The goal is to keep the music playing at least until December 31.
Yesterday was all about US rates that pushed higher. As a consequence, the Yen/US$ weakened, but the Euro/US$ strengthened. This is rather odd.
If we compare the US/German rate differentials to the exchange rate evolution, we can see that the Euro/US$ should be much weaker than it is.
On the other hand, the Yen/US$ closely follows rate differentials.
We can also connect this to the fact that US stock market volatility plunged after the BOJ NIRP policy was announced early in 2016. Since that time, the 20DMF has never crossed below -1% and only twice touched +1%. This tells us of a steady flow of money that is typical of index investing or central bank ETF buying activity. Hence, US equities are mostly supported by Japanese money.
Of course, nothing says that this will stop on January 1rst. What we can only say is that there is no incentive for a reversal before yearly gains can be officially booked.
What we can see below is that index investors now are much more cautious. Hence, I suspect that January may be negative.
Coming back to the Euro/US$ strength, which is not in line with the increasing rate differentials, I suspect that China must be adjusting its reserves by selling US$/Euro. I also believe that when this adjustment is over, US$/Euro exchange rates will catch up with the rate differentials. Anyway, US QE reversal combined with the ECB QE continuation points also in the same direction (a stronger US$.)
Conclusions:
This market still has all that it takes to move higher, but the closer we will get to the end of the year, the less sustainable the uptrend will be.
