United States of America

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

Today, weekly data on the American labor market was published. Initial jobless claims increased by 213.0K, which was less than both the forecast of 220.0K and the previous value of 219.0K, while the total claims grew from 1.872M to 1.908M previously. Thus, the sector is showing signs of resilience to the US Fed’s monetary policy. It is also worth noting the latest ambiguous comments from the regulator’s officials. Thus, member of the Board of Governors Michelle Bowman said that since inflation was still high, and the pace of its decline had slowed slightly, financial authorities need to be careful in further easing monetary parameters. She emphasized that she supported the interest rate cut but was against hasty decisions. Her colleague, Lisa Cook, on the other hand, expressed confidence that price pressures, which are currently mostly limited to the property sector, would ease further. According to the official, inflation will fall to about 2.2% next year, slightly above the target of 2.0%, meaning the “dovish” stance should be continued.

Eurozone

EUR is weakening against JPY, GBP, and USD.

Due to a lack of significant economic releases, the currency’s movement is due to external factors. It is worth noting the latest comments by the head of the Bank of France, Francois Villeroy de Galhau, who said the increase in trade tariffs under the new White House administration would not change the inflation forecasts in the Eurozone. The regulator should continue the “dovish” cycle, but its pace should be determined by flexible pragmatism. He added the European Central Bank (ECB) can adjust the parameters in any direction. Today, market participants focused on data from the Federal Statistical Office of Germany, which notes that in October, the number of bankruptcies increased by 22.9% compared to the same period last year, as businesses are under pressure from high energy and skilled labor costs, as well as tax policy and bureaucracy. The deterioration in the German economy increases the risks of a decline in gross domestic product (GDP) in the entire Eurozone.

The United Kingdom

GBP strengthens against EUR but weakens against USD and JPY.

Today, the November data on industrial order dynamics from the Confederation of British Industry (CBI) were published. The indicator corrected from –27.0 points to –19.0 points, more than experts expected (–25.0 points), while the production expectations rose from –1.0 points to 9.0 points. However, production volumes accelerated the negative dynamics from –6.0 points to –12.0 points. Commenting on these data, CBI analyst Ben Jones said that the decline in values ​​is due to the results of the US elections, which forced clients to limit their activity. However, according to him, the situation may change in the next quarter. Market participants also paid attention to the data on UK government borrowing, which exceeded experts’ estimates. In October, the figure was 17.4B pounds, ranking second in the rating of highs since the publication of these statistics began in 1993. The total volume for the first seven months of the tax year was 96.6B pounds, 1.1B pounds more than for the same period a year earlier.

Japan

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

Investors are focusing on the latest comments from Bank of Japan Governor Kazuo Ueda, who said today that the regulator will carefully study macroeconomic statistics before revising the interest rate at the December meeting and will consider the impact of the yen movement on economic and inflationary processes. The market interpreted this rhetoric as a hint at an increase in the cost of borrowing, which supported the yen against its main competitors. However, this strengthening may prove temporary, with October consumer price data due on Friday, where the figure may fall from 2.5% to 2.2% YoY and the core figure from 2.4% to 2.2%.

Australia

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

On Friday, market participants focus on preliminary data on business activity. The manufacturing PMI may rise from 47.3 points to 48.0 points, the service PMI – from 51.0 points to 51.3 points, and the composite PMI – from 50.2 points to 50.5 points. Overall, the country’s manufacturing sector will continue to slow down but an improvement in the service sector will support economic growth.

Oil

Oil prices are supported by the approval by the outgoing US President Joe Biden’s administration of the use of American weapons to hit targets in Russia, which could lead to an additional escalation of the military conflict.

Experts see two possible consequences of this move. On the one hand, the target could be oil infrastructure, which would lead to a reduction in oil supplies from one of the leading oil producers. On the other hand, the response from official Moscow will likely include attacks on US and allied facilities, including in the world’s oil and gas regions, thereby significantly increasing geopolitical tensions, which traditionally support oil prices. However, a stable trend has not yet been developed due to a poor report from the US Department of Energy’s Energy Information Administration (EIA). Oil reserves increased by 0.545M barrels against a forecast of 0.400M barrels, gasoline volumes changed by 2.054M barrels against preliminary estimates of 1.620M barrels, and distillates decreased by 0.114M barrels.