United States of America

USD is strengthening against GBP but is ambiguous against EUR and JPY.

Investors are focusing on the October Automatic Data Processing (ADP) employment data and preliminary Q3 gross domestic product (GDP). Nonfarm employment change increased by 233.0K, exceeding both the forecast of 110.0K and the previous 159.0K. The largest number of new jobs were added in the education and healthcare sector (53.0K), as well as in the trade, transportation, and utilities sectors (51.0K), which are increasing at the fastest rate since July 2023. GDP accelerated by 2.8% compared to the estimate of 3.0% amid an increase in domestic demand. Personal spending rose by 3.7%, the highest since 2023, and federal government spending by 9.7%. Thus, the labor market remains strong, and GDP is stable, which does not meet the US Fed’s criteria for significant monetary policy easing and strengthens the dollar. Nevertheless, analysts are still confident that the regulator will adjust the interest rate by –25 basis points at the November meeting but the prospects for the December adjustment are still uncertain.

Eurozone

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

Today, preliminary EU and German Q3 gross domestic product (GDP) and German October inflation statistics were published. The European GDP grew by 0.4% QoQ versus the forecast of 0.2% and by 0.9% YoY instead of 0.8%. Experts note that the improvement in the indicators was due to business confidence in the inflation slowdown and the interest rates cut by the European Central Bank (ECB). The largest economy in the Eurozone, Germany, against increased demand and government spending, adjusted by 0.2% instead of the expected –0.1%, avoiding a technical recession, and by –0.2% versus –0.3%. Experts assume that this year, the indicator will decrease by 0.2% and next year, it will show zero dynamics. The German consumer price index increased from 0.0% to 0.4% MoM, exceeding the forecast of 0.2% and from 1.6% to 2.0% YoY instead of 1.8%.

United Kingdom

GBP weakens against USD, JPY, and EUR.

Investors are focused on the presentation of the new Labor government’s first state budget. Finance Minister Rachel Reeves began her speech by declaring that the previous Conservative government left a 22.0B pound black hole in the public finances and that to close it and ensure further sustainable development, taxes should be raised by 40.0B pounds. The official acknowledged that it is a difficult decision but noted that the situation requires intervention. It is planned to increase the employer contribution to the National Insurance (NI) fund from 13.8% to 15.0%, and Capital Gains Tax (CGT) from 10.0% to 18.0% for low-rate taxpayers and from 20.0% to 24.0% for high-rate taxpayers. Reeves also announced forecasts from the UK Office for Budget Responsibility, according to which the country’s gross domestic product (GDP) growth will be 1.1% this year and 2.0% next year. Investors reacted negatively to the government’s plans, believing that business would come under pressure, which led to a weakening of the pound.

Japan

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

On Thursday at 05:00 (GMT 2), the results of the Bank of Japan meeting are due. Against stabilizing inflation around 2.0% and pressure from new Prime Minister Shigeru Ishiba, the regulator may keep interest rates at 0.25%. Earlier, the head of the department, Kazuo Ueda, emphasized the need to carefully study such risks as uncertainty about the US economy and the effects of market volatility. Experts expect that Bank of Japan officials may return to “hawkish” rhetoric no earlier than the beginning of next year but do not rule out that, given the weakening national currency, they may begin adjusting monetary policy earlier.

Australia

AUD is strengthening against EUR, JPY, GBP, and USD.

Investors are focusing on the Q3 inflation data. The consumer price index fell from 1.0% to 0.2% MoM, exceeding the forecast of 0.3%, and from 3.8% to 2.8% YoY against 2.3%, while the weighted average indicator adjusted from 0.8% to 0.9% MoM and from 4.2% to 3.8% YoY. Overall, the indicators reached a three-year low amid government subsidies for electricity and lower gasoline prices. However, high inflation in the services sector remained, and the Reserve Bank of Australia (RBA) cannot retreat from the current “hawkish” monetary policy.

Oil

Oil prices are rising, supported by reports of a change in the OPEC position on oil production volumes and a report from the American Petroleum Institute (API) on oil reserves.

According to sources of the Reuters agency, the cartel may postpone the planned increase in production by 180.0K barrels per day from December to January or further, depending on market conditions. Statistics on oil reserves recorded a correction in the indicator by –0.573M barrels instead of the expected 2.300M barrels. Today at 16:30 (GMT 2), similar data is due from the Energy Information Administration of the US Department of Energy (EIA), which may reflect an increase of 1.500M barrels, putting pressure on oil prices.