United States of America

USD is weakening against its main competitors – EUR, GBP, and JPY.

Investors are preparing for the release of inflation and labor market statistics, which are likely to confirm the effectiveness of the US Fed's monetary policy. The core personal consumption expenditure price index in September is expected to increase from 0.1% to 0.3% MoM but will remain at 2.7% YoY. Unemployment is forecast to be around 4.1%, but employment will also slow from 254.0 thousand to 111.0 thousand, and average wages will slow from 0.4% to 0.3%. Thus, inflationary pressure in the economy will remain stable, and the labor market may show new signs of weakening. The implementation of these forecasts will be an argument for continuing the “dovish” course at the November meeting.

Eurozone

EUR is strengthening against USD but is showing ambiguous dynamics in pairs with JPY and GBP.

It is worth noting the comments of the Belgian central bank chief Pierre Wunsch, who said today that the European Central Bank (ECB) does not yet need to accelerate the pace of interest rate cuts, since the employment level remains high, as well as real wages, confirming the likelihood of a “soft landing” in the economy. At the same time, the official allowed for a decrease in inflation below the target level of 2.0% but considered this prospect short-term. In addition, today representatives of the German concern Volkswagen AG announced that they are considering the possibility of closing three plants in Germany soon, significantly reducing the number of jobs, reducing wages at enterprises by 10.0% and abandoning their indexation in 2025 and 2026. These plans were the result of weak sales of products combined with rising costs of electricity, materials, and labor, which significantly reduce the company's profits. Similar problems affect other German industrial companies, whose deteriorating situation is putting additional pressure on the Eurozone economy.

United Kingdom

GBP is strengthening against USD and has ambiguous dynamics in pairs with JPY and EUR.

Today, the October data on retail sales from the Confederation of British Industry (CBI) was published: the indicator fell from 4.0 points to ˗6.0 points against preliminary estimates of ˗9.0 points, demonstrating a refusal of consumers to shop ahead of the publication of the state budget, which is expected to reflect new steps by the authorities to increase tax duties. Against this background, the business confidence index fell from 47.0% to 44.0%, reaching a four-month low: representatives of national enterprises predict a change in trading activity in the event of an increase in the debt burden.

Japan

JPY is strengthening against USD but is showing ambiguous dynamics in pairs with GBP and EUR.

Investors are preparing for the Bank of Japan meeting on Thursday. Recall that the latest inflation data from the Tokyo metropolitan area showed a slowdown in the growth rate of consumer prices: YoY basis, the indicator fell from 2.1% to 1.8%, and the core indicator – from 2.0% to 1.8%, leveling out the likelihood of tightening monetary policy by the Japanese regulator. Nevertheless, experts note that the authorities will not be able to ignore the general weakness of the national currency for long, which may lead to an increase in interest rates in December of this year or January next year.

Australia

AUD is weakening against GBP, JPY, and EUR but is ambiguous dynamics in pair with USD.

Investors are preparing for the release of inflation data for the third quarter on Wednesday, with consumer price index (CPI) expected to fall from 1.0% to 0.3% QoQ and from 3.8% to 2.3% YoY, while the weighted average is expected to fall from 0.8% to 0.7% QoQ and from 4.1% to 3.6% YoY. If those forecasts prove to be correct, the Reserve Bank of Australia (RBA) could be swayed to cut borrowing costs, weakening the Australian dollar. However, experts do not expect the regulator to take any action until early 2025, as overall consumer price growth remains high.

Oil

Oil prices are actively falling today amid limited consequences of Israel's retaliatory strikes on Iranian territory over the weekend.

The missile attack did not affect either the Islamic Republic's oil production or nuclear infrastructure, and, apparently, the damage from it was insignificant. Experts note that the Iranian leadership is unlikely to take any retaliatory steps, thus, the risks of interruptions in supplies to the Middle East oil market have significantly decreased, putting pressure on quotes.