The USD moved lower today – only outpaced by the CAD as the weakest of the major currencies. The JPY was the strongest.
Over the weekend Pimco said they were moving into the JPY on expectations that the Bank of Japan would start to tighten. The US Fed is thought to be over with their tightening cycle with the market pricing in the chance of an ease as early as March. That should weaken the USDJPY
The last three days have seen the USDJPY move down -0.4%, -0.8%, and -0.81% today. Looking at the daily chart, the move lower has taken the price down to test the low from October 5 and October 10. Those lows in early October based the price before its surge to a 2023 high at 151.909 just last Monday. That high price got within 3 pips of that 2022 high at 151.938 (which would have been the highest level in 32 years).
The sellers are trying to take back control and if the fundamental shift can take place, there is room to roam to the downside. The 100-day MA is currently at 146.528. That will be a key target for increased downside momentum going forward.
On the economic calendar today, the Conference Board leading economic index came out at -0.8% versus -0.7% expected. The client marked the 19th consecutive month decline, and the economy has still not reached recession status. The Atlanta Fed GDPNow estimate for 4Q growth is around 2.0%. That is down from 4.9% growth in the 3Q, but still comfortably above recessionary levels.
Looking at other markets, in the US debt market, yields were lower out the curve. Today the US treasury auctioned off $16 billion of 20-year bonds. The auction was met with strong demand, especially from international investors. Domestic demand was somewhat tame relative to the six-month averages, but even still, the auction had a -1.0 basis point tail.
In the US stock market, the surge to the upside was largely driven by Microsoft’s rally following the hiring of key artificial intelligence executives, including Sam Altman, former head of OpenAI, and Greg Brockman, another OpenAI cofounder. Microsoft’s hiring of these AI experts, particularly Altman to lead a new advanced AI research team, positively influenced the technology sector, also boosting stocks like Apple and Nvidia. Both Microsoft and Nvidia are closing at record levels. Apple shares are within $7 of its all-time record high of $198.19.