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The US ISM manufacturing report confirmed worries about the impact of the US trade war and raised a fresh set of Fed questions. The yen was the top performer while the US dollar lagged. Nonfarm payrolls are due up next but a speech from Fed chair Powell could steal the show on Friday at 15:15 GMT/London. Currently, Fed funds futures show a greater chance of the Fed cutting interest rates in 2019 than raising them.

بين اليورو و الداو (فيديو للمشتركين)

The December ISM manufacturing index fell to 54.1 from 59.3. Economists expected a drop to 57.5 after some weak regional numbers but the fall was worse than the lowest estimate and the largest one-month drop since 2008. In particular, the new orders component cratered to 51.1 from 62.1 and commentary in the report heavily emphasized tariffs.

The drop led to a wave of speculation that the Fed is going to have to do a 180-degree turn and cut rates late this year. The implied odds are now up to 40% and Treasury yields dropped on the same concern.The US dollar sank as its yield advantage erodes and concerns mount about US multinationals after Apple's China warning. The S&P 500 fell 62 points to 2447.

The dollar was particularly hard hit against the commodity currencies late in the day but was sold across the board. In the past four months the market has been scrambling into US dollars on a safety trade but as the economic numbers come in it will be more clear who the winners and losers are. If there's some US-centric weakness, then watch out for a quick reversal in the dollar's gains.

Friday's non-farm payrolls report will be a part of that. The ADP data hinted at a very strong number as it showed 271K new jobs compared to 180K expected. This may simply be part of the secular shift towards seasonal hiring and a sign that some retirees are pulled back into the labor force at this time of year. In any case, the risks may be skewed to downside for the dollar. A strong non-farm payrolls would be brushed off as a lagging indicator while a weak reading would be interpreted as a sign of trouble.

The lasting dollar trade may come on Powell's comments. He's undoubtedly pivoting away from his hawkish stance and it's only a matter of how quickly he wants to do it. On Thursday, Kaplan said he wants to wait through Q2 in a pause, Powell may say something similar.

Also, don't forget the Canadian employment report which is due at the same time as non-farm payrolls. The November print was +94.1K which was the strongest on record. The consensus is for a still-rosy +6K but there's a risk of a major give-back and Thursday's big rally in the loonie could be reversed.

بعد مرور ستة أشهر على اليوم الذي أصبحت فيه شركة أبل العملاقة للتكنولوجيا أول شركة في العالم تصل إلى قيمة سوقية تبلغ 1 تريليون دولار، تراجعت أسهم الشركة بنسبة 9٪ بعد إغلاق جلسة التداول يوم الخميس بعد أن خفضت الشركة توقعات إيراداتها لأول مرة منذ عشرين عامًا تقريبًا، مستشهدةَ بتحسينات أقل من المتوقع لأجهزة الآيفون الجديدة الناتجة عن ضعف الاقتصاد الصيني وصعوبات التوريد إلى نماذج أحدث من آيباد برو و ساعة آبل. وحدث الانخفاض بنسبة 8 ٪ في أسهم أبل يوم الأربعاء على خلفية الهبوط بنسبة 32 ٪ في الربع الرابع من عام 2018، وهو أكبر انخفاض ربع سنوي منذ الربع الثالث من عام 2008 (خلال الأزمة المالية الكبرى). التحليل الكامل

Yen pairs have soared at about 17:45 Eastern (22:45 GMT/London) in a similar on a combination of late reaction to plummeting equity futures following negative guidance from Apple. USDJPY collapsed from 108.90 to 104.87 in under 5 minutes. Like the pound flash crash in October 2016, the JPY flash rally has occured in the sleepiest part of the trading dray, when Asian traders are not only not at their trading desks, but also because Japanese markets are officially still holiday. Japanese markets don't re-open til Friday (unofficially next week), which sets up a dangerous combination of ultra-light liquidity and automatically triggered algos to unleash lightening volatility. The market was already concerned about China and Apple thew gasoline on the fire late Wednesday by cutting its guidance and blaming an economic slowdown in China.  Today's new trade has been covered in detail in the Premium video below, while the AUDUSD long was stopped out.

The dip below 50 in the Caixin China PMI shouldn't have been a big surprise after the official measure broke that key level last week but it reinvigorated worries about a slowdown and sparked a run on risk trades.

Equity markets showed some resilience with the S&P 500 closing slightly higher after futures had fallen as much as 60 points. The FX market was less enthusiastic as the yen crosses and Aussie remained near the lows.

The big surprise came late in the day when Apple CEO Tim Cook cut guidance for the current quarter and blamed it almost entirely on an economic slowdown in China. “We did not foresee the magnitude of the economic deceleration, particularly in Greater China,” he wrote.

Apple's letter sent shares down 8.5% in the aftermarket but also sent AUD/USD to a fresh 22-month low of 0.6970. Companies often have especially good insight into real-time trends in the economy and a big-ticket item like an iPhone can be a particularly good gauge.

At the same time, China has been targeting Apple and that included an import ban in the quarter and a boycott in favor of Huawei may also be a factor. Yet this isn't an isolated factor and it will put an added emphasis on data.

Apple's China: From Saviour to Scapegoat

Most analysts specializing in Apple agree that the downgrade of revenue estimates was not the big surprise, but rather it was the degree that it was concentrated on China. This is especially dangerous because Apple's decision to expand into China's vast market 5 years ago was seen as the only way to maintain its stellar growth rate.

The last day of 2018 is winding down with more conflicting signals. The latest China PMI showed just how hard tariffs are hitting, while Trump on the weekend hinted at progress in trade talks. Markets started the week relatively flat ahead of last week's madness. Normally we'd expect extremely quiet trade through New Years but this year-end has been anything but normal. Tomorrow is a holiday almost everywhere, and US data on ISM and jobs will be released on Thursday and Friday respectively. The charts below rank the performance of global indices, FX and commodities.

President Trump teed up an upbeat start to the week after tweeting on Saturday that he had a call with Chinese President Xi and cited 'big progress made' on a comprehensive trade deal. Mid-level US officials will travel to China in the week of January 7 with 60 days remaining to broker a deal.

The optimism about a China deal was balanced by worry about Chinese industry after the official manufacturing PMI fell to 49.4 from 50.0. It was expected to remain unchanged. The drop is a fall to the lowest since July 2016. It was tempered by some good news in the services PMI at 53.8 compared to 53.2 expected.

The market is trying to sort out whether the global economy is simply slowing or grinding to a recession. There is concern about US industry as well but on Friday the Chicago PMI posted a reading of 65.4 compared to 60.3. That was in sharp contrast to a plunge in the Richmond Fed.

What will make the outlook going forward tricky is that the US Commerce Dept is shut down along with many other parts of the Federal government. That delayed Friday's planned releases of trade balance data and wholesale inventories. There's no sign of an end to the shutdown.

In Europe, Italy passed the 2019 budget after an acrimonious process. That ends this chapter but the seeds have been sewn for future problems.

Thank you all for your continued support and comments and wishing you a happy and healthy 2019.