### United States
The US dollar is showing some softness today, with the majority of G10 currencies gaining ground, except for the Swedish krona. Ahead of the pivotal US employment report scheduled for release tomorrow, this consolidation phase is expected to continue through the North American session. The median forecast for new jobs has inched up to 215,000, according to Bloomberg’s survey. Most emerging market currencies have also strengthened against the greenback, with the exception of the South Korean won.
Equities were mixed in the Asia Pacific region, with declines seen in China, Hong Kong, and South Korea. In contrast, Europe’s Stoxx 600 has risen for the sixth straight session, marking the longest winning streak since May. US index futures are experiencing slight losses. Benchmark 10-year yields are experiencing mixed movements in Europe, yet the gap between peripheral and core premiums is narrowing. The 10-year US Treasury yield has increased by a few basis points, surpassing the 4.20% level and hitting the 200-day moving average. Gold remains within yesterday’s trading range, while January’s WTI hesitantly awaits the results of the upcoming OPEC+ meeting, with the most probable outcome being a delay in the planned output increase until April.
The US Census Bureau has estimated a reduction in the US goods deficit by $9.6 billion in October, bringing it to $99.1 billion. The overall trade deficit for this year has averaged $73.4 billion. Despite the apparent tightness surrounding the US election, it may be premature to see a front-running of the proposed tariffs. November Challenger job cut figures and weekly jobless claims, occurring well after the survey week for tomorrow’s jobs report, are likely to receive limited attention.
### Eurozone
The euro is trading near a three-day high. The failure of the French government to survive a confidence vote has not significantly rattled the markets, as evidenced by the narrowing of the French 10-year premium over Germany for the third consecutive session. Despite uncertainties surrounding the political landscape, there appears to be little immediate urgency for fiscal consolidation next year.
The eurozone reported a 0.5% decline in retail sales for October, effectively erasing September’s gains. German and French retail sales both fell short of forecasts, with German factory orders falling 1.5% after a significant upward revision in September. Despite the political disarray in France, the euro is trading on a firm note, approaching $1.0545. It is flirting with the 20-day moving average near $1.0565, which it has yet to close above since the US election. Notably, $1.06 continues to serve as a strong resistance level.
### United Kingdom
The British pound is showing positive momentum, posting an outside up-day, but only closing slightly above Tuesday’s high. The five-day moving average has surpassed the 20-day moving average for the first time in two months, a trend that is seen as a bullish signal for momentum traders. Recent highs were recorded near $1.2750, with today’s peak around $1.2740. A drop below $1.27 could be seen as discouraging.
### China
In China, after reaching a new annual high of CNH7.3150 on Tuesday, the US dollar’s gains were pared back, helped by the Japanese yen’s recovery and a dip in US Treasury yields. The session low for the dollar was near CNH7.2675 before European markets closed. Despite some softness today, the dollar remains above yesterday’s low, with initial chart support around CNH7.25-CNH7.26.
### Japan
Turning to Japan, the Bank of Japan is cautiously moving towards policy normalization post-July’s turmoil. Encouraged by an uptick in Tokyo’s CPI, better retail sales, and industrial production data, the swaps market priced in almost a 17 basis point increase for this month’s meeting. However, this anticipation faced uncertainty with recent political developments involving the head of the main opposition party. Masayoshi Amamiya, a known dove at the Bank of Japan, did not dismiss the possibility of a rate hike this month. The swaps market priced in around 8.5 basis points as of yesterday’s close.
### Canada
In Canada, the October goods trade balance is awaited, following a series of monthly deficits since March. The average shortfall this year stands at approximately C$633 million, slightly larger than last year’s C$445 million average for the same period. Canada continues to record a trade surplus with the US, exceeding C$38 billion last year. The US dollar remained in a tight range against the Canadian dollar yesterday, primarily between CAD1.4055 and CAD1.4080. With the composite PMI rising to 51.5, its highest since May 2022, expectations for the Canadian economy are cautiously optimistic. The market is pricing in a 65% chance of a 0.5% rate cut next week, a notable uptick from last week’s 55% likelihood.
### Australia
In Australia, the quarter-on-quarter growth disappointed at 0.3%, but there was a sharp 0.8% rise in household spending for October, marking the biggest increase since January. This rise exceeded the total gain recorded from February through September. Australia’s trade surplus widened to A$5.9 billion from A$4.5 billion. Goods exports and imports snapped a three-month decline. The Reserve Bank of Australia, set to meet next week, may provide further insights. Short covering is anticipated due to the hawkish comments from Governor Philip Lowe and today’s robust data.
### Mexico
The US dollar continues its gradual decline against the Mexican peso. Today’s session marks the third consecutive period of lower highs and lower lows, hitting a new weekly low near MXN20.2455. A potential break below MXN20.20 could pave the way for a test of MXN20.00, a level not witnessed since early November. This comes shortly after uncertainty stemming from last week’s tariff threats.
