## United States
The US economy reveals a mixed bag of activities. Interest rates remain steady, with the dollar mainly consolidating against the G10 currencies in what some are calling a muted “Turn Around Tuesday.” Notably, the greenback is drifting around the JPY151 mark, the highest level since late July. In equity markets, the S&P 500 dipped by nearly 0.2% yesterday and hasn’t rebounded from its losing streak since early September. Meanwhile, the NASDAQ is on a four-day winning streak but is down 0.6% in the futures market. The bond sell-off is evident with the 10-year US Treasury yield surpassing 4.20%. The market’s attention is focused on climbing US interest rates and the potential implications of a Trump victory, which could negatively impact close trade allies like Mexico, Canada, China, and Japan. Although existing home sales data is upcoming, it’s expected to have minimal market influence.
## Eurozone
The European market is experiencing pressure, as observed by Europe’s Stoxx 600, which is down 0.35% after a 0.65% decline the previous day. The debt market is seeing upward pressure, with European benchmark yields climbing by 3-5 basis points. The ongoing quiet week for European economic updates is expected to change next week with the release of preliminary eurozone CPI figures and Q3 GDP estimates. These data releases are anticipated amid fiscal policy discussions, especially in Germany, which missed its deadline to submit fiscal plans to the European Commission. There’s a possibility that Germany might adopt a seven-year fiscal adjustment period similar to France and Italy. In the currency market, the euro, which had adjusted down after hitting highs, finds itself holding around last Thursday’s low of near $1.0810. The US two-year premium over Germany shows a widening trend, approaching 190 basis points.
## United Kingdom
The UK is on a serene economic week ahead of the much-anticipated Autumn budget. Prior to this, the UK’s latest government finance data are due for release. Speculations hint at discussions around boosting National Health Service funding and potentially raising taxes on entrepreneurs and reforms in inheritance tax. In the currency scene, the sterling briefly dipped below $1.2980 and currently fluctuates between $1.2960 and $1.3015. There’s attention on whether the pound will maintain or break critical technical levels.
## China
Economic activity in China reflects the ongoing sell-off in global bonds and rising US rates, which significantly affect the Chinese yuan. The dollar recovered sharply from a four-day low against the yuan to settle near CNH7.14. The People’s Bank of China set the dollar’s midpoint reference rate at CNY7.1223, slightly higher than the preceding rate. Observers remain watchful as the yuan edges towards last week’s high point near CNH7.1475.
## Japan
In Japan, the political scene is playing out against a backdrop of rising US yields, which recently helped the dollar post a bullish day against the yen, surging to JPY150.90 and further to JPY151.10. A retracement level is evident, with prospects of the yen reaching JPY152.00-JPY152.50 in sight. Domestic politics is under scrutiny with discussions about the Liberal Democratic Party’s prospects in maintaining its coalition majority amid changing public sentiment on re-militarization and price inflation concerns. Despite these developments, the financial markets have shown minimal response to recent local political polls.
## Canada
Attention is tuned to the upcoming Bank of Canada meeting, with markets anticipating a rate cut of 50 basis points. The exchange rate narrative shows the Canadian dollar under continued pressure, with the greenback reaching CAD1.3850. The Canadian dollar’s slide resumed in the latter part of the last week after a brief break. Also, political developments note a brewing no-confidence threat from Bloc Quebecois unless their policy demands are met.
## Australia
The Australian dollar witnessed a bearish front, marked by a recent downturn that took out last week’s lows before stabilizing above $0.6650. While the follow-through selling has been limited, market watchers suggest that a move above $0.6700 could improve the technical outlook. The financial markets are monitoring broader themes and potential shifts in interest rates discourse across major economies, which implicitly influence Australia’s currency valuations.
## Mexico
Mexico faces heightened risks related to potential political changes north of its border, especially concerning a potential Trump victory, which could unsettle the peso until the US election outcome becomes clear. The currency has shown volatility, with the dollar reaching nearly MXN20.0750 before pulling back. Economic data, including the IGAE activity index and recent retail sales, suggest a stalling in growth, prompting everyone to closely watch how these developments intertwine with external risks.
