United States

USD is strengthening against EUR, GBP, and JPY.

Yesterday, Kansas City Federal Reserve Bank President Jeffrey Schmid said it was unclear how much further interest rates would be cut. However, the start of the easing cycle reflected officials’ growing confidence that the consumer price index was on track to reach the 2.0% target and that the labor and goods markets were close to equilibrium. Schmidt did not comment on the possibility of a –25 basis point adjustment to borrowing costs in December but noted that the increase in government debt could lead to borrowing costs remaining high for a long time to contain inflation.

Eurozone

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

In October, the producer price index in the German economy adjusted from –0.5% to 0.2% MoM instead of the expected –0.1% and from –1.4% to –1.1% YoY. Today, the European Central Bank (ECB) published a Q3 report, reflecting a change in the average wage in the region of 5.42% compared to 3.54% previously. The dynamics of the indicator signal the risks of accelerating inflation, so the regulator’s officials may be more cautious in further monetary policy easing. Nevertheless, experts expect another interest rate cut at the December meeting but then, the ECB may pause to assess the results of the decisions taken and consider the impact of new US trade tariffs on the European economy.

United Kingdom

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

The consumer price index rose from 1.7% to 2.3% YoY, beating expectations of 2.2%, and from 0.0% to 0.6% MoM, with the core indicator accelerating from 3.2% to 3.3% YoY, versus expectations of 3.1%, and from 0.1% to 0.4% MoM, beating the 2.0% target. The Bank of England’s key service sector price indicator also changed from 4.9% to 5.0%. Inflationary pressure in the economy is mounting due to higher taxes. Yesterday, the regulator’s governor, Andrew Bailey, said that higher National Insurance contributions could cause businesses to pass on the costs to consumers, making it more likely that the financial authorities will not adjust interest rates in December and slow the pace of monetary easing next year.

Japan

JPY is strengthening against EUR, GBP, and USD.

In October, exports grew by 3.1%, exceeding forecasts of 2.2%, while imports grew by 0.4% compared to 0.3%, bringing the trade deficit to 461.2B yen amid increased demand from China for chip manufacturing equipment up to 1.5%. On the other hand, sales in the US fell by 6.2% due to a decline in the automotive sector. Despite the positive dynamics, experts still fear the negative effects of the introduction of higher trade tariffs by the new US administration. According to experts’ calculations, an increase in duties on Japanese goods imported to the US by 10.0% will cause a decrease in Japan’s gross domestic product (GDP) by 0.13%, and the economy could lose another 0.12% if an active trade war between the US and China begins.

Australia

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

Finance Minister Jim Chalmers noted that falling iron ore prices and a downturn in the labor market have put pressure on government revenues, which have supported the country’s budget over the past two years. On the other hand, the official expressed confidence that the period of the main increase in inflation is behind. However, this statement contrasts with the opinion of the Reserve Bank of Australia (RBA) representatives, who do not expect to defeat the growth of consumer prices before next year.

Oil

Oil prices are trying to grow against the escalation of the Russian-Ukrainian conflict. Experts fear that if the Russian Federation’s oil production infrastructure is damaged, oil supply from one of its leading producers may decrease.

However, positive dynamics are restrained by data from the American Petroleum Institute (API), which reflected an increase in oil reserves by 4.753M barrels against forecasts of 0.800M barrels, while gasoline reserves decreased by 2.480M barrels. Investors are awaiting the release of a report from the US Department of Energy’s Energy Information Administration (EIA) later today, which may reach 2.089M barrels, putting additional pressure on oil prices.