Market Overview: US Dollar Faces Broad Pressure

US Dollar Performance and Global Currency Trends

The US dollar is under significant pressure today, reflecting shifts in global economic data and bond yields. Strong final Purchasing Managers’ Index (PMI) readings from Europe, coupled with a retreat in US Treasury yields, have resulted in the dollar breaking below last month’s lows against multiple G10 currencies. Interestingly, even currencies backed by weaker economic indicators, such as Australia’s Q3 GDP and Switzerland’s Consumer Price Index (CPI), are experiencing demand.

Emerging market (EM) currencies, particularly within Central Europe, are broadly appreciating, although notable exceptions include the Turkish lira, Russian ruble, Indian rupee, and Philippine peso. Equity markets in the Asia-Pacific region posted mixed results; Chinese stocks, including those in Hong Kong and mainland China, declined by over 1%, while Japan’s Nikkei and South Korea’s Kospi advanced more than 1%. European equities firmed, with the Stoxx 600 index gaining 0.3%, sufficient to push its weekly performance back into positive territory.

Fixed Income and Commodities

Japan witnessed a 2-4 basis point rise in long-term bond yields, European benchmark yields edged slightly higher, and the 10-year US Treasury yield, which neared 4.12% yesterday, has retreated to approximately 4.08%. Gold prices struggled to hold near yesterday’s peak (~$1,236), slipping below $1,200 during European morning trading. Copper reached a record high, while January West Texas Intermediate (WTI) crude oil remained relatively stable between $58 and $60 per barrel for the fourth consecutive day.

US Dollar Technical Analysis and Economic Data

The Dollar Index found crucial support near the 99.00 level on Monday and briefly surpassed 99.55 yesterday. This intraday high corresponds with the 38.2% Fibonacci retracement of the correction from the November 21 peak (~100.40). However, the index closed near its lows and opened lower today, creating a gap between yesterday’s low (just above 99.30) and today’s opening (just below 99.30). It now hovers near 99.00, a critical level representing both last month’s low and the potential neckline of a double-top pattern. A break below this could target 97.70, which coincides with the 61.8% retracement of gains since the September 17 low (Federal Reserve meeting day).

Markets are closely watching a series of high-frequency US economic releases scheduled for today. The ADP private sector employment figure and ISM services index are expected to have greater market influence than import/export prices and industrial production data for September. Final services and composite PMI reports are also due but generally receive less attention than flash estimates, which tend to provide a reliable indication.

Regional Currency and Economic Updates

Eurozone

After stabilizing yesterday with a firm close, the euro extended its gains today, approaching $1.1665—slightly above last month’s high—supported by stronger-than-expected final November PMIs for services and composite indices. The composite PMI rose to 52.8 from the preliminary 52.4 and October’s 52.5, marking the sixth consecutive monthly advance and the highest reading since April 2023.

Country-specific final PMIs were as follows: Germany’s composite PMI came in at 52.4 (flash 52.1), down from 53.9 in October but still the best since April 2023. France’s final composite PMI rose to 50.4, exceeding preliminary estimates and marking the first expansionary reading since August 2024. Spain’s composite PMI eased slightly to 55.1, while Italy posted a rise to 53.8, its strongest performance since April 2023. The euro’s near-term target is around $1.1700.

China and Offshore Yuan (CNH)

The US dollar weakened to a new annual low against the offshore yuan, dipping below CNH7.0570. Despite the People’s Bank of China (PBOC) setting a higher reference rate for the dollar yesterday, the greenback continued to exhibit softness. Today, the PBOC lowered the fixing to CNY7.0754.

Market consensus remains that the PBOC is guiding the dollar toward the CNH7.0 level. While state-owned banks reportedly purchased dollars recently, these activities are not widely interpreted as direct market intervention. The PBOC confirmed net government bond purchases of CNY50 billion (~$7.1 billion) in November, following CNY20 billion in October, likely aiming to support the market amid debt repayment concerns related to China Vanke. Additional bond purchases are anticipated in December as year-end approaches.

Japan

The dollar retreated sharply from the November 20 peak of JPY157.90 to a low near JPY154.65 on Monday, matching the 38.2% Fibonacci retracement of the rally from October 17 and narrowly avoiding falling below JPY150. The recent ascent in US yields provided some underlying support, however, and the dollar currently consolidates in a narrow range just above JPY155.50, near its 20-day moving average.

Options expiring today with strike prices close to JPY155.50 total about $1.3 billion, making this a pivotal technical level. A breach of this range could lead to a re-test of Monday’s low. Japan’s final November composite PMI was reported at 52.0, holding at the year’s peak level seen earlier in February and August. The swaps market ascribes roughly an 80% probability to a 25 basis point rate hike at the Bank of Japan’s mid-December meeting, with another increase priced in for 2026.

United Kingdom

Sterling slipped to a four-day low near $1.3180 yesterday before modest recovery to around $1.3220. Subsequent upward revisions in the UK’s flash PMI data and a broader dollar weakening propelled GBP/USD to nearly $1.3290. This level corresponds to a 38.2% retracement of losses since the September 17 high (~$1.3725). The 200-day moving average sits near $1.3320, with the 50% retracement level somewhat above at $1.3370.

The UK’s final November services and composite PMIs were revised slightly upward to 51.3 and 51.2, respectively, although both remained below October’s 52.3 and 52.2 readings. Market participants largely anticipate a 25 basis point interest rate reduction by the Bank of England on December 18, with expectations for an additional cut fully priced in by late April 2026.

Canada

The US dollar reached a session peak near CAD1.4015 during early North American trading yesterday, tuning into the 38.2% retracement of the downtrend from November 21’s high (CAD1.4130) to last week’s low (CAD1.3940). By afternoon, the greenback declined slightly below CAD1.3970 and has revisited last week’s lows during European hours today. A breakdown below these levels risks targeting CAD1.3920 initially and then the October low just under CAD1.3890.

Canada will release third-quarter productivity data today, with expectations for an improvement to roughly 0.5%, following a 1.0% decline in Q2. Services and composite PMI reports will also be published; notably, the October composite PMI edged above the 50 threshold (50.3) for the first time this year.

Australia

The Australian dollar has now surpassed the prior day’s high for eight consecutive sessions, reaching nearly $0.6590—its highest point since late October. The $0.6565 level, tested on Monday, represents the midpoint of the decline from this year’s high on September 17 to the November 21 low near $0.6420. The 61.8% retracement lies near $0.6600, close to October’s peak at approximately $0.6620.

Australia’s recent Q3 GDP growth was a modest 0.4%, below consensus expectations of 0.7%, following 0.6% and 0.7% gains in Q2 and Q1, respectively. The final November composite PMI confirmed a reading of 52.6—its strongest in three months—and well above last November’s 50.2.

Mexico

The US dollar traded within a tight range around Monday’s close (~MXN18.3050), briefly marginally breaching last month’s low near MXN18.25. The yearly low for USD/MXN was recorded on September 17 at approximately MXN18.20. The 61.8% retracement of the dollar’s ascent from last year’s low (~MXN16.26) stands slightly above MXN18.18.

Mexico is scheduled to release September’s gross fixed investment data today; however, the impact is expected to be limited. Third-quarter GDP, already reported, indicated a 0.3% quarterly contraction for the fourth consecutive quarter, with consumption cited as a drag. Yet, year-over-year consumption growth was positive in July (0.06%) and August (0.08%) and is expected to have rebounded in September. September’s private consumption figures will be closely watched, with Bloomberg surveys projecting a solid 1.6% increase, one of the strongest readings this year.

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_This summary reflects recent developments in global financial markets, economic indicators, and currency movements, providing a comprehensive perspective for market participants._