The financial markets are witnessing a continuation of corrective trends that emerged yesterday. Following the recent turbulence sparked by the U.S. President-elect’s pushback on narrower tariff applications, the foreign exchange and equities markets appear to be stabilizing. The Antipodean currencies, which had been severely impacted late last year, are leading gains among G10 currencies, though most remain within the prior day’s ranges. Notable equity rallies have also been observed, with Asia-Pacific and European markets posting gains.

Asia-Pacific Markets
The U.S. dollar traded within its two-week range against the Japanese yen yesterday, moving between JPY156 and JPY158. In today’s session, the greenback rose to a new high since July, reaching JPY158.40, but faced selling pressure that brought it back to JPY157.40 during early European trading hours. Meanwhile, most Asia-Pacific equities rallied, with Japan’s Nikkei 225 gaining nearly 2%. Other markets in the region followed suit, contributing to the positive sentiment.

European Markets
The euro exhibited a robust recovery yesterday, climbing slightly above $1.0435 and retracing 50% of its losses since December 6. This rally brought the euro close to its 20-day moving average, last breached on December 18. The next technical retracement level, near $1.0475, may come into focus, though weak economic fundamentals suggest the European Central Bank remains on track for a 25 basis-point rate cut at the end of the month.
Similarly, sterling advanced to $1.2550, marking a four-day high and surpassing the 38.2% retracement level of its decline from $1.2880. Today, it approached the 50% retracement near $1.2580, slightly above its 20-day moving average.

American Markets
The U.S. dollar retraced a significant portion of last week’s gains during yesterday’s session. The Dollar Index fell 0.8%, marking its largest decline since late November. After briefly recovering to 108.40 earlier today, the index dipped back below last year’s settlement level of 108.00, with nearby support expected in the 107.50-107.75 range.
Key economic releases today include data anticipated to show a widening U.S. trade deficit for November, driven by increased imports of industrial supplies and capital goods. Meanwhile, consumer goods imports are expected to ease. Other indicators, such as a modest increase in JOLTS job openings and a slight rise in the ISM services PMI, are also in focus.