource-led economic base.

As of 09:15 am GMT time, the AUD/USD moved lower to $0.7436.

Later today, other economic data will come from China as their currency reserves for November are due. Japan reported that earnings rose 0.1 percent. This was unchanged from the same time period last year. As far as the main stock bourse in Japan was concerned, the Nikkei 225 was up 0.47 percent. The yen did strengthen against the US Dollar. However, the USD/JPY is currently trades unchanged at 113.85. The yen was neat ¥114 last week.

In South Korea, the Kospi Composite Index was up over one percent after the ministry of finance said it would allocate 68 percent of its budget in the first half of 2017 to boost economic growth.

Looking at currencies, today, the euro was trading, as of 09:00 am GMT time, at 1.078. The EUR/USD Forex market had hit a 20 month low at 1.0503 on Monday. The rebound in the euro is partially thanks to investors digesting the recent “no vote” in Italy on Senate reform as a “no vote” on European Union membership. There was a small sell off in Italian government bonds, which saw yields rise which caused the EUR/USD to move higher and a rally in European stock bourses.

The Euro Hits a Fresh 20 Month Low after Renzi’s Defeat

This morning, during Asian trade hours, the euro has hit a 20 month low as investors are digesting the implications of the No Vote in Italy after Italian Prime Minister Matteo Renzi was embarrassed over a vote regarding constitutional reforms.

Many of the Asian markets were in the red this morning, as the S&P ASX 200, in Australia, lost 0.80 percent. Losses were capped by a rise in utilities, which were up 2.77 percent. In New Zealand, the NZX 50 lost grown after Prime Minister John Key said he would resign. He will not seek a fourth term. As a result the New Zealand Dollar fell against the US Dollar. As of 11:20 am HK time, the NZD/USD was trading at 0.7088. This is near the session low of 0.7070.

In Japan, the Nikkei 225 was down 0.82 percent and in South Korea the Kospi Composite Index was down around 0.25 percent. In Taiwan, the Taiex as flat. This comes after US President-elect Donald Trump tweeted that Taiwan’s President Tsai Ing called to congratulate him. This call earned a strong rebuke from China.

Turning back to Europe, Italy’s Prime Minister Matteo Renzi said the voters showed a clear rejection of any legislative reform. He will meet with his cabinet today as well as resign to the country’s President Sergio Mattarella.

This “no vote” will lead to some political instability with another election in Italy. It is about the potential of an election more than missing the opportunity to make long-term constitutional changes. The real concern for the financial markets, is whether or not these new elections will lead to the election of the Five Star Movement whose policy is to hold a referendum on whether or not Italy should leave the European Union. This is not a clear process, and not sure whether or not Italy can actually leave the EU. However, the potential of a referendum will generate significant amount of financial market volatility as there is a lot of premium built into the markets at this time.

Asian Markets Slip as Investors are in Limbo

This morning, markets in the Asian and Pacific Rim stuttered as the post OPEC rally has petered out. The strength in the US Dollar has also paused as investors are waiting on today’s non-farm payroll report (NFP) due out of the United States.

The S&P ASX 200, in Australia, was down 0.75 percent as there was broad based losses across all sub-indices. Only the gold sub-index was higher this morning, as it rose over 1.5 percent. In Australia, the October retail sales came out 0.5 percent over last month. This was the third month in a row of gains. This was above expectations of a 0.3 percent print.

The Nikkei 225 was lower this morning as the yen gained strength. This pulled exporting plays lower as they tend to do better with a weaker yen. In South Korea, the Kospi Composite Index lost 0.7 percent. Korean data showed that the revised third quarter gross domestic product (GDP) was up 0.6 percent from the previous quarter. South Korea is embroiled in a political scandal involving President Par Geun-hye who has offered to quit as opposition parties are calling for her to be impeached.

There was a weak lead-in from the US markets as well as the looming Italian referendum weighing on sentiment. Also due out later today is the all-important US NFP figures. Analysts are expecting 165,000 new jobs to be added last month and the unemployment rate to remain steady. The non-farm payrolls are a key indicator that the Federal Reserve looks at and it is due later in the day.

Given that there are rising expectations for inflation as well as significant fiscal stimulus being touted by the incoming Trump administration, the US Federal Reserve is likely to be far less dovish with monetary policy going forward.

Nikkei Jumps 2% on The OPEC Deal

This morning, Japan’s benchmark Nikkei surged more than two percent on the heels of sold manufacturing surveys out of China and upbeat sentiment following the recent OPEC deal to cut oil production. This is the first deal to cut production since 2008.

The Nikkei 225 jumped 2.25 percent, led by energy plays like Inpex which soared over ten percent, however close trading day at 1.12% up. Japan Petroleum Corporation rocketed nearly 13 percent and a weaker yen also boosted exporting plays. The USD/JPY Forex pair, as of 11:20 am HK time was trading at 114.35.

In Australia, the S&PASX 200 was up 1.10 percent as the energy sub-index recovered up nearly seven percent. The materials sub-index also went up 2.3 percent. Today’s economic data showed that business sentiment ell by four percent in the third quarter. Way worse than the expected 2.5 percent decline. This fall in investments will likely have an impact on the third quarter gross domestic product release on December 7.

Shares on the Chinese stock indices rose today as the Shanghai Composite rose 0.67 percent and the Shenzhen Composite rose 0.42 percent. Stocks on the Hang Seng Index rose 0.47 percent. This morning, China released its official manufacturing purchasing managers index (PMI) which rose to 51.7. This was above the expected 51.0. The Caixin/Markit Manufacturing PMI fell to 50.9. The number came in at 51.2 in October but beat expectations.

In Japan, the manufacturing PMI came in higher-than-expected in November at 51.3. Economists expected a print of 51.1. In South Korea data showed that the CPI rose by 1.3 percent, annually, but missed the expected 1.5 percent increase. Their target for inflation is two percent and this print leaves room for further monetary easing.

The news was positive for the South Korean Kospi which rose 0.2 percent. Other data, for South Korea, showed that their exports rose 2.7 percent, above the expected 1.2 percent. Imports jumped 10.1 percent, well above the expected 2.9 percent increase. Shipments to China also grew for the first time in 17 months.

Pressure on Oil as OPEC sets to Meet Today, Oil Jumps More Than 8%

Oil Prices rise this morning more than 5% after speculations of curb output deal agreement among OPEC members. The Algerian oil minister said earlier that he is 99 per cent certain OPEC members will reach a deal today. His comment spiked oil prices.

This morning, markets in the Asian and Pacific Rim were mixed in trade as energy stocks were under selling pressure thanks to an overnight decline in oil prices. Investors are eyeing today’s OPEC cartel meeting in Vienna for an accord to cap production.

In Japan, the benchmark Nikkei 225 closed flat while stocks on the South Korean Kospi Composite Index gained 0.26 percent. In the Down Under, the S&P ASX 200 lost 0.31 percent. Miners led the losses on the Australian exchange and material sub-index dropped 2.3 percent. The energy sub-sector tracked oil prices lower and shed 1.45 percent.

In Hong Kong, the Hang Seng Index was up 0.08 percent and mainland Chinese markets were a tad lower. The Shanghai Composite was down 0.2 percent and the Shenzhen Composite lost 0.1 percent this morning.

Overnight, the price of the black gold fell almost four percent as a fresh wave of pessimism over any hope that OPEC would reach a deal to curb the production of crude oil diminished. Today’s morning, oil prices are trading positively . Crude oil is trading 1.78% up while Brent oil is trading 1.80% up. There are oil ministers from the 14 nations that make up the cartel in Vienna and there are signs of cracks in any deal. They are scheduled to announce any deal later in the day, if there is one.

This put pressure on energy plays throughout the Asian and Pacific Rim. Shares of Santos fell over one percent. Oil Search lost 1.6 percent and Woodside Petroleum she over 2.3 percent. In Japan, Fuji Oil lost over 1.3 percent and in South Korea, S-Oil lost nearly 1.29 percent. Hong Kong listed oil plays were also mostly lower.

Turning to the broader Forex market, this morning, the Dollar pulled back again. This comes despite an upward revision to the third quarter gross domestic product (Q3 GDP) for the United States and a stronger-than-expected consumer confidence report. Profit seekers are still skimming a little off the top as the Dollar rally does not appear to be quite finished yet.

The second reading for the US Q3 GDP came in at an annual rate of 3.2 percent. This was an upward revision from the original 2.9 percent. Consumer confidence came in at 101.1, above expectations.

Asian Markets Mixed, Focus on OPEC Meeting

This morning, Japanese stock markets fell a bit despite solid economic data that pointed to a stabilization in domestic demand. The Nikkei and its yen sensitive exporting plays were spooked by another day of the yen gaining strength.

Markets focus is shifting towards OPEC meeting after a volatile and confusing trading session on Tuesday. This morning, Oil is trading lower more than 1% after Russia canceled its participation in the meeting. Yesterday, crude oil soared 3.91% after  report says Iraq will cooperate with OPEC members.

The new concern that weigh on markets is a survey hits four year high which concludes that Italy chance leaving Eurozone over the next year jumped to 19.3%.

Japan’s seasonally adjusted unemployment rate was steady in October at thee percent. This is no change from the report in August. Household spending fell 0.4 percent, annually, in October but at a slower pace than the estimate of a 0.6 percent decline. Retail sales, a separate report, fell 0.1 percent in the same month. Analysts expected the number to contract by 1.2 percent.

The Nikkei 225 closed down 0.3 percent while the Topic fell around 0.1 percent. The USD/JPY Forex market was which was near ¥112 on Tuesday was closer to ¥113 the week before. This sent exporting plays on the Japanese stock bourses lower as they prefer a weaker yen to boost their bottom line.

Across the Korean Straight, the Kospi Composite was flat at 1,979.03. Shares of Samsung Electronics rose 0.12 percent after releasing a statement, yesterday, that it was reviewing a transition to split and become a holding company structure. This comes after US based activist hedge fund manager Elliot Management proposed that the company spit itself into a holding vehicle. This is for ownership purposes as well as operations. The company also announced a plan to allocate 50 percent of its free cash flow to shareholder returns in 2016 and 2017. They would also pay a dividend of 28,500 won this year, up 36 percent from last year.

Looking at the broader currency market this morning, the US Dollar pulled back again to trade near 101.25. It was trading near 101.66 yesterday. The Dollar had been closer to $102 last week.

The pullback in the Dollar gave a chance for other currencies to make some gains this morning. The Australian Dollar rose from 0.74, last week, to 0.7488 today. The Aussie is being boosted by higher prices in metals. The euro climbed from 1.055 to 1.0608 and the British Pound is trading at 1.24 this morning.

Strong Yen Pushing The Nikkei Lower, Oil Drops on Output Cut Doubts

The financial markets in the Asian and Pacific Rim had a mixed day to start the trading week this morning. Japanese stocks moved slightly lower after seven straight trading days of gains. The Japanese yen traded sharply higher against the US Dollar and oil prices moved lower.

In Japan, their headline stock bourse, the Nikkei 225, closed down 0.13% as the yen gained against the Dollar. This is seen as a negative for the country’s exporters. The USD/JPY, as of 09:00 am GMT time, is down one percent to trade at 112.02. This Forex market had been trading near ¥113 last week.

In the Down Under, the S&P ASX 200 was also down 0.79% as the energy sub-index dragged the Australian stock bourse lower. This sub-sector was down 1.7 percent tracking the price of crude oil lower. Materials also fell on the day, down 1.14 percent.

Oil prices fall this morning over doubts of OPEC producers to generate an agreement of output cut at their meeting on Wednesday. Crude oil dropped one percent to trade at 45.61 while Brent crude oil trades at 47.83 down 0.85%.

In South Korea, hundreds of thousands of protestors rallied calling for the ouster of President Park Geun-hye who is embroiled in an influence-peddling scandal. At first, the Kospi Composite Index fell then reversed course to trade up a tad over 0.3 percent.

In China, the Shanghai Composite Index was up a half percent and the Shenzhen Composite Index was virtually flat up a mere 0.1 percent. In Hong Kong, the Hang Seng Index was up 0.6 percent on the day. Last Frida, China and Hong Kong security regulators announced the Hong Kong-Shenzhen direct connect would start on December 5. This would allow foreign investors to trade shares on the Shenzhen in Hong Kong.

Looking at the broad Forex market, the US Dollar Index, which sees the US Dollar trading against a basket of currencies, fell this morning. The Dollar as trading, as of 09:00 am GMT time, at 100.95. The index had surged to 102.07 last week. A high not seen since April 2003. The soft Dollar is seen as corrective as the almighty Buck remains strong thanks to US President-elect Donald Trump’s vast infrastructure spending program.

Asian Markets Trade Mostly Higher, European Markets Mixed

Asian markets and the Nikkei traded higher as the yen weakened and after taking a small breather from the Trump rally in the global equity markets. US financial markets were closed for the Thanksgiving holiday on Thursday.

We are seeing a lot of repositioning in the markets right now in the wake of Donald Trump winning the race for the White House on November 8. We saw a lot of money, over the year, coming into the emerging markets and now nearly a quarter of that has flowed out. There is still some more to go but the regional fundamentals are fairly sound and there are some good investments in the emerging markets.

The ASX 200, in Australia, was up nearly 0.6 percent this morning after a flat open. There were good broad based gains throughout the index. Only the gold sub-index saw losses as it fell 2.4 percent on the day.

In Japan, the Nikkei 225 was up over 0.7 percent as the yen continued to weaken against the US Dollar. As of 11:00 am HK time, the USD/JPY Forex market was trading at 113.65. This market, the USD/JPY, is at a near eight month high. A weaker yen tends to support the countries exporters as they sell, overseas in US Dollar and convert to the yen.

As far as economic data is concerned, Japan released its core consumer prices this morning. The CPI fell 0.4 percent in October, on an annual basis. This was in line with what economists had expected. However, it marks the eighth month in a row that the core CPI has fallen. This is likely to add to the heat the policymakers are feeling to add more stimulus to Japan’s stalling economy.

Turning our attention back to the Forex market, the US Dollar has been on a tear since Trump was elected president in the November 8 election. A Trump administration or Trumponomics will see the country boost fiscal spending and kick start inflation. There has also been a round of stronger-than-expected economic data out of the United States coupled with rising expectations that the Federal Reserve will raise its benchmark Fed Funds rate in December. This is lending support to the US Dollar and the selloff in US Treasuries which is boosting interest rates higher also continues.

US Dollar Hitting Record Highs, Yen Weakens Propelling The Nikkei Higher

This morning the Japanese yen weakened sending the Japanese stock bourse, the Nikkei, higher as the rest of Asia and the Pacific Rim traded mostly flat to lower. Japanese financial markets were shuttered yesterday for a public holiday and today, in the United States, financial markets will be closed for the Thanksgiving Day holiday.

The benchmark stock bourse, the Nikkei 225 was up nearly one percent, at the time of this report with the Topix up 0.86 percent. In South Korea, the Kospi Composite Index is down 0.84 percent and in Hong Kong, stocks were also down half a percent. The stock exchanges on mainland China were trading slightly higher this morning.

In Australia, the S&P ASX 200 reversed early gains to close flat on the day at 5,481.30. The heavily weighted financial sub-sector rose 0.25 percent while the energy and material sub-sectors both fell. Shares of Boral, a construction and material business tumbled 11.92 percent after announcing they would buy the US based Headwaters for $2.6 billion.

Turning our attention to the Forex markets this morning, the US Dollar index rose during US trading hours after the release of November’s Federal Reserve’s meeting minutes. The minutes backed the consensus view of a rate hike in December. This morning the Dollar index moved up from Wednesday’s 101.02 to 101.88. This is a level not seen since 2003.

This morning, the yen weakened further in the USD/JPY Forex market moving up to 113.24. Yesterday the yen was near 111.05 and last week the yen was below ¥110. This pushed exporting plays higher as Toyota climbed 3.3 percent, Nissan was up 2.2 percent and Honda Motor closed up over three percent. Shares of the electronic giant Panasonic rose over 2.2 percent.

This morning the euro fell to 1.0530 from levels above $1.06. The British Pound is at 1.2430. The Chinese yuan’s mid-point was set at 6.9085, its weakest level since June 10, 2008. The People’s Bank of China allows the yuan to float two percent around this daily fix.

The Australian ASX Leads Asia This Morning

Australian stocks climbed higher this morning as they tracked US stocks, which rose to fresh record highs overnight. Other Asian markets stumbled and had a mixed performance.

This morning the Australian benchmark stock index, the S&P ASX 200 was up 1.31% with most of its sub-sectors in the green. The heavily weighted financial sub-index outperformed rising 1.1 percent on the day. The materials sector climbed 1.7 percent and materials also rose. The Australian Dollar (AUD/USD) gapped higher to $0.7438 during the session. This is up from 0.7320 earlier this week.

The markets in the Down Under were driven by commodity prices. The view is that commodity prices are going to remain a bit higher thanks to an increase in demand from the United States and China. This caused mining plays to rise on the day. Companies like Rio Tinto rose 2.3 percent. Fortescue Mining rose 2.5 percent and BHP Billiton jumped over 2.8 percent on the day.

Turning our attention to the other regional markets, Japanese financial markets were shuttered for the Labor Thanksgiving holiday today. In New Zealand, the NZX 50 rose nearly 0.3 percent while in South Korea, stocks on the Kospi Composite Index were marginally higher. In Hong Kong, shares on the Hang Seng Composite Index also rose moderately. On mainland China, shares were mostly mixed on the day. The Shanghai Composite rose 0.1 percent and the smaller Shenzhen Composite rose fell a bit lower.

Looking at the broad Forex universe, this morning, the US Dollar Index, which tracks the buck against a basket of currencies, was trading at 100.99 at 10:30 am HK time. Pretty unchanged from yesterday afternoon at 101.04. The Japanese yen is trading at 101.11 against the US Dollar, as it fell from levels near ¥110 last week. Looking at the euro this morning, the EUR/USD is trading near 1.0621 and the British Pound was near 1.2407.

Asian Markets Turns Positive after Earthquake

At the time of this report, 09:20 am GMT time, shares in Japan turned slightly higher as the damage of an early morning earthquake appeared to be moderate. Other markets in Asia and the Pacific Rim rallied as the US Dollar lost steam and moved lower.

The benchmark Nikkei 225 was up nearly 0.31 percent and the broader Topix, in Tokyo, was up 0.23 percent this morning. The USD/JPY Forex market is trading at 110.69 at 09:20 am GMT time. The yen had hit a high of 110.23 after the news of the quake broke.

In the early morning hours, a magnitude 6.9 earthquake struck off the coast of Fukushima. A 90 cm tsunami was seen soon after the quake and waves of over 3 meters were also noted. This area was devastated once before by an earthquake and the resulting tsunami devastated the regional nuclear plant. Analysts said they are not expecting a lot of lasting damage from this quake and it would not have lasting effect on the regional financial markets.

This morning, investors are also concerned over President-elect Donald Trump’s latest statement that he will withdraw the United States from the Trans Pacific Partnership (TPP) in his first hundred days. Japan’s Prime Minister Mr. Shinzo Abe, who is now in Buenos Aires, Argentina, said that the trade deal would be meaningless without US.

Turning our attention to the currency markets, as of 09:20 am GMT time, the US Dollar index was trading at 100.88. This is well below its multi-year high of 101.50 hit earlier in the week. The Australian Dollar was trading at 0.7405, up from 0.7320 in the previous trading session. The euro is trading at 1.0644 which is up from 1.06 on Monday and the British Pound has also moved higher against the US Dollar. The Pound is trading at 1.2491 which is up from near $1.23 on Monday.

Asian Markets Turnaround as The Dollar Takes a Breather

This morning, Asian markets mounted a turnaround with an impressive recovery as the US Dollar took a time out and oil prices recovered a bit.

The US Dollar Index, which measures the greenback against a basket of currencies, eased back from its 13 year high of 101.48 that it reached last week. The Dollar, as of 09:00 am GMT time, was trading around 101.12. The Dollar’s climb higher is starting to run out of some steam as markets have now fully priced in Donald Trump’s victory for President of the United States.

In Japan, the Nikkei 225 stock bourse was up 0.49 percent, slightly off from session highs as the yen’s move lower stalled.

In Australia, the S&P ASX 200 was virtually flat after moving lower. The recovery was spurred by the energy sub-index, which rose 1.4 percent and its gain capped by the gold sub-index which lost another 2.4 percent on the day. In South Korea, the Kospi Composite Index swung higher after losing as much as 0.3 percent. Investors were rattles after news surfaced that prosecutors considered President Park Geun-hye was an accomplice in the ongoing investigation into corruption. This will likely spur more protests for President Park to step down or be impeached.

Looking into US bond yields, US Treasuries are now at their highest point this year. The US 10 year note is at 2.3423 percent and the 30 year note is at 3.0206 percent. The epicenter of the volatility of the financial markets is the US Treasury market as the moves here have been incredible, to say the least. Yields have been climbing since Trump won the US election for president as his win should stoke inflation.

This morning, the People’s Bank of China set the yuan’s mid-point at 6.8985 against the US Dollar. The last mid-point set was at 6.888. As of 10:55 am HK time the USD/CNH was trading at 6.8960.

EUR/USD The Perfect Storm?

Recently, the EUR/USD pair has been selling off rather drastically. There are a lot of things influencing this pair at the moment, and quite frankly most traders are probably not aware of the structural implications of what has been going on.

While the surprise election of Donald Trump initially sent the US dollar plunging, cooler heads prevailed and realized that the Donald Trump administration was going to be much more business friendly than the previous administration. Because of this, investment in the United States should increase, and therefore money should flow across the border. Beyond that, Mr. Trump is also suggested that interest rates are too low, so there will be political pressure on the Federal Reserve to raise interest rates sooner rather than later. He fears a bubble forming, unlike his predecessors.

On the other side of the Atlantic Ocean, we have a real mess. The European Union is threatened by several different factors. The United Kingdom leaving the European Union of course was the first serious blow to the EU itself, but there are several elections coming in the next year that could completely obliterate the EU given enough time. Anti-EU parties are starting to show real strength in places like Austria, France, the Netherlands, and several other member states. It is hard to imagine a scenario in which the anti-EU coalition wins in a place like France and the European Union survives longer term. There are far too many issues, and quite frankly far too many cultures to fit under the umbrella of the European Union. A quick example: the European Union doesn’t even have a trade agreement with the United States or Canada. It’s that broken.

There calls for parity between the Euro and the US dollar, and quite frankly that’s a reasonable assessment. We have recently broken through quite a bit of support, and there are more “what if’s” on the European continent then there are on the North American continent. Because of this, money will continue to flow from East to West across the Atlantic.

Asian Markets Slide with Oil and the Dollar Gains

The financial stock markets in the Asian and Pacific Rim were all lower this morning as the price of oil slide during early trading session. Also, the US Dollar is now at a thirteen year high. The only exception to a red day in Asia was the Australian stock bourse which edged up higher.

In Japan, the benchmark Nikkei 225 was down marginally after retracing losses of better than 0.4 percent. Overall the Japanese index closed the day unchanged. The Japanese headline stock bourse has been on a five day streak of gains and is up ten percent since Donald Trump won the US Presidency.

In South Korea, the Kospi Composite Index close a slightly positive day rising 0.05%. There was a planned delay of on hour due to the national college entrance exams. In Hong Kong, stocks fell 0.05 percent on the Hang Seng Composite.

The Australian stock exchange, the S&P ASX200, bucked the downtrend and was up 0.20 percent. It retraced losses of 0.3 percent earlier in the day. The Australian benchmark saw gains in the energy sub-index, which was up 1.6 percent. Its heavily weighted financials sub-index was down 0.36 percent on the day.

During the Asian trade hours, US WTI Crude futures fell 0.2 percent to $45.49 per barrel before retrace up to trade positively at 45.69 up 0.28%. The global benchmark Brent crude lost 0.19 percent to trade at $46.54 per barrel. This weighed on heavily on oil plays like Santos, down almost three percent, Woodside Petroleum shed over two percent and Oil Search lost over one percent.

Oil prices were under pressure thanks to a US economic data release from the US Energy Information Administration (EIA) which showed that crude inventories in the world’s largest economy climbed by 5.3 million barrels last week. Analysts expected a clime of 1.5 million barrels.

Turning our attention to the Forex markets, the US Dollar is trading at a level not seen in nearly 13 years. The US Dollar index is trading at 100.15 at 0900 am GMT time. It had hit a high of 100.57 earlier in the session. This level has not been seen since April 2003.

This morning, the Japanese yen tracked higher against the Dollar putting pressure on exporting plays which brought the Nikkei lower. As of 0915 am GMT time, the USD/JPY Forex market is trading at 109.06.