- US January S&P Global flash services PMI 52.5 vs 52.8 expected
- Trump administration weights total blockade of Cuba – report
- Yen intervention talk sends USD/JPY sharply lower
- Canada November retail sales +1.3% vs +1.2% expected
Markets:
- WTI crude oil up $1.77 to $61.13
- US 10-year yields down 1.6 bps to 4.235%
- Bitcoin flat at $89K
- S&P 500 flat
- Gold up $44 to $4980, a fresh record
- Silver hits $100 for the first time, continues to $102
- JPY leads, USD lags
The newsflow was light but it certainly wasn’t a quiet Friday in North American trading. There were some big moves in commodities and FX but very little to point to as catalysts. In the absence, rumours filled in the gaps.
The big one was that the Japanese Ministry of Finance did a rate check, essentially calling banks and asking for quotes. That’s a trivial move but it’s hugely symbolic as it’s a potential precursor to intervention. The yen sold off earlier in the day and USD/JPY hit 159.22 following the Bank of Japan but it turned around in a big way, down to 155.86 last.
There was even some talk of intervention but doing that late Friday well after Tokyo has gone to bed is out of the ordinary. The move also didn’t have the spike-style move typical of proper intervention.
Also critical is that the US dollar was broadly weaker and was solid continually in US hours. Again, there was no obvious catalyst for that, though cable did have some backing following hawkish comments, rising yields and the earlier PMIs. There was certainly a dollar selloff and it also coincided with a 3% jump in oil prices and fresh highs in precious metals.
That combination of events looks like a geopolitical trade. Late in the day there was talk of a full Cuban blockade but eyes are also on any potential action against Iran. Trump has frequently acted on the weekend and there is likely some sense that he could do it again.
In stock markets, megacap tech was strong while the Russell 2000 struggled. The S&P 500 was flat but the YTD leader — Intel — was smashed 17% lower following disappointing guidance.
Have a great weekend.
This article was written by Adam Button at investinglive.com.