US Stocks Pull Back on Weaker Data – Dow off 0.9%
US stocks retreated overnight as renewed weakness in the manufacturing sector added pressure to broader market sentiment. The latest ISM Manufacturing report missed expectations once again, reinforcing concerns that ongoing tariff effects are continuing to weigh on activity. The Dow led the equity declines, falling 0.90% to close at 47,289, while the S&P 500 slipped 0.53% to 6,812. The Nasdaq also moved lower, easing 0.38% to finish the session at 23,275. The softer data drove US Treasury yields higher, while the US dollar eased slightly against the majors; the DXY edged down 0.07%, ending the day at 99.41. Bond markets saw yields climb across the curve, with the US 2-year Treasury rising 4.1 basis points to 3.531%, and the 10-year yield increasing 7.3 basis points to 4.086%. Commodity markets were firmer, particularly in energy. Brent gained 1.44% to settle at $63.28, while WTI advanced 1.59% to $59.48, supported by reports of Ukrainian drone strikes on Russian facilities and confirmation that OPEC will keep production unchanged through Q1 2026. Gold briefly reached a six-week high before easing back to close 0.21% lower at $4,230.23.
Yen Remains in Focus for FX Traders
Once again, the yen took centre spot for FX traders yesterday, as comments from Bank of Japan Governor Kazuo Ueda indicating that a December rate hike could be on the cards saw the currency rally against the dollar and on the crosses. USDJPY took a big hit as the interest rate differential potential of the strongly priced-in Fed rate cut and now a Bank of Japan hike contributed to seeing it drop over 1% from peak to trough before recovering later in the day. Traders are now firmly in a “sell the rally” mode for the pair, with resistance now coming in on the daily charts at yesterday’s break level near 156.00, and support on yesterday’s low at 154.65. A break of that level should see the move extended, with the next target being the November lows just below 153.00.
Quiet Calendar Day Ahead of a Busy Week
Today’s economic calendar is relatively light, although comments from central bankers during the Asian session may provide some volatility early in the day. The Asian session has little in the way of data today, but central banker updates look set to move markets. We have already heard from the new RBNZ Governor Anna Breman, which has seen a bit of pressure on the Kiwi dollar after some dovish comments, and we do have a rare Asian-session speech from Fed Chair Jerome Powell when he speaks from Stanford University, which could see some bigger moves in the market. The London session sees the release of key EU inflation data, with the CPI Flash Estimate (exp. 2.1% y/y) and Core CPI Flash Estimate (exp. 2.4% y/y) out a few hours after the open. The New York session has its quietest calendar day for the week, with no tier 1 data on the cards, but we do hear from Fed member Michelle Bowman when she testifies in front of the House Financial Services Committee.
