## United States
The US dollar is kicking off the new week and month on a strong note, advancing against all G10 currencies and nearly every emerging market currency. Though US President-elect Trump’s threats towards BRICS—should they abandon the dollar—seem more symbolic than effective, the proposed BRICS currency appears unrealistic. Meanwhile, Trump claims victory over a sharp decline in migration through the southern US border and a trend of decreasing fentanyl-related deaths, even as Mexico’s President Sheinbaum had earlier confirmed these trends.
In the US, the 10-year yield has advanced by nearly five basis points to approximately 4.22%, impacting gold prices, which saw a decline of about 2.7% last week. Although gold snapped a four-day advance, it’s down around 0.3% today. The January WTI is at the lower end of last week’s $68-$69 range in quiet trading. A solid jobs report, forecasted to show a 200k rise in nonfarm payrolls, and a CPI uptick next week could introduce second thoughts to the market.
## Eurozone
In Europe, the French government seems close to a crisis that might require an election, which would not occur for nearly a year, while Germany faces a confidence vote soon that the current government is unlikely to survive, with elections planned for mid-Q1 2025. The euro slipped below $1.05 recently and may experience more losses soon. German economic data remains weak, with GDP contracting in 2023, showing a mere 0.1% growth in Q3 and the Bundesbank forecasting stagnation in Q4. Eurozone unemployment remained at an all-time low of 6.3% in October. The final manufacturing PMI in the eurozone held steady at 45.2, with peripheral countries showing varied results.
## United Kingdom
The UK’s final manufacturing PMI recorded a decline to 48.0, marking the third consecutive drop. Sterling briefly traded above its 20-day moving average, approaching $1.2735, although intense selling pressure pulled it back to $1.2670 in early North American trading. The risk concerning the French government has impacted the euro, driven down near $1.0495 in early European transactions.
## China
In the Asia-Pacific, China’s composite PMI held at 50.8 after two months of growth. While the official manufacturing PMI inched up from 50.1 to 50.3, the non-manufacturing PMI slipped to 50.0. The Caixin manufacturing PMI indicates stronger activity, rising to 51.5, its highest level since June, driven by new orders and a spike in output price inflation. China’s monetary authorities might instigate additional monetary support, such as reserve cuts, by year-end, while export restrictions on certain critical metals and minerals took effect from December 1.
## Japan
Japan’s recent data, including Tokyo’s CPI and industrial production, have bolstered confidence in a potential BOJ rate hike later this month. Japan’s Q3 capital expenditure rose, suggesting the economy may outperform the initial 0.9% growth forecast, with predictions of a 1.5% expansion in Q4. The yen recently rallied amidst these developments while softer US yields supported the currency. The dollar traded lower against the yen, showing some stability around JPY150.00.
## Canada
In Canada, after stagnation in September, the economy expanded by 0.3% in the same month, although quarterly growth decelerated to 1.1% annualized. The Bank of Canada is expected to announce its rate decision on December 11 following the jobs report on December 6, with markets fully pricing in a 31% probability of a half-point cut, a slight increase from the previous week.
## Australia
Australia looks towards Q3 GDP figures this week, with additional trade and spending data due on Thursday. Although the Australian dollar hit a three-month low near $0.6435 after Trump’s tariff threats, it managed to rise over the week, consolidating around $0.6525. Concerns remain regarding core price pressures, with market participants watching for any impact on monetary policy.
## Mexico
In Mexico, the release of November manufacturing PMI, the IMEF index, worker remittances, and a central bank survey are anticipated. President Sheinbaum has openly criticized Trump’s tariff threats, highlighting the interdependence of US-Mexican trade and efforts at border control. Despite these tensions, diplomatic engagement has fostered positive rhetoric, while the dollar retreated to a four-day low against the peso. At the same time, Brazil’s fiscal challenges impacted the real, which hit record lows against the dollar before recovering slightly from the BRL6.00 mark.
