Commodities lower, rate expectations lower, but dollar higher

•      Commodities lower, rate expectations lower, but dollar higher

–    Copper down almost 8%, corn off 4%, Brent down but WTI up a bit (for now)

–    Fed funds rate expectations fall another 5 bps in the long end

–    But USD rises vs all G10 currencies except JPY

•      NFIB indices suggest healthy job market

–    Employment & workers’ compensation indices both rose; they’re correlated with the employment cost index. Suggest average earnings figure was an anomaly

–    Fed likely to be encouraged, keep them on tightening path

•      Mood on CAD getting bearish as USD/CAD approaches 1.20

–    Deputy Gov speech implies lower oil prices will affect monetary policy due to fears about growth = doubly CAD-negative

•      JPY up as stocks down, as usual

–    But talk is BoJ may lower its CPI forecast = JPY-negative

•      Today:

–    Eurozone: European Court of Justice to give non-binding opinion on ECB’s OMT program. Negative opinion could cause EUR to rise, positive might have little impact

–    UK:  BoE Gov. Carney & Co. to testify in Parliament on the Financial Stability Report

–    US: retail sales for Dec forecast to drop; Beige Book coming out