December 03, 2024 at 09:20PM
South Korean President declares martial low “to clear out pro-North Korean elements”
South Korean parliament votes to block President’s martial law declaration
South Korean president reverses his martial law declaration
US JOLTS job openings 7.744M vs 7.475M expected
Fed’s Daly: December rate cut is absolutely not off the table
Fed’s Kugler: Will make decisions meeting by meeting, policy not on a pre-set course
Kugler Q&A: Not clear yet if AI will destroy or create jobs
ECB’s Holzmann: I see likelihood for a moderate rate cut in December
OPEC November output rose 180K – survey
Markets:
JPY leads, CAD lags but the moves were small
WTI crude oil up $1.96 to $70.06
US 10-year yields up 2.9 bps to 4.22%
Gold up $5 to $2643
S&P 500 flat
It looked like it might be a quiet day in financial markets with only JOLTS on the US scheduled and little movement in FX in Asia or early European markets. But the quiet was shattered by an unusual actor: South Korea. President Yoon made some wild accusations about North Korean infiltration and declared martial law.
That prompted a flight to safety, drop in Treasury yields and decline in USD/JPY to 148.66 in a 100-pip decline. The move seemingly came out of nowhere and near 11 pm local time. Opposition-controlled parliament sprung into action and voted against to move, though it was not clear if they had the authority and at one point armed officials were also in parliament. It was a confusing situation and the motives of the President are still hard to imagine.
In any case, after the vote, he reversed the declaration, ending a strange six hours. The market had mostly looked past it before the announcement as USD/JPY and Treasury yields steadily recouped the move.
In the US, the JOLTS report was a tad better but the odds of a Fed cut in December ticked up slightly anyway. The thinking might be that the broader trend of job openings is clearly lower, underscoring the Fed’s slow path to neutral. That kind of thinking was mostly underscored by Fed speakers today though none of the leaned out with an indication of what they want to do at the Dec FOMC.
All told, the FX market is largely finishing the day where it started and we will move onto tomorrow’s ADP and ISM services prints.
This article was written by Adam Button at www.forexlive.com.
