Asian markets climbed on Thursday, spurred by a tech-driven rally on Wall Street, as an expected U.S. consumer inflation report strengthened predictions of a Federal Reserve interest rate cut next week. Japan’s Nikkei index surpassed 40,000 for the first time since mid-October, supported by gains in the chip sector. The yen’s decline also aided the exporter-heavy index, as traders lowered their expectations for a Bank of Japan rate hike next week. Meanwhile, the Australian dollar surged after employment figures far exceeded forecasts, bouncing back from Wednesday’s drop following a Reuters report hinting that Beijing might allow further yuan devaluation next year. Given that China is Australia’s largest trading partner, the Australian dollar is often viewed as a liquid stand-in for the yuan. The yuan held steady above a one-week low after the central bank set a slightly stronger official rate.At today’s ECB meeting, expectations for a rate cut may clash with Lagarde’s reluctance to make firm commitments. A 25 basis point reduction in the ECB’s deposit rate, bringing it down to 3%, is the most probable outcome from the Governing Council’s meeting today. Therefore, the market’s attention will be on hints regarding future actions. If a 25 basis point cut occurs today, the market anticipates over 60 basis points of cumulative easing spread across the January and March meetings. In other words, market expectations suggest a significant likelihood that one of the first two meetings in 2025 will see a 50 basis point cut, alongside a 25 basis point reduction at the other meeting. Since October, expectations had initially leaned towards a larger cut in December before tapering off. The immediate concern is that the forecasts for January and March may need to be adjusted downwards at this point. Historical patterns indicate that Lagarde tends to use press conferences to avoid making firm commitments and emphasise a’meeting by meeting’ decision-making process. A continued trend of poor PMI data, for instance, could further bolster expectations for rate cuts in early 2025, but that will be addressed next week. At this moment, it may be overly optimistic to expect Lagarde to completely endorse the market’s dovish outlook.Stateside, the US is set to release its Producer Price Index (PPI) figures later today. This announcement comes just a day after the market received a consumer inflation report that was in line with expectations and not excessively high. This particular reading of consumer inflation has significantly influenced market sentiment, leading many to believe that the Federal Reserve is likely to implement a rate cut during their upcoming meeting on December 18. The anticipation surrounding these economic indicators reflects the ongoing concerns about inflation and the overall health of the economy, as investors and analysts closely monitor the Federal Reserve’s actions and decisions in response to these economic signals.
Overnight Newswire Updates of Note
(Sourced from reliable financial news outlets)
FX Options Expiries For 10am New York Cut (1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
CFTC Data As Of 6/12/24
Technical & Trade ViewsSP500 Bullish Above Bearish Below 6100
EURUSD Bullish Above Bearish Below 1.0450
GBPUSD Bullish Above Bearish Below 1.26
USDJPY Bullish Above Bearish Below 154
XAUUSD Bullish Above Bearish Below 2600
BTCUSD Bullish Above Bearish Below 92000
Primary objective is 100,000 TARGET HIT NEW PATTERN EMERGING 
More By This Author:FTSE Reverses From Two-Week Low On U.S. Inflation As Fed Rate Move Locked
Daily Market Outlook – Wednesday, Dec. 11
FTSE In The Red As Copper Price Pressure Miners
