• US December PCE core inflation 2.9% y/y vs 3.0% expected
• US December pending home sales +8.3% vs +1.5% expected
• Yellen: US officials received assurances that Chinese banks ‚doing well‘
• Baker Hughes US oil rig count +2
• Atlanta Fed GDPNow Q1 initial estimate +3.0%
• Red Sea ship is using firefighting equipment to control fire
• Dallas Fed December trimmed mean PCE price index +2.6% annualized
• White House’s Brainard: Economy is ‚upbeat‘ and inflation is getting anchored at 2%

Markets:

• CAD leads, JPY lags
• S&P 500 down 0.1%
• US 10-year yields up 1.5 bps to 4.15%
• Gold down $1 to $2018
• WTI crude oil up $0.81 to $78.17

The market didn’t know exactly what to do with the US PCE report. On the hawkish side, the headline PCE number wasn’t as cool as GDP suggested it could be and personal income was strong. On the dovish side, the core PCE headline was soft and the six-month annualized numbers are below the Fed’s target. The market initially went both ways but settled right around the middle.

Bonds chopped as well but yields were ultimately led higher by the front end, perhaps in anticipation of a larger auction size announcement next week. That helped to spur the dollar modestly higher but it ultimately left the euro and pound just 7 pips higher and lower, respectively.

The yen was the laggard in part due to softer Tokyo CPI data last week. The market is also struggling to see global inflation and the thinking is that a rate hiking cycle is turning into 2-3 ’normalization‘ hikes instead, at best. USD/JPY rose above 148 and continued to 148.20 before settling back near the figure.

The loonie was a stronger performer, perhaps in part to TMX announcing plans for line-fill but mostly due to higher oil prices. Crude was volatile but late-news of a tanker being struck by missiles and catching fire in the Red Sea certainly didn’t hurt crude. USD/CAD fell as low as 1.3415 before bouncing to 1.3447 last.

AUD wasn’t quite as fortunate as China sentiment ebbed after the big mid-week rally. It’s a market that will need constant good news to shake off the malaise and today showed just how big of a battle it will be. AUD/USD finished slightly lower on the day at 0.6580 after hitting 0.6610 and forming a minor double top with yesterday’s high.

Have a wonderful weekend, the week ahead is a big one.

This article was written by Adam Button at www.forexlive.com.

It has been a lively month and week for US equities but aside from a trainwreck from Intel (-12%), it was a quiet day in terms of volatility and price moves. The declines end a series of record highs for the S&P 500.

• S&P 500 -0.1%
• Nasdaq Comp -0.4%
• DJIA +0.2%
• Russell 2000 +0.1%
• Toronto TSX Comp +0.1%

On the week:

• S&P 500 +1.1
• Nasdaq Comp +0.9%
• DJIA +0.7%
• Russell 2000 +1.7%
• Toronto TSX Comp +1.2%

Next week is a major one on the earnings calendar highlighted by Alphabet & Microsoft (Tuesday) and Amazon & Apple Thursday.

This article was written by Adam Button at www.forexlive.com.

I’m surprised that Trafigura was still transiting the Red Sea with oil but I suspect they won’t be anymore. The company said firefighting equipment on board is being deployed to control a fire caused in one cargo tank on the Marlin Luanda, which is an oil tanker.

The ship was reportedly carrying naphtha and headed to Malaysia.

This is straight up terrorism, I hope the workers on the ship are safe.

Update: Apparently it was carrying Russian fuel.

This article was written by Adam Button at www.forexlive.com.

Here’s a look at the US economic calendar for next week:

• January 29: Treasury quarterly financing estimates
• January 30: Dallas Fed, FHFA house prices, Case-Shiller, and Conference Board consumer confidence
• January 31: FOMC decision, quarterly refunding announcement, JOLTS and the ADP employment report
• February 1: Chicago PMI, Challenger job cut report, jobless claims, nonfarm productivity, construction spending, ISM Manufacturing
• February 2: Nonfarm payrolls, unemployment rate, average hourly earnings, University of Michigan consumer sentiment final, factory orders.

The market is pricing in 133 bps in Fed cuts this year ahead of the data.

For more, check out the economic calendar.

This article was written by Adam Button at www.forexlive.com.