Dollar Holds Firm as French Uncertainty Intensifies
GBP
GBP/USD is currently trading at 1.2695 (interbank), while GBP/EUR stands at 1.2085 (interbank).
The pound has strengthened, supported by positive UK economic indicators.
October’s core inflation figures showed an increase, leading investors to reduce expectations of another Bank of England (BoE) interest rate cut.
Additionally, optimism surrounding the UK economy's resilience in the face of global challenges has heightened expectations that British monetary policy will remain steadier compared to the US.
This week, attention turns to Retail Sales and the latest PMI data. Additionally, Andrew Bailey is set to speak at the FT Global Banking Summit in London.
Today’s events (GMT):
07:00 - Nationwide HPI (Nov) – Actual: 3.7% vs Forecast: 2.4%
EUR
EUR/USD is currently trading lower at 1.0510 (interbank).
This morning, Euro Area Manufacturing PMI fell to 45.2 in November, down from 46 in October 2024. Germany's manufacturing sector also remained deep in contraction at 43.0, unchanged from the previous month, as firms grapple with subdued demand and competitive pressures, underscoring persistent challenges for Europe’s largest economy, according to Monday’s survey.
Last week, the Eurozone’s preliminary inflation data showed an increase to a four-month high in November, but analysts believe this won’t deter the European Central Bank (ECB) from implementing a rate cut next month.
European bond markets are pricing a 20% probability of a significant 50-basis-point rate cut by the ECB in December.
The euro slipped this morning as political challenges in France intensified, with National Rally (NR) leader Marine Le Pen calling for further amendments to key proposals.
Traders will closely monitor French political developments and final manufacturing and services PMIs from major European economies, including Germany and France.
Today’s events (GMT):
08:55 - German Manufacturing PMI (Nov) – Actual: 43.0 vs Forecast: 43.2
09:00 – Euro Manufacturing PMI (Nov) – Actual: 45.2 vs Forecast: 45.2
10:00 - ECB President Lagarde Speaks
10:00 - Unemployment Rate (Oct) - Forecast: 6.3%
USD
The Dollar Index which measures the U.S. dollar against a basket of six currencies is currently at 106.39 having closed out November with a gain of 1.8% even after last week's setback.
Strong US economic growth has driven the dollar’s performance throughout the year, although concerns persist that overly aggressive rate cuts could undo progress in controlling inflation.
Last week, President-elect Donald Trump unsettled markets with threats of 25% tariffs on goods from Mexico and Canada, and an additional 10% on Chinese imports, sparking fears of a potential trade war.
Minutes from the Federal Reserve’s latest meeting highlighted divisions among policymakers on the future path of rate cuts.
This week, focus shifts to key US data, including final Manufacturing and Services PMIs, JOLTS Job Openings, and the November Non-Farm Payroll report, with economists forecasting 202,000 new jobs following disruptions in October.
Today’s events (GMT):
14:45 - Manufacturing PMI (Nov) Forecast: 48.8
15:00 - ISM Manufacturing PMI (Nov) Forecast: 47.7
CAD
USD/CAD is trading at 1.4032 (interbank), retreating from multi-year highs reached last week.
Canada’s economy grew by only 1% in Q3, falling short of the BoC’s forecast of 1.5% and down from 2.2% in Q2. This has increased speculation of a potential 25-basis-point rate cut in December, with a 50% chance of a larger reduction.
A Canada Post strike entering its third week is threatening holiday deliveries, with little progress in negotiations. The Labour Minister has indicated that binding arbitration is unlikely at this stage.
Attention will also focus on Canada’s employment report for November, due on Friday, as the Bank of Canada prepares for its next interest rate decision on December 11th.
Oil prices have risen slightly, with Brent crude at $72.02 per barrel and West Texas Intermediate (WTI) crude at $67.92 per barrel.
No significant events are scheduled for today
For further analysis or to book a transaction, please get in touch: