# United States
In the USA, the dollar is trading quietly with a slight firming on the day. Yesterday’s trading setback saw little follow-through selling. The upcoming US economic releases are primed to influence markets, with September durable goods orders and the October University of Michigan consumer confidence and inflation expectations survey set to provide fresh insights. The September durable goods orders are projected to dip by 1%, as per Bloomberg’s survey, following a stagnant August. Despite Boeing ramping up its orders from 40 to 65, expectations exclude transportation orders showing a slight downturn. Looking forward to the economic outlook for Q3, next week’s trade data, inventory adjustments, and GDP, due out on October 30, will be critical. The anticipated softer personal consumption and income data could modify market dynamics, although the market’s pulse might be most attuned to next Friday’s US jobs report, with forecasts pegging new additions at 135k, down from 254k in September. Meanwhile, traders have begun pricing in significant cuts from central banks, with the ECB expected to slash 123 basis points by mid-next year, while the Federal Reserve eyes about 125 basis points.
# Eurozone
In the Eurozone, growth remains an elusive sentiment. Inflationary pressures and expectations continue to ease. The improbable chance of a 50 basis points cut in December remains steady at around 40%. Swaps pricing around ECB policy for the first half of 2025 remains consistent, currently projecting a 123 basis point reduction. GDP figures for Q3, scheduled for release soon, are expected to echo Q2’s 0.2% growth, with Germany’s economy potentially lagging. Recent IFO survey results surprised positively, but an overall economic contraction is probable again. Of heightened significance is the upcoming October CPI release, pivotal for reshaping ECB policy expectations. If November’s price trends hold true, a stronger CPI might emerge by December 12. Meanwhile, the euro posted its strongest single-day gain in a month yesterday, buoyed by narrowing US-German bond spreads. Hovering near $1.0830, the euro appears poised to challenge greater resistance levels beyond $1.0870-75.
# United Kingdom
Similar to the Eurozone, the United Kingdom is on the brink of pivotal economic announcements. Chancellor Reeves has reaffirmed Labour’s broad definition of Public Sector Net Financial Liabilities, allowing for more extensive public spending ahead of next week’s Autumn budget. A key focal point is the anticipated Bank of England decision, with Governor Bailey hinting at potential rate cuts in the November 7 MPC meeting. Sterling mirrored the euro’s performance yesterday but remains capped below the $1.2995 high from mid-week. A notable rate separation has widened between UK and US two-year yields, now stretching to about eight basis points.
# China
Moving eastwards, China’s yuan is exhibiting a taste for alternating gains and losses against the US dollar over the past five sessions, and with yesterday’s decline, an uptick today seems probable to maintain the pattern. The onshore yield inched higher, but the CNH7.10-CNH7.15 corridor holds sway over market momentum. Today’s PBOC reference rate was set at CNY7.1090, a slight easing from the prior day’s apex since August.
# Japan
In Japan, economic sentiment saw a dip following a downshift in Tokyo’s CPI numbers, sinking from 2.1% to 1.8% in October, justifying the influence of governmental energy subsidies that shaved a half percentage point from the headline rate. Despite this, scant evidence exists suggesting an imminent shift in BOJ policy. Market focus shifts to Sunday’s lower house election, with anticipation swirling around LDP’s need for coalition continuity with Komeito. Meanwhile, the yen’s initial firmness against the dollar waned, settling in the JPY151.40-JPY152.10 band. Additionally, the success of the Tokyo Metro IPO, amassing $2.3 billion, did not significantly impact the yen’s momentum.
# Canada
Over in Canada, recent US dollar strength saw the Canadian dollar off-pace as the lone G10 currency not to gain against the greenback over six months, marking a 1.4% decline. Anticipated firmness in August retail sales (forecasted at 0.5% growth) offers little bearing on the Bank of Canada’s December decision, where nearly a 50% likelihood of a 50 basis point cut hinges on different economic metrics. Presently, the US dollar navigates a CAD1.3870 landscape with substantial option expiration ties at CAD1.3855 maintaining current corridors.
# Australia
Down under, the Australian dollar has experienced significant pressure, having fallen 4.7% from late September highs. Despite efforts, $0.6645 remains an elusive retracement objective, hovering within two-month lows. We expect a consolidative session in North America today, with limited volatility.
# Mexico
Lastly, in Mexico, a slightly firmer-than-anticipated inflation report for the first half of October revealed minimal impact on the peso, with subsequent market activity remaining largely unchanged. The currency briefly touched a new weekly high yesterday before stabilizing between MXN19.80-MXN19.84, following last week’s MXN19.8770 close.
