# United States
The US dollar is showing a broader robustness today. Despite the US stock market being closed for President Carter’s funeral, the dollar remains firm in the face of lower US 10-year yields, especially following weaker-than-expected ADP jobs data. The Dollar Index hovers near 109.00, reflecting a technical retracement from previous losses, with a psychological target around 110.00-111.00 in the near future contingent on upcoming economic reports influencing Federal Reserve expectations. At the same time, US index futures have dipped, awaiting the re-opening of the cash market post-US employment data. The bond market closed early, causing the US 10-year yield to fall just below 4.70%.
# Eurozone
In the Eurozone, the euro has experienced some pressure, but maintained a relatively quiet trading range today between $1.0285 and $1.0320. After breaking below $1.03, option-related activity has sent the euro just under $1.0275. German factory data has been mixed, with a noticeable recovery in industrial output following a significant drop in factory orders, yet it may not offset the second consecutive annual GDP decline. The November trade surplus rose due to increased exports and decreased imports, pointing to some ongoing economic strength despite broader headwinds.
# United Kingdom
The British pound is facing downward pressure as UK Gilts see rising yields for the fourth consecutive session due to fiscal concerns amidst weak growth. Sterling has breached last year’s low, dropping as far as $1.2240, and resistance is now noted around $1.23. The Gilt yield continues to increase, indicating continued investor uncertainty regarding the UK’s economic trajectory. There is speculation that the pound’s depreciation may influence the Bank of England’s policy direction.
# China
Against the Chinese yuan, the US dollar is ascending to levels unseen since September 2023, breaching CNY7.33. Despite the offshore yuan holding its range, the onshore yuan struggles with downward pressure. China’s inflation dynamics show slowing CPI, possibly overstating deflation risks, as core prices, excluding food and energy, rise slightly. Manufacturing PPI remains in the negative zone since 2022. Notably, China’s 10-year yield, although near-record lows, maintains a real positive rate, unlike other major economies experiencing negative real rates.
# Japan
The yen is holding firm despite pressure from rising US yields, which peaked at nearly 4.73%. Although speculation about a Bank of Japan (BOJ) intervention is tempered by recent strong wage data, the yen remains under duress. The BOJ’s looming decisions are uncertain, with market participants split on whether a rate hike is imminent. Real earnings, however, still face challenges with a consistent negative trend, pointing to deeper issues within the economy.
# Canada
The Canadian dollar is seeing a slight depreciation, with the US dollar testing the upper reaches of recent trading ranges, potentially gearing towards retesting December highs. Following the US election, the Canadian and Norwegian krone have been the most resilient among G10 currencies. The market eagerly awaits tomorrow’s jobs data to determine the immediate trajectory of CAD against USD.
# Australia
The Australian and New Zealand dollars are lagging in the G10 currency space, with the Australian dollar slipping through the $0.6200 mark. However, recent data on retail sales and trade provide a mixed economic view. Australia experienced its largest retail sales increase in over a year, and a larger-than-expected trade surplus, highlighting strong external demand. Yet, this hasn’t fully translated into currency strength against the U.S. dollar.
# Mexico
Among emerging markets, the Colombian peso has registered significant gains post-US election, with the Mexican peso also holding relatively firm, marking a 1.5% depreciation. Analysts keep a close watch on Mexico’s December CPI report, predicted to show a slight ease in inflation. The peso’s short-term movement may hinge on a potential surprise in CPI figures, as the market braces for the U.S. jobs report.
