The US dollar is mostly firmer today, with notable movements across G10 currencies. Strong wage data and a softer US 10-year yield are lending support to the Japanese yen, which is up nearly 0.2% against the dollar. Conversely, the British pound and UK Gilts remain under pressure.
Equity markets are mixed; nearly all Asia-Pacific indices fell, while Europe’s Stoxx 600 has recouped most of yesterday's 0.2% loss. US index futures are trading lower, though the cash market remains closed.
Gold is holding steady, trading just below yesterday’s high near $2,670. Meanwhile, February WTI crude reversed lower after hitting a three-month high of $75.30.

Asia-Pacific Markets
The US 10-year yield, which touched nearly 4.73% yesterday, supported the dollar's rise to a marginal six-month high before stabilizing slightly below that level. Despite yen weakness, the likelihood of Bank of Japan (BoJ) intervention appears low. However, speculation about a potential BoJ rate hike later this month persists, fueled by wage growth data and a swaps market pricing in an 11-basis-point increase. The BoJ has kept investors guessing, offering little clarity on whether a rate adjustment might occur this month or in March.

European Markets
Weaker-than-expected US ADP private-sector job data has steadied the euro, which remains range-bound between $1.0285 and $1.0320. In Germany, an encouraging 1.5% rise in industrial output followed a downward revision of October’s 0.4% decline, offsetting concerns from yesterday’s sharp 5.4% drop in November factory orders.
In the UK, yesterday’s sell-off in Gilts triggered a significant drop in sterling. The pound breached its eight-month low near $1.2355, finding support at $1.2320 before sliding further to $1.2240 today. It has since rebounded modestly to $1.2285 in European trading.
Sterling has seen three sessions this year with losses exceeding 1%, prompting speculation that its weakness could influence the Bank of England’s (BoE) policy considerations. Earlier this week, the swaps market had priced in 61 basis points of rate cuts for 2024, but that has narrowed to 48 basis points.

American Markets
US stock markets are closed today, and bond markets will close early in observance of President Jimmy Carter’s funeral.
Despite the weaker-than-expected ADP employment report marking a second consecutive slowdown, the Dollar Index held firm, settling near 109.00. The next psychological target for the index is 110.00, with 111.00 potentially in sight if Friday’s employment report or next week’s CPI data bring forward expectations of Federal Reserve rate cuts.