Market Overview

The US dollar exhibits a mixed performance across global currency markets. Sterling emerges as the weakest among the G10 currencies following unexpectedly weak employment data, which has increased the probability of a rate cut in the UK next month. The dollar recorded a modest new high against the Japanese yen—the highest since February—though it remains below the key level of JPY154.50. Dollar bloc currencies are generally softer, while Scandinavian currencies have shown slight firmness. US and Canadian holidays contribute to a subdued North American trading session today.

Equity and Fixed Income Markets

In the Asia-Pacific region, equity markets delivered mixed results. The MSCI regional index remained largely unchanged, with South Korea and Singapore posting the strongest gains. Conversely, China’s CSI 300 index declined by nearly 1%, the largest drop among major exchanges. European equities continue their recovery, with the Stoxx 600 rising for a second straight session—a move not seen in over two weeks. In the US, S&P 500 and Nasdaq futures are down 0.20–0.35%.

Benchmark ten-year government bond yields in Europe have generally firmed slightly, with the exception of UK Gilts, which experienced a 5–6 basis point decrease. In the United States, Treasury futures imply steady to slightly higher yields.

Commodities

Gold prices extended yesterday’s gains, adding another $22 to reach $1,4138 in the cash market, hitting an intraday high near $1,4149. This marks a retracement of more than half the losses suffered since gold hit a record high around $1,4381.50 on October 20. Meanwhile, December WTI crude oil remains firm yet capped near $60.50 for a fourth consecutive session.

Currency Insights

US Dollar

US banks and bond markets are closed today, although the stock market remains open. Anticipation mounts for a House of Representatives vote on a Senate-approved compromise bill expected tomorrow. However, reopening may come too late to influence this week’s key economic releases, including October CPI, PPI, and retail sales reports.

Since the Federal Reserve’s initial rate cut on September 17, the Dollar Index has advanced approximately 4.3%, reaching 100.35 last week—the highest level since late May—and briefly tested the 200-day moving average for the first time since early March. Trading has consolidated mostly within a 99.40-99.90 range since last Friday. Support is identified in the 99.20–99.25 area. Given momentum indicators are poised to decline, a break below 98.75 could signal that the two-month upward correction has concluded.

Euro (EUR)

The euro’s recovery off last week’s three-month low near $1.1470 has stalled around $1.1590, close to its 20-day moving average and the 50% retracement level of its recent pullback from the ~ $1.1720 high. This consolidation within last Friday’s trading range ($1.1530–$1.1590) suggests constructive price action.

Germany’s November ZEW survey shows a slight improvement in the current assessment, now at -78.7 versus -80.0 in October—the worst reading since May. However, economic expectations softened to 38.5 from 39.3, marking the first deterioration in five months.

Chinese Yuan (CNY)

The US dollar peaked against the offshore yuan near CNH7.1385 last week and found support slightly below CNH7.12 yesterday. It remains stable today within a narrow band between CNH7.1210 and CNH7.1265, capable of dipping to CNH7.1135 without major impact. A break below CNH7.1075 would raise the possibility of retesting lows near CNH7.0885 from late October.

The People’s Bank of China set the daily midpoint slightly lower than late October’s low at CNY7.0836 last week, with fixes at CNY7.0856 and CNY7.0866 in subsequent sessions. Key economic releases including retail sales and industrial production on Thursday are projected to show sequential weakness, with fixed asset and property investment contractions possibly deepening.

Japanese Yen (JPY)

The US dollar edged to a new nine-month peak intraday, approaching JPY154.50. Apart from a brief exception last Tuesday, the dollar has traded within a range established on October 30 between JPY152.15 and JPY154.45. Support emerged near JPY152.80 in late last week. A decisive break above JPY154.50 could target JPY155.00.

Japanese authorities have issued warnings regarding the one-sided dollar strength near these levels; however, no definitive intervention target appears set. Despite some cautionary statements, substantial intervention is not anticipated. For the month, the yen has depreciated a marginal 0.2%.

British Pound (GBP)

Sterling recouped half of its losses since the Fed’s late September rate cut by advancing to $1.3190 yesterday. The next technical retracement target—the 61.8% level—lies near $1.3230. However, disappointing employment data prompted a swift reversal, pushing GBP/USD down to around $1.3115, near the 38.2% retracement of last week’s gains, with the 50% retracement at approximately $1.3100.

GBP reversed its recovery against the euro after reaching a 3½ year low last week, with EUR/GBP now trading above 0.8800 after testing 0.8770 yesterday.

UK employment contracted by 22,000 over the past three months, the first decline since March 2024. Payrolled employees fell by nearly 32,000, with increases in jobless claims and a rise in the ILO unemployment rate from 4.8% to 5.0%. Average weekly earnings growth slowed. Consequently, market-implied probabilities for a UK rate cut next month surged to nearly 86%, up from about 72% just a day prior—the highest since August.

Canadian Dollar (CAD)

The US dollar reached a seven-month peak against the Canadian dollar near CAD1.4140 last week before pulling back to nearly CAD1.4025 entering the weekend. This retreat coincided with a larger-than-expected unemployment rate drop in Canada to 6.9% from 7.1%, with the USD/CAD testing the 50% retracement level near CAD1.4000 yesterday. The 61.8% retracement lies around CAD1.3985.

A breakout above the CAD1.4050-1.4070 zone would reinforce the US dollar’s technical strength and could pave the way for a retest of recent highs. Trading remains subdued today within the CAD1.4015 to CAD1.4040 range. Canadian markets are closed for Remembrance Day.

Australian Dollar (AUD)

The Australian dollar tested $0.6540 yesterday, aligning with the 38.2% retracement of losses recorded since the September 17 high near $0.6705, and roughly the 50% retracement of declines from late October’s high around $0.6620. AUD/USD is consolidating today in the $0.6515–$0.6535 range.

In cross rates, the Australian dollar surged above NZD1.15 yesterday, reaching last seen levels from twelve years ago. It has since consolidated.

The highlight of the Australian economic calendar this week is Thursday’s October employment report, with expectations for accelerated job growth and a potential fall in the unemployment rate from 4.5%, a four-year peak.

Mexican Peso (MXN)

Following a two-month high near MXN18.77 last week, the US dollar was sold for the fourth consecutive session on Monday, dipping below MXN18.37. The dollar remains near these lows today. Support is observed between MXN18.3350 and MXN18.3400.

Mexico’s September industrial production data is expected today after three consecutive monthly declines. Economist forecasts are mixed: half anticipate gains, most modest, except one predicting a 1.4% increase. However, market impact is anticipated to be limited, as Q3 GDP (+0.3% quarter-on-quarter) was already reported and the central bank lowered the policy rate by 25 basis points last week to 7.25%.

Brazilian Real (BRL)

Brazil’s October inflation report, due today, is forecasted to demonstrate continued moderation. Bloomberg’s median estimate projects the year-on-year inflation rate to ease to 4.74% from 5.17%, potentially marking the first sub-5% reading since January. Declines in electricity and gasoline prices may be partially offset by food price pressures.

Disclaimer

The information provided herein is for informational purposes only and should not be construed as investment advice or recommendations. Market conditions and data are subject to change.