United States of America

USD weakens against EUR, GBP, and JPY.

Investors are assessing yesterday’s comments by US Fed Chairman Jerome Powell, who said that continued economic growth and a stable labor market allow the regulator to exercise caution in making decisions on further monetary policy easing. Along with an increase in the consumer price index from 2.4% to 2.6% and the producer price indicator from 1.9% to 2.4%, these statements have caused traders additional concerns about the US Fed’s refusal to adjust the interest rate in December and a slowdown in the pace of reduction in borrowing costs next year to 4.00–3.75% instead of the 3.0% previously expected. In addition, the October retail sales changed from 0.8% to 0.4%, although experts expected 0.3%.

Eurozone

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

In October, the German wholesale price index rose from –0.3% to 0.1% MoM and from –1.6% to –0.8% YoY. Inflationary pressures in Germany are increasing but are unlikely to affect the need for monetary easing by European Central Bank (ECB) officials since, according to experts, the entire bloc will soon come under pressure from new trade tariffs from the US President Donald Trump administration. Today’s ECB meeting minutes reflected the differences in the views on the risks of extreme inflation decrease. Most believe it will reach the 2.0% target earlier than expected at the end of next year if gross domestic product (GDP) growth slows or goes into recession and wage and inflation expectations weaken. However, some officials said there were risks of a more severe slowdown in price growth than the ECB’s current target of below 2.0%, which would require a sharper increase in borrowing costs.

United Kingdom

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

The Q3 preliminary gross domestic product (GDP) was ambiguous. It increased by 0.1% QoQ versus forecasts of 0.2% and by 1.0% YoY, exceeding estimates of 0.1%. The September figure decreased by 0.1% versus 0.2% MoM and 1.0% versus 1.1% YoY. The country’s economy is under pressure due to a significant increase in the tax burden on businesses, announced by Chancellor of the Exchequer Rachel Reeves in the new government budget. In addition, September industrial production changed by –0.5% versus preliminary estimates of 0.1% MoM and by –1.8% versus –1.2% YoY. So, the Bank of England officials may move to faster easing of monetary policy to support the economy. However, not all officials agree with such actions yet. Thus, yesterday, the regulator’s board member Catherine Mann said it was necessary to keep interest rates at the previous level until the risks of accelerating inflation disappear, including those associated with the election of the Republican Party representative Donald Trump as US President.

Japan

JPY is strengthening against EUR, GBP, and USD.

The Q3 preliminary gross domestic product (GDP) reflected a slowdown from 0.5% to 0.2% QoQ and from 2.2% to 0.9% YoY against a decrease in capital investment, although private consumption increased by 0.9%. Experts fear that the negative impact on the economy will increase due to the slowdown in Chinese GDP and the introduction of additional import duties by the administration of the new head of the White House, Donald Trump, because of which Bank of Japan officials will not raise the interest rate soon, and the weakening of the national currency will continue. On the other hand, September industrial production accelerated from 1.4% to 1.6%, exceeding the expected 1.4%.

Australia

AUD is weakening against JPY and EUR but strengthening against USD and GBP.

Economists at the National Australia Bank have changed their forecasts for the Reserve Bank of Australia’s (RBA) next steps. Previously, it was assumed that monetary policy easing would begin in February. Now, the experts consider it will not happen until at least May amid a strengthening labor market and the continued risks of accelerating inflation.

Oil

Oil prices began to decline under the influence of several opposing factors.

Thus, the industrial production in China amounted to 3.4% MoM compared to the forecasts of 3.5% and 5.3% instead of 5.5% YoY, while the country’s factories processed 4.6% less crude oil than a year earlier, which puts pressure on oil prices. On the other hand, the decline in the quotes is curbed by yesterday’s data from the Energy Information Administration, which reflected growth in the US crude oil inventories by 2.089M barrels, while gasoline inventories fell by 4.407M barrels and distillates by 1.394M barrels.