Hello traders, welcome on a Thursday. Thursday is the first trading day after a very busy Wednesday, so naturally we start by reviewing what happened yesterday. We had two major interest-rate decisions. First came the Bank of Canada, where rates were left unchanged at 2.25%. Later, the Federal Reserve announced a 25-basis-point cut, fully in line with expectations. The key part, however, was the statement from Jerome Powell. Powell noted that it is less likely for the labour market to tighten enough to push inflation higher again, and when asked about the possibility of a productivity shock, he simply confirmed that yes, we are seeing one. Apart from that, no particularly groundbreaking comments came from Powell.
Overnight, Australia delivered mixed job data—employment change was worse than expected, but the unemployment rate fell. Traders chose to focus on the weaker part of the report, and Australian dollar is the weakest currency on Thursday morning. The New Zealand dollar is also losing, following its regional counterpart. We additionally received an interest rate decision from Switzerland just moments ago. As expected, no change, and the very first reaction is Swiss franc gaining in value—but this is only the first few minutes after the release, so the direction may still shift once liquidity increases. Still to come today, we have a scheduled speech from Bank of England Governor Bailey and the usual unemployment claims from the US.
Now turning to the markets themselves, the picture is straightforward. Commodity currencies—AUD, NZD, CAD—are all under pressure. On the stronger side, we see Japanese yen, which is gaining across the board, while US dollar is mixed after yesterday’s post-FOMC weakness. On the commodities front, oil extends its decline, confirming ongoing bearish sentiment. Precious metals are diverging again: gold is flat-to-bearish, stuck in a sluggish consolidation, while silver is surging, continuing its aggressive move to the upside. Finally, index futures are in the red. FOMC clearly triggered a correction phase, but that is hardly surprising given the spectacular rise during the second half of November. Indices simply needed room to breathe.
That is the market landscape as we begin the European session on Thursday.