## United States
The U.S. markets have stabilized following post-election fluctuations, with a notably calmer atmosphere prevailing in the foreign exchange market. The dollar saw moderation against the G10 currencies, particularly with the Norwegian krone’s 1% gain, influenced by their central bank’s decision to maintain current rates. In equities, there’s been a universal rise among Asia-Pacific stock exchanges, notably with China’s CSI300 climbing 3%. However, India diverged as its main index dipped by 1%. In Europe, the Stoxx 600 is recovering most of the previous day’s loss, while U.S. index futures indicate modest advances. Regarding bonds, most European 10-year yields experienced an 8-9 basis point jump, with the UK Gilt as an exception, declining by nearly two basis points. The 10-year U.S. Treasury yield remains stable near 4.43%.
Anticipation surrounds the Federal Reserve’s expected quarter-point cut in the Fed funds target. While this is widely presumed, much attention is on Chair Powell’s remarks regarding the incoming administration. His communication is expected to remain cautious, focusing on policy responses over rhetoric.
Gold, having extended its previous sharp sell-off, reached $2643.50 before recovering to $2667 in European trading, despite six months of Chinese reserve figures showing no new purchases. December WTI crude is trading within the previous day’s range, consolidating near $71.
## Eurozone
In Europe, central bank activities dominate the agenda. Sweden’s Riksbank announced a 50-basis-point cut in the deposit rate to 2.75%, maintaining headline inflation at 1.6% for October. Meanwhile, Norway’s Norges Bank decided against altering interest rates, not anticipating cuts until the first quarter of 2025. The Bank of England is expected to announce a quarter-point reduction to 4.75%, with the Czech central bank likely cutting its repo rate to 4.0%.
Germany’s industrial landscape shows a complex picture. Although factory orders rose by 1.5% in September, industrial production saw a 2.5% decline, following a rise in August. This pattern mirrors France’s 0.9% drop in industrial production, potentially signaling weak aggregate figures reported on November 13. Additionally, Germany’s trade surplus narrowed to 17 billion euros, a decline from 21.4 billion, due to weaker exports and stronger imports.
The euro found its footing in North America, rebounding from a dip to $1.0685 to recover near last month’s low. Meanwhile, sterling fell sharply to $1.2835, breaching the October low but stabilized slightly above $1.29 as the BOE meeting approaches, with support expected around $1.2875.
## United Kingdom
While European central banks engage in various monetary policy maneuvers, the Bank of England is poised to make a significant announcement. Expectations are firmly set on a quarter-point rate cut bringing it to 4.75%. This decision is awaited against the backcloth of a broader European economic narrative characterized by mixed industrial performance and political upheaval, particularly in Germany. Sterling endured a drop past October lows yesterday, but some stabilizing occurred as it approached $1.29 in anticipation of the BOE’s decision, with support expected near $1.2875.
## China
In China, October witnessed a surge in exports by 12.7%, significantly surpassing the 5% median forecast in Bloomberg’s survey. This upswing coincides with anticipation of increased U.S. tariffs expected next year. However, imports contracted by 2.3%, slightly more than expected, resulting in a substantial $95.7 billion trade surplus, nearing June’s record $98.6 billion.
Moreover, China’s foreign reserves for October fell by $55.3 billion to $3.26 trillion, wiping out gains from the prior two months, seemingly due to the U.S. dollar’s strength against other major currencies. On another note, the People’s Bank of China did not add to its gold reserves for the sixth consecutive month.
## Japan
Japan is grappling with challenges in consumption despite the strongest increase in labor earnings since 1997. September’s data saw real household spending contracting year-over-year by 1.9%, leading to forecasts of a similar trend for October. The persistent decline in real terms highlights the complexities of cultural and demographic factors influencing consumption patterns. Additionally, Japan’s space constraints, epitomized by smaller average Tokyo apartments compared to New York City, contribute to limited space for material goods.
## Canada
In trading, post-election dynamics saw the U.S. dollar rally against the Canadian dollar, reaching nearly CAD1.3960, matching the year’s prior highs. The dollar’s pullback to CAD1.3870 marked a 61.8% retracement of the prior day’s gains. Support surfaces near CAD1.3850, indicating ongoing volatility amidst broader market adjustments.
## Australia
The Australian dollar experienced fluctuation, moving slightly below $0.6515, yet recovered nearly to $0.6600 in European trade and further firmed to reach close to $0.6640, aligning with the 20-day moving average. The currency’s next technical target may be around $0.6680, reflecting underlying complexity amidst broader currency dynamics.
## Mexico
Mexico’s inflation dynamics reveal a potential uptick in the headline CPI from 4.58% in September to approximately 4.75% in October. Conversely, the core rate reflects a sustained decrease, falling below 4% in September for the first time since February 2021, and expected to further decrease to 3.85%. Meanwhile, the U.S. dollar’s rise against the peso approached levels unseen since September 2022, yet resistance was seen as it held above MXN20.00, reflecting nuanced regional currency interactions in response to global economic shifts.
