• US November core PCE +2.8% y/y vs +2.9% expected
• Canada retail sales for October 0.6% versus 0.7% expected
• Canada’s NDP says they will vote to defeat the Liberal government
• Fed’s Goolsbee: Nice to get inflation number that is better than expected
• Fed’s Williams: Inflation data since Sept has been ‚a touch higher‘
• Fed’s Hammack: Rate cut was a ‚close call‘ and she favored holding policy steady
• EU consumer confidence flesh for December -14.5 versus -13.7 last month
• University of Michigan consumer sentiment final 74.0 versus 74.0 preliminary
• Fed vice chair for supervision is worried that Trump will try to remove him – report
• Dallas Fed trimmed mean November PCE price index +1.8% vs +2.9%
• House speaker Johnson: We have a unified agreement among Republicans
• Canada October budget balance C$-1.49 billion vs previous C$-3.17 billion
• RBC card spending data shows softer Canadian spending ahead of today’s retail sales report
• Fed’s Daly: The recalibration phase is now over

Markets:

• S&P 500 up 1.1%
• WTI crude up 15-cents to $69.53
• US 10-year yields down 4.2 bps to 4.52%
• Gold up $30 to $2623
• JPY leads, USD lags

The mood shifted sharply on Friday as stocks looked set for another rout in the pre-market only to reverse higher. The FX market followed a similar pattern, though the moves were less-dramatic. That meant US dollar selling after the dollar hit some of the best levels of the year early in Asia.

Two things turned markets: The PCE report and progress on avoiding a government shutdown.

On Wednesday, the Fed comments indicated a big shift towards worries about inflation but the PCE report brought a dose of reality back to the debate as the numbers were lower than expected and not at levels so worrisome that the Fed would need to contemplate hiking.

Comments from Goolsbee and Williams underscored that, assuring markets that the path for rates is still lower and that the only real debate is the pace of cuts.

Some of the machinations around the debt ceiling debate also underscored a Trump/Musk recalibration around fiscal hawkishness. It’s not yet clear how it will shake down so keep a close eye over the weekend. The real thing to watch is how the new administration prioritizes fiscal consolidation relative to corporate tax cuts. The vast majority of the market thinks the top priority is the stock market but that could be a miscalculation.

In terms of market moves, USD/JPY fell hard on some verbal intervention from Tokyo and it continued to drift lower in the US as Treasury yields ticked lower.

The euro bounced impressively after touching 1.0344 while the Australian and Canadian dollars rebounded from the worst levels of the year. The pound touched below the November lows in Asia the bounced to 1.2600 before fading 25 pips below the figure.

I would expect the first reaction on Monday to center around the government shutdown response but we’re deep into the holiday season now so the temperature might fall.

Have a great weekend.

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

The major U.S. stock indices ended the day with gains of 1% or more for all three major benchmarks, but they closed lower for the week. Here’s a detailed snapshot:

Closing Levels (Daily Gains):

• Dow Jones Industrial Average: rose 498.82 points (+1.18%) to close at 42,841.06.

• S&P 500 Index: rose 63.79 points (+1.09%) to close at 5,930.87.

• NASDAQ Composite: rose 199.83 points (+1.03%) to close at 19,572.60.

• Russell 2000 (Small-Cap Index): rose 20.86 points (+0.94%) to close at 2,242.36.

Weekly Performance:

• Dow Jones Industrial Average: fell -2.25%.

• S&P 500 Index: fell -1.90%.

• NASDAQ Composite: fell -1.78%.

• Russell 2000 Index: fell -4.45%.

Technical Insights for the NASDAQ Composite:
On the hourly chart, the NASDAQ index tumbled below its 200-hour moving average (19,428.78) and an upward-sloping trendline during the trading day. However, it failed to sustain the downward momentum and rebounded to close between its 200-hour moving average and its 100-hour moving average (19,803.75).

Outlook for Next Week:

• Trading above the 100-hour moving average would indicate a bullish short-term bias.

• Trading below the 200-hour moving average would signal a bearish short-term bias.

The interaction with these key moving averages will be critical in determining the direction of the NASDAQ Composite in the coming days.

Technical Insights for the S&P Composite:
On the hourly chart, the S&P index fell below its 100 and 200 hour moving averages and 6040.97 and 6001.31. That tilted the bias more to the downside. The low price for the week did extend below a swing area between 5853.00 and 5878.47, but the price quickly snapped back in trading today. The selllers had their shot and they failed.

Going into next week, the target resistance on the topside would be the moving averages. The swing area on the downside will be supported

Outlook for Next Week:

• Trading above the 200- hour MA and 100-hour moving average (green and blue lines) would indicate a bullish short-term bias.

• Trading swing area support would signal a bearish short-term bias.

The interaction with these key moving averages will be critical in determining the direction of the NASDAQ Composite in the coming days.

This article was written by Greg Michalowski at www.forexlive.com.

Reuters reports that he sought advice from law firm Arnold & Porter.

I’m doubt this is meaningful for markets but it does speak to real worries around Trump and the Fed. It also speaks to how strongly he might feel (or his donors might feel) about bank regulation.

Barr, like Quarles before him, rarely weighs in on monetary policy and almost always focuses on regulation and supervision of banks.

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

• Prior was +2.9%

These are one-month annualized numbers so small changes led to swings like this. That said, the latest number is one-month running at a sub-2% pace, 11 more to go.

• 6-month annualized: 2.2% vs 2.3% prior
• 12-month: 2.7% unchanged

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

• Johnson says there will be no government shutdown

Talk is cheap, let’s get the vote.

Update: It sounds like this won’t be split into three parts but will just be the bill that failed yesterday but without an extension to the debt limit.

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