### United States
The recent nomination of Scott Bessent as the US Treasury Secretary has sparked a lively reaction in the capital markets. This selection is being perceived favorably, with market participants viewing it as a boost to risk appetites. Stocks have been bought and the dollar has been sold off, with a particular surge in the euro among the G10 currencies. Notably, the Canadian dollar lags behind with only a 0.15% gain. Gold has experienced a downturn, falling by 1.6% and potentially foreshadowing a deeper correction if it closes below last Friday’s low. Outside China and Hong Kong, equities have rallied with several large markets, such as Tokyo and New Zealand, showing gains of over 1%. US index futures are up by at least 0.5%. The US 10-year Treasury yields have dropped by five basis points to 4.35%. In the Asia Pacific, Bank of Japan’s Governor Ueda has not ruled out further hikes, while the US economic week begins with survey data and housing reports, focusing more towards the PCE deflator in the latter half. The consumption data is expected to shape the outlook for Q4 GDP, predicted to fall between 2.0% and 2.5%.
### Eurozone
In the eurozone, economic activities are expected to pick up by the end of the week, culminating in the preliminary estimate for November’s CPI. Although the base effect provides a challenging comparison, last year’s eurozone CPI saw a 0.6% drop in November. As the CPI figure had fallen to 1.8% in September and rebounded to 2.0% by October, this will be closely watched. ECB officials are aware of the bumpy road ahead, as shown by the jump in negotiated wages (year-over-year from 3.5% in Q2 to 5.4% in Q3). Despite this, a December rate cut still seems viable, supported by the swaps market pricing in a chance of a 50 bp cut. The euro slid earlier when the flash November PMI disappointed but has since regained ground following the Treasury nomination news.
### United Kingdom
The UK economic calendar features survey and consumer lending data, but overall new trading incentives seem limited. After a disappointing PMI, sterling dropped to below $1.2490 but then stabilized, traded mostly between $1.2500 and $1.2540. Following Bessent’s announcement, sterling slightly rose above $1.2600, returning to around $1.2550 before finding support again. Notably, a set of options expiring on Wednesday will test this level.
### China
China’s economic spotlight this week is on the November PMI, with little improvement expected, which could be seen as a setback. Mid-week, industrial profits will also be reported. On the currency front, the US dollar reached a peak against the offshore yuan before slightly retreating. The People’s Bank of China set the dollar reference rate at CNY7.1918, showing an attempt to curb the dollar’s appreciation against the yuan.
### Japan
In Japan, Bank of Japan Governor Ueda is keeping the option of another interest rate hike open as Tokyo’s November CPI is due soon. The headline rate is expected to increase following October’s energy subsides, with forecasts at 2.2% and the core rate at 2.0%. Both retail sales and industrial output for October are due by the week’s end and are predicted to have rebounded, setting the stage for stronger Q4 growth following a 0.9% annualized pace in Q3.
### Canada
Canada’s economy also starts slowly this week but picks up with the September and Q3 GDP data expected later. Growth acceleration is expected, with October inflation above expectations. The odds of a 50 bp rate cut next month have decreased sharply. Data released earlier showed a 0.9% rise in September retail sales excluding autos, marking it the strongest in five months. The Canadian dollar was the strongest among the G10 last week, but a close above CAD1.3950 is necessary to support a stronger case for short-term highs.
### Australia
Australia emphasizes the quarterly CPI, but an estimate for October due on Wednesday is also significant. Expected to rise for the first time since May, the estimate aims to highlight inflationary trends. The futures market suggests that the first interest rate cut could fall between May and July 2025.
### Mexico
Mexico anticipates the October trade balance and central bank’s inflation report mid-week, followed by the central bank’s meeting minutes. Softer price pressures in Mexico fueled speculation about a potential rate cut next month. The US dollar firmed against the peso last week, registering its highest close since July 2022. Any break of MXN20.32 could bring the peso to MXN20.24.
