Dollar Eases Following Trump Nomination
GBP
GBP/USD is trading at 1.2658 (interbank), while GBP/EUR remains steady at 1.2002 (interbank).
The Pound Sterling has strengthened slightly from last week’s lows, supported by market speculation around the Bank of England’s (BoE) monetary policy outlook.
On Friday, the Pound faced pressure after UK Retail Sales contracted more than anticipated in October, declining by 0.7% month-on-month as consumers hesitated to spend ahead of the government's first budget on October 30.
Additionally, the Composite PMI fell below the neutral 50 mark, indicating a contraction in economic activity for the first time since October 2023, with declines in both manufacturing and stagnation in services.
Market participants expect the BoE to adopt a cautious approach, leaving interest rates unchanged at 4.75% in December and pricing in a gradual reduction to 4% by 2025.
No significant events are scheduled for today
EUR
EUR/USD is trading at 1.0474 (interbank), recovering slightly from Friday’s two-year low of 1.0332.
This morning, the German Ifo Business Climate Index (BCI) for November weakened, dropping from 86.5 in October to 85.7, as economic sentiment remained subdued. The decline reflects ongoing challenges in Europe’s largest economy, further dampening market sentiment.
The ECB has already delivered three rate cuts this year, but weak economic data has increased the likelihood of a larger 50-basis-point (bps) reduction in December to bolster growth.
Markets will focus on the eurozone’s flash Consumer Price Indices (CPI) for November later this week, which could influence future ECB decisions. The harmonised CPI is forecast at 2.3%, with core inflation expected at 2.8%, keeping policymakers cautious about the pace of further rate reductions.
Today’s Events (GMT):
09:00 - German Ifo Business Climate Index (Nov) – Actual: 86.7 vs Forecast: 86.1
15:30 - ECB's Lane Speaks
USD
The Dollar Index, measuring the U.S. dollar against a basket of six major currencies, the Dollar Index, is at 106.94, holding steady after hitting a two-year peak last week.
The dollar's rally has been supported by expectations that President-elect Donald Trump's proposed fiscal policies, including tariffs and higher infrastructure spending, could stoke inflation and limit the Federal Reserve's rate-cutting cycle.
Treasury yields eased slightly following Trump’s nomination of fund manager Scott Bessent as Treasury Secretary, with markets interpreting his strong-dollar stance as a potential boost for the currency.
This week, traders will turn their focus to the second estimate of third-quarter GDP, Personal Consumption Expenditures (PCE) data, and the Federal Open Market Committee (FOMC) meeting minutes for further clues on the Fed’s monetary policy direction.
No significant events are scheduled for today
CAD
USD/CAD currently, trading at 1.3993 (interbank).
The Canadian dollar advanced last week, marking its best weekly performance since August, as robust domestic retail sales data dampened expectations for aggressive Bank of Canada (BoC) rate cuts.
Retail sales in September rose by 0.4%, exceeding expectations, and preliminary data for October suggested a further gain of 0.7%.
Markets now see only a 14% chance of a 50-basis-point (bps) rate cut at the BoC’s December meeting, with an 86% likelihood of a smaller 25 bps reduction.
Statistics Canada will release its third-quarter GDP report on Friday, expected to show an annualised growth rate of 1%. Additionally, BoC Deputy Governor Rhys Mendes is scheduled to address monetary policy at an event on Tuesday.
Oil prices steadied after strong gains last week, supported by reports of a potential ceasefire between Israel and Hezbollah. Brent crude is currently priced at $75.14 a barrel, while West Texas Intermediate (WTI) crude is at $70.75 a barrel.
No significant events are scheduled for today
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