United States of America

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

The positive dynamics are developing against comments by US President-elect Donald Trump that the BRICS countries should not create a single currency alternative to the US. Otherwise, they will face the introduction of 100.0% duties on their goods exported to the US. Experts fear his statements are a warning of a new trade war not only with China but also with several other major economies, including India and Russia. In response, official Moscow noted that forcing other countries to use the American dollar would lead to the opposite effect and lose its appeal as a reserve asset. On Friday, investors are awaiting the publication of November employment and unemployment figures. Since the price index of private consumption expenditure rose from 2.1% to 2.3% and the core indicator from 2.7% to 2.8%, in the event of a strengthening of the labor market, both key conditions will no longer satisfy the possibilities of a new easing of monetary policy, and the December rate cut by 25 basis points will be in question. So far, most experts expect the US Fed will go for it. However, at the beginning of next year, it will take a break in the “dovish” cycle.

Eurozone

EUR is weakening against JPY, USD, and GBP.

In November, the EU manufacturing PMI fell from 46.0 points to 45.2 points, justifying forecasts, and in the largest economy in the Eurozone, Germany, it remained at 43.0 points instead of the expected 43.2 points. The data is weakening, and businesses are already facing a decline in production and orders, but the situation could worsen further if the Donald Trump administration increases US trade tariffs. Today, European Central Bank (ECB) Governing Board member and Bank of Greece Governor Yannis Stournaras said interest rates were likely to be cut further in December, with experts expecting a 25 basis point cut.

UK

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

The November manufacturing PMI fell to 48.0 points from 49.9 points, compared to expectations of 48.6 points, to hit a nine-month low, as orders fell and uncertainty over expectations of tariffs from the Donald Trump administration increased. House price data for November from the UK’s Nationwide Building Society was released today, rising from 0.1% to 1.2% MoM and from 2.4% to 3.7% YoY, reaching a two-year high, confirming the sector’s resilience despite high borrowing costs.

Japan

JPY is strengthening against EUR and ambiguous against USD and GBP.

Investors are focusing on comments from Bank of Japan Governor Kazuo Ueda. Over the weekend, he said another rate hike is coming as economic data meets policymakers’ expectations. However, uncertainty over the regulator’s future actions could be brought by the economic actions of the new US administration, as well as by trade union and business talks in the spring over the size of wage increases. The likelihood of further monetary tightening is reinforced by the data on Q3 capital investment released today. The indicator rose by 8.1%, exceeding the forecast of 6.7%, confirming the recovery of the national economy. On the other hand, the manufacturing PMI corrected from 49.2 points to 49.0 points.

Australia

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

Today, the November manufacturing PMI was released. The indicator remained in the stagnation zone at 49.4 points, under pressure from high interest rates of the Reserve Bank of Australia (RBA) and significant inflation in the country. On the other hand, the October retail sales increased from 0.1% to 0.6% MoM, exceeding the preliminary estimate of 0.4%.

Oil

Oil prices are developing positive dynamics supported by Chinese macroeconomic statistics.

Thus, Caixin manufacturing PMI rose from 50.3 points to 51.5 points, exceeding the forecast of 50.6 points, as a result of which demand for oil products in the country may increase significantly soon. Experts note that companies are trying to increase supplies as much as possible before the administration of US President-elect Donald Trump introduces new trade duties. In addition, the price strengthening is due to the continuing tension in the Middle East stock after a significant aggravation of the geopolitical situation in Syria. Also, the ceasefire between Israel and the Lebanese paramilitary organization Hezbollah does not seem sustainable.