United States of America

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

Investors are focused on the personal consumption expenditure index (PCE) for September: it increased from 0.2% to 0.3% MoM and remained at 2.7% instead of the expected 2.6% YoY. Thus, inflationary pressure in the American economy has stabilized, which may give US Federal Reserve officials an argument to reduce the number of interest rate adjustments this year to one, by 25 basis points. The number of initial jobless claims last week was adjusted by 216.0 thousand, which was lower than both the forecast of 229.0 thousand and the previous figure of 228.0 thousand, while the total number of citizens receiving assistance from the state decreased from 1.888 million to 1.862 million instead of the expected increase to 1.890 million. Thus, the labor market once again demonstrated resilience to the current measures of the regulator, which may cause a cautious approach when adjusting monetary policy.

Eurozone

EUR is strengthening against USD, weakening against JPY, but has ambiguous dynamics in pair with GBP.

Investors are focused on the publication of preliminary inflation data for October: the consumer price index (CPI) increased from ˗0.1% to 0.3% MoM and from 1.7% to 2.0% YoY, while the core indicator grew from 0.1% to 0.2%, MoM and remained at 2.7% YoY with preliminary estimates of 2.6%. The most noticeable (by 2.9%) increase in price was food, alcohol, and tobacco. These data contradict the opinion of those officials of the European Central Bank (ECB) who are afraid of too strong a slowdown in consumer price growth in the Eurozone and reduce the likelihood of accelerating the pace of easing monetary policy from 25 basis points to 50 basis points. Nevertheless, experts are confident that the regulator's “dovish” course will continue. The euro's strengthening is facilitated by the publication of September data on retail sales in the German economy, which turned out to be positive: MoM, sales volume grew by 1.2% instead of the expected decline of 0.7%, and YoY, it increased by 3.8% with a forecast of 1.6%.

United Kingdom

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

The focus remains on the new government budget, presented yesterday by Chancellor of the Exchequer Rachel Reeves, which has caused a mixed reaction among investors. The document assumes a significant increase in taxes to ensure the receipt of 40.0 billion pounds to the treasury: in particular, companies' contributions to the National Insurance Fund (NI) will increase to 15.0%, while the capital gains tax (CGT) will increase from 10.0% to 18.0% for low–rate payers and from 20.0% to 24.0% for high-rate ones. All this can put significant pressure on the business, reducing the likelihood of profit growth, which raises concerns of investors who abandon the pound. On the other hand, the government has planned to increase spending on health, education, and infrastructure upgrades, which, according to the Office for Budget Responsibility (OBR), could lead to an acceleration in inflation rates to 2.6% in the coming year. The likelihood of increased inflationary pressure in the economy, in turn, may lead to the Bank of England (BoE) refusing to ease monetary policy. Against this background, analysts at the financial company Goldman Sachs now expect that the regulator will keep interest rates at current levels in December, while it was previously believed that officials could reduce the cost of borrowing by 25 basis points.

Japan

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

Investors are focused on the results of the Bank of Japan (BoJ) meeting that ended today, at which the key rate was kept at 0.25%, but officials hinted at the possibility of increasing it in the future. The regulator also predicted that inflation in the coming years will be within the target of 2.0% and emphasized the possibility of further tightening of monetary policy in the event of further economic recovery. However, BoJ Governor Kazuo Ueda told reporters that there is no specific plan to raise interest rates, and each next step by monetary authorities will depend on incoming economic data. It should be noted that most economists polled by Reuters still believe that the Bank of Japan will not switch to a “hawkish” course in the near future but will begin active actions by March 2025.

Australia

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

September retail sales data was released today and was negative, rising 0.1% month-on-month instead of the expected 0.3%. The statistics highlights the pressure on Australian household finances due to persistently high inflation and the Reserve Bank of Australia’s (RBA) refusal to cut interest rates. Also released today were preliminary September construction data, with building permits up 4.4% instead of the expected 2.2%, while single-family home permits were up 2.2%.

Oil

Oil prices are making moderate attempts to grow today.

The report on oil reserves published yesterday by the Energy Information Administration of the US Department of Energy (EIA) recorded a decrease of 0.515 million barrels instead of a correction of 1.500 million barrels, while gasoline reserves fell by 2.707 million barrels and distillates – by 0.977 million barrels. The October data on business activity in China published today recorded its growth, which indicates that government measures to support the economy have been effective: the Manufacturing PMI increased from 50.0 points to 50.2 points, and the Services PMI – from 49.8 points to 50.1 points. Additional support for prices is provided by the expectation of a postponement of the increase in oil production by 180.0 thousand barrels per day by OPEC . According to Reuters, producers may decide on this as early as next week.