Key Releases
United States of America
USD is weakening against JPY and GBP but has ambiguous dynamics in pair with EUR.
Investors are focused on comments from US Federal Reserve officials regarding further steps in the field of monetary policy: yesterday, Federal Reserve Bank (FRB) of Minneapolis President Neel Kashkari said that continuing the “moderate” reduction in borrowing costs looks appropriate to keep inflation near the target level of 2.0% while avoiding too much pressure on the labor market. The official noted that the current key rate of 4.75–5.0% continues to limit economic growth, but it is unclear by how much. Fed Governor Christopher Waller said that the US economy is still growing at a faster pace than desired, so future adjustments to the cost of borrowing should be less aggressive. Nevertheless, the official confirmed that the US Fed intends to gradually move to a “dovish” monetary policy course over the next year. Currently, most experts believe that the regulator will cut the key rate two more times before the end of the year, by 25 basis points each.
Eurozone
EUR is weakening against JPY and GBP but has ambiguous dynamics in pair with UD.
Today, the October data on the economic sentiment index from the Center for European Economic Research (ZEW) was published: the indicator for the Eurozone countries increased from 9.3 points to 20.1 points, exceeding the expected 16.9 points, and the index for Germany increased from 3.6 points to 13.1 points instead of 10.2 points. Experts note that the improvement in the sentiment was facilitated by stronger investor confidence in a further slowdown in inflation and the easing of monetary policy by the European Central Bank (ECB), as well as hopes for an increase in export demand. The August data on industrial production published today also turned out to be positive: its volume increased by 0.1% MoM against preliminary estimates of ˗1.0%, and YoY, it grew by 1.8%.
United Kingdom
GBP is strengthening in pairs with EUR and USD but is showing ambiguous dynamics against JPY.
Investors are focused on the publication of August data on the labor market, which turned out to be positive: the unemployment rate fell from 4.1% to 4.0%, employment increased from 265.0 thousand to 373.0 thousand against expectations of 250.0 thousand, while the average level of wages with bonuses slowed growth from 4.1% to 3.8% and excluding them – from 5.1% to 4.9%. Thus, in August, employee compensation grew at the slowest pace since the beginning of the COVID-19 pandemic, which gives experts reason to believe that the Bank of England will continue to cut interest rates in the near future.
Japan
JPY is strengthening against EUR and USD but has ambiguous dynamics in pair with GBP.
In the absence of significant economic releases, the yen's movement was determined by external factors. It is worth noting the publication of the results of a new survey of leading economists on the Bank of Japan's further actions, conducted by Reuters: now more than half of respondents expect the regulator to leave the key rate at the current level until the end of the year, but increase it no later than March. The delay in tightening monetary policy will largely occur due to the position of Prime Minister Shigeru Ishiba, who opposes such steps. In addition, the new Japanese cabinet plans to allocate an additional 13.0 trillion yen to combat inflation, replacing monetary methods of restraining consumer prices with measures to support and subsidize citizens.
Australia
AUD is weakening against GBP, EUR, and JPY but has ambiguous dynamics in pair with USD.
Prime Minister Anthony Albanese today announced a new building program to tackle the country’s housing shortage, with plans to build 1.2 million homes by 2030, which should help ease price pressure in one of the world’s most expensive housing markets, where prices rose for the 19th month in a row in September, up 7.1% from a year earlier. As well as reducing housing costs, the new program should also help slow overall inflation.
Oil
Oil prices are pressured today amid a diminishing likelihood of Israeli strikes on Iranian oil infrastructure and lower forecasts for global demand for oil products.
According to the Washington Post, Israeli Prime Minister Benjamin Netanyahu told US officials that even if Iran were to be attacked, military facilities, not nuclear or oil infrastructure would be targeted. Thus, fears of disruptions in the supply of Middle Eastern oil to the market have significantly diminished. Meanwhile, the International Energy Agency (IEA) and the OPEC cartel have adjusted their forecasts for global oil demand growth downwards, which also contributed to the decline in quotes.
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