U.S. Dollar Edges Higher, Rate Cut Expectations Strengthen
GBP
GBP/USD has slipped below the 1.2700 mark, currently trading at 1.2670 (interbank). This morning's trading session reflects market sentiment that the Federal Reserve may have concluded its tightening cycle, leading to a weakened U.S. dollar.
GBP/EUR pair is at 1.1656 (interbank), reaching its highest level since early September at 1.1687.
Bank of England Governor Andrew Bailey expressed commitment to achieving the 2% inflation target but expressed reservations about the progress.
Despite a positive uptick in the UK S&P Global/CIPS Manufacturing PMI to 47.2 in November, economic data from the UK is sparse this week, with attention turning to U.S. and Eurozone indicators for potential market volatility.
No major data today
EUR
The Euro is facing selling pressure against the U.S. Dollar, with EUR/USD currently trading at 1.0877 (interbank).
The Euro's momentum has waned due to lower-than-expected inflation figures in major economies and speculation about an interest rate cut by the ECB next year. The market is pricing in a 50% chance of a rate cut as early as March.
Traders await insights from ECB President Christine Lagarde's speech on Monday, with the pre-decision blackout period starting on Thursday.
Industrial production figures for October from key Eurozone countries will be released this week, offering further indicators of economic health.
Events Today (GMT):
07:00 - German Trade Balance (Oct) - 17.8B vs 17.1B forecast
14:00 - ECB President Lagarde Speaks
USD
The U.S. Dollar Index, measuring the dollar against six currencies, is down 0.2% at 103.32 after a weak performance in November, marking its third consecutive weekly decline.
Federal Reserve Chairman Jerome Powell acknowledged the slowing impact of U.S. monetary policy on the economy, signalling a potential end to the rate-hike cycle.
Markets now show a 60% chance of a rate cut by the March meeting.
Attention turns to Friday's November jobs report, crucial for assessing ongoing economic growth. Economic analysts anticipate an increase of 180,000 jobs in the U.S. economy for November, following the creation of 150,000 jobs in October.
A weaker-than-expected jobs number could fuel concerns about a cooling economy post-rate hikes, impacting risk appetite.
No major data today
CAD
USD/CAD has risen by 0.4%, currently trading at 1.3538 (interbank rates). This follows last week’s dip to 1.3486, the lowest level since September 29th.
Despite a higher-than-expected increase of 24,900 jobs in Canada in November, concerns linger as hours worked fell, and the jobless rate ticked up to 5.8%.
Canada's manufacturing sector contracted for a seventh consecutive month in November, reflecting global industrial weaknesses.
The Bank of Canada, meeting on Wednesday, is expected to maintain rates at 5% for the third consecutive session.
Recent economic contractions in the third quarter suggest the central bank's aggressive rate hikes may be curbing growth.
No major data today