Unraveling the Impact of Political Turmoil on Currencies
U.S. Dollar and South Korea's Won
The U.S. dollar saw a notable spike against South Korea's won following local media reports. These reports indicated that South Korea's main opposition Democratic Party was on standby after receiving word of another martial law declaration. As a result, the won lost 0.43% and was trading at 1419.32. South Korea's President Yoon Suk Yeol's decision to impose and then rescind martial law on Tuesday created turmoil in global financial markets. Despite authorities' pledge to provide 'unlimited liquidity' to stabilize conditions, Korean markets remain on edge.This incident highlights the sensitivity of currencies to political events. The sudden change in South Korea's political situation had an immediate impact on its currency, demonstrating the interconnectedness of global markets.
Cryptocurrencies and Bitcoin
Bitcoin had a momentous day as it catapulted above $100,000 for the first time. Even skeptics now anticipate a crypto-friendly Trump administration, which could fuel an extended rally. However, after this surge, bitcoin took a breather. Traders are locking in profits after Thursday's break above the $100,000 milestone.The world's most well-known cryptocurrency has been on a remarkable upward trajectory since November, driven by bets that Donald Trump's U.S. presidential election win will lead to a more favorable regulatory environment for cryptocurrencies. Trump's appointment of former PayPal Chief Operating Officer David Sacks as his artificial intelligence and cryptocurrency czar has added to the optimism surrounding bitcoin.
U.S. Non-Farm Payrolls and Federal Reserve
On the broader economic front, the U.S. non-farm payrolls report for November is set to be a key focus. Investors are eager to second-guess the pace of future Federal Reserve rate cuts. According to a Reuters survey, payrolls are expected to have increased by 200,000 jobs last month, following a meager increase of 12,000 in October, the lowest number since December 2020.The Fed will be cautious about placing too much weight on the expected steep rebound in payrolls. As long as the unemployment rate doesn't fall back to 4.0%, markets should be comfortable with the prospect of a rate cut this month. This sentiment is reflected in the CME FedWatch tool, which shows that markets currently see about a 72% chance of a 25-basis-point rate cut when the Fed meets on Dec. 17-18, up from 66.5% a week ago.
European Central Bank and Euro
For now, the European Central Bank is not expected to respond directly to the heightened political turmoil in Europe when it meets next week. Despite this, 73 out of 75 economists polled by Reuters believe the ECB will trim 25 basis points from its deposit rate on Dec. 12. Traders are also almost certain about a rate cut next week.The euro bloc currency has been on a downward trend this week, marking the fourth loss in the last five weeks. The euro slid 0.14% to $1.0574 after bouncing on Thursday as French bonds stabilized, moving further away from a two-year low of $1.03315 hit at the end of November. French President Emmanuel Macron's efforts to appoint a new prime minister are crucial in stabilizing the eurozone.
Bank of Japan and Rate Outlook
Traders are pondering the likelihood of a rate hike at the Bank of Japan's meeting on Dec. 18-19. Media reports published on Wednesday suggested the BOJ may maintain its current stance this month, confusing market expectations. However, comments from typically dovish policymaker Toyoaki Nakamura, who expressed his openness to rate hikes, helped push the currency higher on Thursday.The dollar was down 0.06% against the yen at 149.98. Government data showed that Japanese household spending dropped 1.3% in October compared to the previous year, performing better than expected. These economic indicators provide valuable insights into the global economic landscape and its impact on currencies.
In conclusion, the global financial markets are in a state of flux, with major currencies and cryptocurrencies being influenced by a variety of political and economic factors. Investors and traders alike are closely monitoring these developments to make informed decisions.Major Currencies in a Politically Turbulent Week
On Friday, major currencies showed stability as markets contemplated the effects of a politically tumultuous week. France's government collapsed, and South Korea briefly imposed martial law. These events sent ripples through the currency markets. In the broader economic front, the focus will be on the U.S. non-farm payrolls report for November. Payrolls are expected to have increased by 200,000 jobs last month, following a meager 12,000 increase in October. The Fed will be cautious about relying too heavily on this expected rebound. Sean Callow, senior FX analyst at InTouch Capital Markets, explains that as long as the unemployment rate doesn't fall back to 4.0%, markets should be comfortable with a rate cut this month. Currently, markets see a 72% chance of a 25-basis-point rate cut when the Federal Reserve meets on Dec. 17-18, up from 66.5% a week ago.The dollar index, which measures the U.S. currency against six rivals, rose 0.05% to 105.77 after slipping towards a three-week low in the previous session. The euro was down 0.05% at $1.0582 after bouncing on Thursday. French bonds stabilized, pulling away from a two-year low. French President Emmanuel Macron met with allies and parliament leaders to appoint a new prime minister to replace Michel Barnier.For now, the European Central Bank isn't expected to react to the heightened political turmoil in Europe when it meets next week. Almost all 75 economists polled by Reuters believe the ECB will trim 25 basis points from its deposit rate on Dec. 12. Traders are also certain about a rate cut next week. The euro bloc currency is on track to post a loss this week, the fourth in the last five weeks.Cryptocurrencies: Bitcoin's Rollercoaster Ride
In the world of cryptocurrencies, bitcoin took a breather after reaching a new milestone. It catapulted above $100,000 for the first time a day earlier but then hovered lower as traders locked in profits. The world's most well-known cryptocurrency has been on a tear since November, fueled by bets that Donald Trump's U.S. presidential election win will lead to a friendly regulatory environment. It briefly slid to a one-week low and was last down 1.41% at $97,616, off its all-time-high of $103,649 hit the previous day.Asian Currencies and Their Challenges
In Asia, the dollar was flat against the yen at 150.07 after government data showed Japanese household spending dropped 1.3% in October, better than expected. Traders are pondering the likelihood of a rate hike at the Bank of Japan's meeting on Dec. 18-19. Media reports on Wednesday suggested the BOJ may stand pat this month, confusing market expectations. However, comments from typically dovish policymaker Toyoaki Nakamura that he's not opposed to rate hikes helped push the currency higher on Thursday.The South Korean won held steady at 1415.5 after the chaos following President Yoon Suk Yeol's declaration and subsequent rescinding of martial law earlier this week.Elsewhere, sterling traded at $1.27545, down 0.04% on the day. The Australian dollar fetched $0.64465, hovering not far off Wednesday's four-month low of $0.63992. The kiwi traded at $0.5878, down 0.12%.The Battle for Playoff Supremacy on "Thursday Night"
Playoff Race Heating Up
The temperature might be getting colder, but the playoff race is heating up at an astonishing rate. The Detroit Lions, having had a stellar season, are roaring through the NFC and are on the verge of securing a spot in the 2024 NFL playoffs. All they need is a victory or a tie against the Green Bay Packers at home on Thursday. On the other hand, the Packers, currently sitting in the sixth spot in the NFC playoffs, need a win to keep pace with the competition. With only 15 teams still alive and vying for playoff positioning, every game counts.
Entering Week 14, only the New York Giants have been eliminated from postseason contention in the NFC. This leaves a lot of teams on the cusp of elimination, making every win critical for both the Packers and the rest of the NFC. The Lions and Packers meet in a critical divisional matchup that will determine a lot for both teams.
Key Players and Statistics
Christian Watson had a big play in the second half, catching a 59-yard pass from Jordan Love. Had Love placed the ball a bit better, Watson might have scored a touchdown. Jared Goff and Matthew Stafford's trade in 2021 has had a significant impact on both teams. The Rams got Stafford, while the Lions got Goff and some valuable picks that have helped them become a Super Bowl contender this season.
Looking at the halftime stats, Jordan Love had 3-of-7 passing for 31 yards and 3 carries for 21 yards. Josh Jacobs had 9 carries for 49 yards and a touchdown. Christian Watson had 1 catch for 20 yards. On the Lions' side, Jared Goff had 14-of-20 passing for 131 yards and a touchdown. David Montgomery had 7 carries for 32 yards and a touchdown. Jahmyr Gibbs had 8 carries for 14 yards and a receiving touchdown.
First Half Showdown
The Lions got the better of the Packers in the first half, outgaining them 174-105 and holding Jordan Love to just 31 passing yards. Green Bay had a key turnover that led to the Lions' field goal. However, the Packers were running the ball better, with Josh Jacobs having 49 yards and a touchdown on nine carries. The Lions will continue to utilize their balanced offense while looking to pressure Love. Their defense has shown some weaknesses, but if they can hold up, they have a good chance to extend their winning streak to 11 games.
Second Half Dramatics
The Packers went run-heavy after the Lions' field goal drive and saw Josh Jacobs punch in a 1-yard touchdown. Jordan Love had his longest run of the season on the drive, but had issues through the air. The Lions also had their moments, with Jared Goff throwing a fourth-and-goal score to Jahmyr Gibbs. Jake Bates made the extra point to give the Lions a 10-point lead with 11 seconds left in the half.
Alim McNeill's injury update was good news for the Lions. He cleared the NFL's concussion protocol and returned to the game. The Lions also had some key plays, like Jake Bates making a 43-yard field goal after Christian Watson's fumble and the Lions recovering it. The Packers had some challenges too, like Jordan Love overthrowing Dontavyion Wicks.
Final Quarter Struggles
The Lions defense continued to hold up well despite injuries. They pressured Jordan Love on a third-and-5 and forced him to throw an incomplete pass. The Packers also had their struggles, like being forced to punt after a three-run sequence that didn't gain much yardage. The Lions are in a good position to win the NFC North if they can continue to play well.
With three divisional games left in the final five-week gauntlet, the Lions are in the best position to win the NFC North. They have a perfect record against NFC North opponents and are in sole possession of first place. A win against the Packers on Thursday would clinch a playoff berth and the head-to-head tiebreaker over Green Bay. The Packers, on the other hand, need a lot to go their way to have a shot at the NFC North title.