United States of America

USD is strengthening against EUR and GBP but weakening in pair with JPY.

Preliminary data on the construction market for October were published today, which turned out to be negative: the number of issued building permits fell by 0.6% to 1.416 million, while the number of new homes under construction fell by 3.1% to 1.311 million. Thus, the sector is under pressure, which in previous conditions could have helped reduce the cost of borrowing by the US Federal Reserve, but now the steps of monetary authorities are impossible to predict, since officials are waiting for the tax cuts announced by the newly elected President Donald Trump and the introduction of additional trade tariffs. Experts fear that these actions could cause an acceleration of inflation, the consequences of which will have to be offset by monetary measures.

Eurozone

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

Today, October inflation data in the Eurozone was published, which met analysts' forecasts: the indicator increased from ˗0.1% to 0.3% MoM and remained at 2.0% YoY, while the core consumer price index (CPI) also remained unchanged – at 0.2% MoM and 2.7% YoY. Thus, price pressure in the European economy has stabilized around the target levels, which introduces some uncertainty into the further actions of the European Central Bank (ECB). In this regard, it is worth noting the latest comments by the Bank of Italy Governor Fabio Panetta, who today said that the regulator should reduce interest rates so that they no longer restrain economic growth, but stimulate it, since the EU economy is on the verge of stagnation. The official also noted that the current key rate is not neutral and will have to be reduced. According to Panetta, it is also necessary to more actively inform businesses about upcoming decisions to help them prepare for the changes.

United Kingdom

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

Investors are focused on comments from Bank of England (BoE) Governor Andrew Bailey, who told the Treasury Select Committee today that the big rise in National Insurance contributions planned in the Labour government’s new budget could lead to higher prices for goods and services, as well as a slowdown in wage growth and a reduction in hiring. If consumer prices start to rise significantly again, the regulator will have to maintain the current monetary policy course for a long time. It is also worth noting the results of the latest Reuters poll of leading economists: a majority of respondents believe that the BoE will not cut its key rate in December amid renewed concerns about rising inflation due to the introduction of trade tariffs by the administration of US President-elect Donald Trump. However, experts expect borrowing costs to fall by 25 basis points each quarter over the next year.

Japan

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

Investors are preparing for the publication of October foreign trade data on Wednesday: exports are expected to grow by 2.2% after falling by 1.7% the previous month, while imports could fall by 0.3% after a 2.1% correction in September, contributing to the trade deficit to 360.4 billion yen. The fulfilment of these forecasts will give hope for continued economic growth but is unlikely to be regarded by experts as a reason for serious optimism: most of them fear that foreign trade will soon come under pressure due to the increase in trade tariffs by the administration of US President-elect Donald Trump. This will create additional difficulties for manufacturers and could cause an economic downturn, which means that the Bank of Japan (BoJ) is unlikely to undertake another increase in interest rates before the beginning of next year.

Australia

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

Investors are focused on the publication of the minutes of the latest meeting of the Reserve Bank of Australia (RBA): the document indicates that officials believe the current parameters of monetary policy are optimal for reducing core inflation, which is still too high. According to the regulator, the key rate will remain at the current level for some time before starting to decline in 2025. According to RBA officials, the cost of borrowing should begin to be reduced if consumption is stable, and the state of the labor market deteriorates significantly. If consumption remains weak, then interest rates should be left unchanged.

Oil

Oil prices are showing ambiguous dynamics today: the morning decline has given way to growth, but pressure remains amid the resumption of production at the largest in Western Europe field, Johan Sverdrup in Norway, after the consequences of a power grid failure have been eliminated.

Nevertheless, a significant decline in prices is being hampered by increasing geopolitical tensions: the permission of the US President Joe Biden's administration to strike with American weapons deep into Russian territory has prompted warnings from official Moscow about the possibility of retaliatory strikes, including with the use of nuclear weapons. During the day, investors are also awaiting the publication of a report on reserves from the American Petroleum Institute (API): they are predicted to grow by 0.800 million barrels, which could put additional pressure on the quotes of “black gold”.