• JPY leads, CAD lags
  • WTI crude oil up 26 cents to $69.64
  • US 10-year yields up 1.7 bps to 4.13%
  • S&P 500 up 33 points, or 0.7%, to 4590
  • Gold up $4 to $2028

It was all about the yen today as USD/JPY briefly fell nearly 600 pips. The breakdown started in Asia after Ueda hinted at difficult challenges towards the end of this year and early next year. The market took that as a hint that he might hike interest rates at the December 19 meeting. He added many caveats and repeated that they will patiently continue but USD/JPY began to drop.

The selling accelerated slightly on the US data slate and as US 2-year yields turned lower on the day at the same time. The bleed continued into the London close when the pair stabilized just above 144.00 for a few hours. However in the US afternoon, stops were run through 144.00 and 143.75 in a plunge to 141.73 in a very quick move. The dip was bought over 10 minutes and the pair rebounded to consolidate around 143.50. Further buying has continued as Tokyo begins to wake up.

The drop in USD/JPY may have led to broader USD selling as the crowded USD/JPY trade was thinned out. Risk trades also approved the latest AI demo from Google, which helped to boost the Nasdaq.

EUR/USD climbed to 1.0817 as it ended a six-day losing streak. From the highs, it bled down to 1.0792 but still reversed the previous day's decline.

AUD was also strong as it led everything aside from JPY on the positive risk trade. Commodities tried to rally early in the day but were later stuffed despite the dollar selling.

Eyes are on tomorrow's US non-farm payrolls report for the next leg in the US dollar. The market is pricing in 126 bps of US easing next year with a 70% chance of a cut in March; those numbers are sure to shift on Friday.

See: Preview: November non-farm payrolls by the numbers

FX news wrap