ForexLive European FX news wrap: Equities and risk appetite roiled as US shutdown looms

Headlines:

• US futures sink lower on the session
• Trump: EU must make large scale purchase of US oil and gas or face tariffs
• What is the distribution of forecasts for the US PCE?
• ECB’s Lane: We only have to be restrictive if inflation momentum is above 2%
• Germany November PPI +0.5% vs +0.3% m/m expected
• UK November retail sales +0.2% vs +0.5% m/m expected
• UK December CBI retailing reported sales -15 vs -18 prior

Markets:

• CHF leads, AUD lags on the day
• European equities lower; S&P 500 futures down 1.1%
• US 10-year yields down 3.2 bps to 4.538%
• Gold up 0.4% to $2,604.93
• WTI Crude down 0.9% to $68.72
• Bitcoin down 4.3% to $93,076

There’s no festive cheer in markets as we look to the final real trading day of the year. Instead, there is an overhang with dark clouds circling over the US Congress amid an imminent government shutdown.

Trump’s spending bill failed to pass the House vote and now the clock is ticking until midnight before it all goes up in flames. And markets are certainly not taking too kindly to that.

Risk trades are on the ropes as equities are being punished hard following the late selling in Wall Street yesterday. European indices are down well over 1% while S&P 500 futures are now down 1.1% as well, after having held down by around 0.2% at the start of the session.

USD/JPY is also falling to 156.65 with Treasuries also catching some bids, with the pair falling from around 157.10 earlier in the day.

Besides that, EUR/USD continues to hug near the 1.0400 mark amid large option expiries but the Swiss franc is also bid amid the risk retreat in European assets. USD/CHF is down 0.6% to 0.8930 on the day.

Elsewhere, gold is up amid a more sluggish dollar with the precious metal climbing back just above $2,600. And Bitcoin is hammered down to $93,000 levels after its fall from grace down from six figures.

It’s the home stretch now before we get to the Christmas and New Year’s holidays. I wish everyone a wonderful festive period and thanks for all the support and teachings in 2024. Have a wonderful year-end!

This article was written by Justin Low at www.forexlive.com.