The Canadian dollar climbed past the 1.36 per USD level in late November, marking a two-month high as speeches by Fed officials reinforced expectations of rate cuts in 2024, leading to a USD sell-off. Conversely, disinflation in Canada, coupled with stronger consumer spending, heightened risk appetite and bolstered the Canadian currency. In October, inflation in Canada fell more than anticipated to 3.1%, softer than the Bank of Canada’s forecast of around 3.5% through the middle of next year. Additionally, retail sales grew by 0.6% in September, surpassing estimates. Meanwhile, expected delays in the OPEC+ meeting to decide production policy led to a slight recovery in oil futures, further supporting demand for the loonie.

Canadian Dollar Strengthens to 2-Month High

The dollar index fell to almost 102.5 on Tuesday, the lowest in 15 weeks, and is on track to end the November month about 3% lower, as recent Fed speeches reinforced bets that the Fed is done raising interest rates and could start cutting rates next year. Board Member Waller said he’s “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%". Also, although Governor Bowman mentioned that she anticipates the necessity for further policy tightening to align inflation with the Fed's target, her statement appeared to be more toned than before. Investors now look ahead to PCE prices, the Fed-preferred inflation gauge, as well as personal income and spending data, and the ISM Manufacturing PMI for further guidance. The dollar weakened across the board, with the most pronounced selling activity versus the yen, pound and antipodean currencies.

DXY Hits 15-week Low

Dollar Index Hits 15-week Low

The euro briefly touched $1.1, maintaining its highest level since August 10th on hawkish statements from ECB officials, while investors await inflation data for November. Bundesbank President Nagel cautioned on Tuesday that if the inflation outlook worsens, the central bank might need to consider raising interest rates again, advising against hasty policy easing. Earlier, ECB President Lagarde acknowledged that inflation pressures within the Eurozone are alleviating, yet robust wage growth complicates policymakers' attempts to rein in price increases. Lagarde also foresaw a continued softening of inflationary pressures but highlighted the possibility of a temporary uptick in headline inflation in the upcoming months. The upcoming CPI report is projected to reveal a drop in the Euro Area's annual inflation rate to 2.7% in November, the lowest since July 2021, with the core gauge falling to 3.9%, marking its lowest point since June 2022.

Euro Touches $1.1

The Euro exchange rate rose above 1.1 US Dollars in the foreign exchange interbank market.

Euro traded above 1.1

EURUSD increased to a 15-week high of 1.0964

Euro Hits 15-week High

The British pound consolidated its gains above the $1.26 mark, reaching its highest level since late August as investors digested hawkish statements from Bank of England policymakers. On Tuesday, Bank of England's Deputy Governor Dave Ramsden stated that Britain's monetary policy is likely to require a "restrictive" approach for an extended period to bring inflation back to the central bank's 2% target. Meanwhile, Chief Economist Huw Pill emphasized last week the necessity for the central bank to remain steadfast in its battle against inflation, asserting that it cannot afford to loosen its tight monetary policy. Meanwhile, recent data revealed a stabilization in the UK's private sector activity in November, surpassing market predictions and concluding a three-month period of contraction. Also, the GFK consumer morale improved in November by more than expected.

Sterling at 3-Month High

The euro held steady above $1.09, remaining close to its highest levels since August 10th, as investors digested a series of statements from ECB officials while anticipating forthcoming inflation data. ECB policymaker Nagel cautioned on Tuesday that if the inflation outlook worsens, the central bank might need to consider raising interest rates again, advising against hasty policy easing. Simultaneously, President Lagarde acknowledged that inflation pressures within the Eurozone are alleviating, yet robust wage growth complicates policymakers' attempts to rein in price increases. Lagarde also foresaw a continued softening of inflationary pressures but highlighted the possibility of a temporary uptick in headline inflation in the upcoming months. The upcoming CPI report is projected to reveal a drop in the Euro Area's annual inflation rate to 2.7%, the lowest since July 2021, with the core gauge falling to 3.9%, marking its lowest point since June 2022.

Euro Holds at Over 3-Month High Ahead of Inflation

The Japanese yen appreciated past 148.5 per dollar amid a general greenback weakness, as signs of slowing economic activity in the US reinforced bets that the Federal Reserve is done raising interest rates and could start cutting rates next year. Domestically, latest data showed that Japan’s headline inflation rate accelerated to 3.3% in October from 3% in September, pointing to the highest reading since July. Also, business activity in Japan slowed to an 11-month low in November amid persistent weakness in the manufacturing sector. The Bank of Japan reaffirmed its commitment to accommodative monetary policies during its October policy meeting, and made only minor adjustments to yield curve controls. The BOJ re-defined 1% as a loose "upper bound" rather than a rigid cap on 10-year JGBs and removed a pledge to defend the level with offers to buy an unlimited amount of bonds.

Japanese Yen Gains on Dollar Weakness

The offshore yuan steadied around 7.15 per dollar, hovering near its strongest levels in four months as the People’s Bank of China stressed the need to keep the currency stable in a quarterly policy implementation report. The central bank said it would “resolutely correct pro-cyclical market activities, deal with behaviors that disrupt market orders, prevent overshooting risks in the currency and avoid the formation of one-sided and self-reinforced market expectations.” The yuan rallied recently as PBOC has been setting stronger-than-expected midpoint rates, in what analysts attributed to an official attempt to support the currency. Investors now look ahead to Chinese manufacturing activity data this week for further guidance. Meanwhile, latest data showed that industrial profits in the country continued to shrink in November, but at the slowest pace in almost a year.

Chinese Yuan Steadies Amid PBOC Remarks

The Australian dollar appreciated past $0.66, hitting its strongest levels in almost four months amid a general greenback weakness, as signs of slowing economic activity in the US reinforced bets that the Federal Reserve is done raising interest rates and could start cutting rates next year. Investors also reacted to data showing Australian retail sales unexpectedly fell in October as consumers hit the pause button on some discretionary spending and awaited Black Friday sales events. Elsewhere, Reserve Bank of Australia Governor Michele Bullock warned recently that domestic demand has been contributing increasingly to inflation, requiring a “substantial” response from interest rates. Markets now see a 60% chance of another rate hike to 4.6% next year, up from 40% previously. Earlier in November, the RBA raised the cash rate by 25 basis points to 4.35% as inflation proved more persistent than anticipated a few months ago.

Australian Dollar Hits Near 4-Month High

The dollar index held around 103.1 on Tuesday, hovering at its lowest levels in three months as weak US economic data reinforced bets that the Federal Reserve is done raising interest rates and could start cutting rates next year. Markets see a 25% chance that the central bank could begin cutting rates as early as March 2024, and a 45% chance by May. Data released on Monday showed that US new home sales fell 5.6% on a seasonally adjusted basis to 679,000 units in October, falling short of the 723,000 units expected by analysts. Investors now look ahead to PCE prices, the Fed-preferred inflation gauge, as well as personal income and spending data and the ISM Manufacturing PMI for further guidance. Moreover, several Fed officials are scheduled to deliver remarks at various events this week. The dollar weakened across the board, with the most pronounced selling activity versus the yen and antipodean currencies.

Dollar Hovers Three-Month Lows

The Mexican peso hovered near the 17.1 per USD level, remaining close to the two-month high touched on November 24th, supported by robust economic data and a weakened dollar. The revised GDP expanded by 1.1% on a quarterly basis in the three months ending September, marking the highest growth in a year. These figures emphasize Mexico's resilience to Banxico's prolonged record-high borrowing costs, allowing leeway for a hawkish stance if inflation persists. In the latest meeting, the central bank raised next year's inflation projections from 3.50% to 3.87%. Additionally, mid-month headline inflation for November slightly exceeded estimates at 4.32%, the first acceleration in consumer prices since January 2023. However, minutes from said meeting indicated policymakers' recognition of signs of slowing inflation, and recent remarks by Banxico’s Deputy Governor Jonathan Heath tempered the peso’s strength as a gradual end to restrictive monetary policy may come as early as February or March.

Mexican Peso Holds Near 2-Month High

The New Zealand dollar approached $0.61, the strongest level since early August, amidst a broader USD weakness and in anticipation of the RBNZ's interest rate decision scheduled for Wednesday. Expectations of the US Federal Reserve concluding its tightening cycle and possibly initiating rate cuts have contributed to the depreciation of the USD. Simultaneously, the Reserve Bank of New Zealand is anticipated to maintain the main interest rate at 5.5%, the highest level recorded since December 2008, despite growing calls for a rate cut due to decelerating inflation and sluggish economic data. The inflation rate slowed to 5.6% in Q3 compared to a 33-year high of 7.3% reached in Q2 of 2022 while the food inflation fell to 6.3% in October from a 12.5% peak hit in June. Also, household consumption and business activity continue to fall. Furthermore, the inauguration of a new center-right government on Monday boosted market sentiment.

New Zealand Dollar Rises for 3rd Session

The South African rand traded around 18.7 per USD, strengthening from a near one-month low of $18.9 hit on November 22nd, helped by a subdued dollar amid hopes of an end to US interest rate hikes. Meanwhile, the South African Reserve Bank (SARB) decided to keep interest rates on hold for the third consecutive time at 8.25% at its latest meeting on November 23rd. Nevertheless, the central bank was once again hawkish in tone as economic uncertainty persists in South Africa, and inflation risks remain tilted to the upside.

South African Rand Slightly Stronger

The euro held above $1.09, remaining close to its highest since August 10th, as investors await inflation data to gauge the monetary policy outlook. While Eurozone inflation pressures are easing, strong wage growth complicates the European Central Bank's efforts to curb price growth, according to ECB President Christine Lagarde. She emphasized the need to remain vigilant, stating that it's not the time to declare victory over inflation. Lagarde anticipates continued weakening of inflationary pressures, but headline inflation may temporarily rise in the coming months with a "considerable uncertainty" in the medium-term outlook. The upcoming CPI report is expected to show a decline in the Euro Area's annual inflation rate to 2.7%, the lowest since July 2021, with the core gauge falling to 3.9%, the lowest since June 2022.

Euro Holds Above $1.09

The dollar index fell to almost 103.3 on Monday, the lowest in 3 months, as investors continue to bet that the Federal Reserve is done hiking the interest rates and is set to deliver multiple cuts next year in spite of mixed economic data. Last week, preliminary S&P Global PMIs showed manufacturing fell more than expected while services rose faster. Also, initial claims were down more than anticipated but durable goods fell more than expected and the University of Michigan inflation expectations for the year ahead increased for a second month. This week, the markets will closely monitor the releases of PCE prices, personal income, and spending and the ISM Manufacturing PMI as well as several appearances of Federal Reserve officials. The dollar fell the most against Aussie, Kiwi, British Pound and Japanese yen.

DXY Falls Further

The offshore yuan slipped past 7.15 per dollar, moving away from four-month highs as the People’s Bank of China set the midpoint rate at 7.1159, softer than the previous fix of 7.1151. That was the first weakening in five sessions, although it still came in stronger than market participants anticipated. Investors also cautiously awaited Chinese manufacturing activity data this week to guide the economic and monetary policy outlook domestically. Meanwhile, latest data showed that industrial profits in the country continued to shrink in November, but at the slowest pace in almost a year. On the monetary policy front, the PBOC left its one and five-year loan prime rates steady at 3.45% and 4.2%, respectively, during its November fixing, in line with expectations. The decision came as economic data for October came in mixed, while authorities continued to assess the impact of the latest stimulus measures on the economy.

Chinese Yuan Slips on Softer Fixing

The Kiwi dollar hovered around $0.606 on Monday after stretching as high as $0.609 in the previous session, trading lower for the first session in three, amid caution that the Reserve Bank of New Zealand could leave cash rates unchanged for the fourth straight meeting this week. Inflationary pressure in the island nation is easing further following a cumulative 525bps of interest rate hikes in the past two years. Traders were also on edge as they anticipated PMI data from top trading partner China over the next few days as uneven recovery in the economy likely persisted last month amid relentless headwinds from the property sector.  In the US, a slew of key economic data will be due, among others, US PCE prices, the ISM Manufacturing PMI, and personal income and spending. Meantime, several Fed speakers, including Chair Powell, are expected to deliver their speeches this week.

New Zealand Dollar Eases

The dollar index steadied around 103.4 on Monday after losing some ground last week, as investors look ahead to key economic data this week to guide the monetary policy outlook. The US will release the latest PCE prices, the ISM Manufacturing PMI and personal income and spending figures among others this week, while Federal Reserve officials will provide fresh insights in various appearances. Last week, economic data continued to paint a mixed scenario, with preliminary S&P Global PMIs showing manufacturing fell more than expected while services rose faster. Meanwhile, initial claims were down more than anticipated but durable goods disappointed and the University of Michigan inflation expectations for the year ahead increased for a second month. Markets are still betting that the Fed will hold rates unchanged in December, while focus is turned to potential rate cuts next year.

Dollar Steadies as More Data Eyed

USDHKD decreased to a 47-week low of 7.7888

Hong Kong Dollar Hits 47-week High

The Canadian dollar traded around the 1.36 per USD level in late November, marking an over one-month high amid US economic indicators pointing to cooling inflation and job creation, signaling a weaker economy, pointing to a dovish shift by the Fed. Domestically, inflation in Canada fell more than expected to 3.1% in October, softer than the Bank of Canada’s forecast of around 3.5% through the middle of next year. This reading signaled disinflation, which, coupled with retail sales rebounding in September and surpassing estimates with growth of 0.6%, heightened risk appetite and boosted the loonie.

Canadian Dollar at Over 1-Month High

The Mexican peso strengthened toward 17.1 per USD level in November, approaching the two-month high touched on November 20th as strong economic data compounded the support from a softness in the dollar. The Mexican GDP was revised higher to expand 1.1% on a quarterly basis in the three months ending September, the most in one year. The results added to a batch of economic figures that underscore Mexico’s resilience to the prolonged period of record-high borrowing costs from Banxico, adding leeway for the central bank to remain hawkish should inflation remain stubbornly high. In its last meeting, the bank raised next year’s inflation projections from 3.50% to 3.87%. Additionally, mid-month headline inflation for November slightly exceeded estimates at 4.32%, marking the first acceleration in consumer prices since January 2023 for the mid-month gauge. Still, minutes from said meeting revealed that policymakers acknowledged that inflation has exhibited signs of slowing.

Mexican Peso Approaches 2-Month High

The dollar index declined to 103.4 in thin trade on Friday as traders return from Thanksgiving to a shortened session. Investors continue to assess the monetary policy outlook, at a time interest rates in the US are believed to have peaked although the Fed has been reiterating borrowing costs will remain elevated for some time. Economic data continues to paint a mixed scenario, with preliminary S&P Global PMIs showing manufacturing fell more than expected while services rose faster. Meanwhile, initial claims were down more than anticipated but durable goods disappointed and the University of Michigan inflation expectations for the year ahead increased for a second month. On the week, the dollar lost about 0.5%, a second weekly loss.

Dollar Edges Down in Thin Trade

USDCAD decreased to a 5-week low of 1.3626

Canadian Dollar Hits 5-week High

The Indian rupee weakened past 83.3 per USD, its lowest on record, after repeatedly testing the level since September as stronger demand for the greenback in Asia magnified elevated levels of capital outflows from the RBI. Reports that foreign investors liquidated rupee-denominated assets furthered concerns of unbalanced capital flows in the Indian economy, pressured by relatively low real interest rates by the RBI. Also lifting the amount of rupees sold for foreign currencies, volatile oil prices increased India’s vulnerability to high import inflation, magnifying selling pressure on the currency. Still, traders refrained from taking overly bearish positions on the rupee as the RBI has repeatedly sold off foreign exchange reserves to prevent the rupee from falling below the 83.3 level. The pattern was noted on multiple occasions since the third quarter of 2022, with data showing that the RBI sold more than $23 billion worth of foreign exchange in the last four months.

Indian Rupee Falls to Record Low

The British pound consolidated its gains above the $1.25 mark, hitting its highest level since early September as investors digested hawkish statements from a Bank of England policymaker and a flash PMI report. Bank of England Chief Economist Huw Pill emphasized the necessity for the central bank to stand firm in its fight against inflation, asserting that it cannot afford to ease its tight monetary policy. Pill had previously hinted at the potential for a rate cut around August 2024, while recent traders' expectations indicate the BoE is likely to maintain its Bank Rate at a 15-year high of 5.25% until at least July. In economic data, PMI figures revealed a stabilization in the UK's private sector activity for November, surpassing market predictions and concluding a three-month period of contraction.

Sterling Rises on Hawkish Comments from Pill, Strong PMI Data

The euro stabilized around $1.09, remaining close to its highest level since late August, as investors digested remarks from multiple ECB policymakers, the most recent ECB meeting minutes, and a slew of economic data. ECB member Robert Holzmann reiterated the possibility of another rate hike, following cautionary comments from colleague Pierre Wunsch who warned against overly optimistic expectations regarding future cuts. Meanwhile, the ECB's latest accounts underscored policymakers' stress on the importance of retaining the potential for a further rate hike, even if additional tightening wasn't their primary scenario. Simultaneously, the latest PMI survey indicated a slower contraction in Eurozone business activity for November, despite ongoing declines in employment levels since the start of 2021 and a six-month high in input cost inflation. Data from Germany showed business morale in Europe's largest economy improved less than expected in November.

Euro Stabilizes Around $1.09

The New Zealand dollar held gains on Friday, hovering around $0.605 while pointing to the second consecutive solid rise for the week, amid growing bets that the central bank will continue its campaign against sticky inflation during its eventual monetary policy meeting of the year next week. The RBNZ in October left cash rates unchanged for the third successive meeting at 5.5% but cautioned that consumer price inflation remained too high, and interest rates need to stay at an elevated level for longer to bring back the inflation to a desired range of 1 to 3%. Meantime, a new coalition government in Wellington made a series of policy changes, including removing the dual mandate of the central bank on inflation and employment, to focus only on price stability. In China, government advisers will recommend GDP growth targets for next year ranging from 4.5 to 5.5% at an annual policymakers’ meeting in December, amid efforts from Beijing to stabilize demand and reverse property slump.

Kiwi Dollar Set to Post Solid Gains Weekly

The Japanese yen held steady around 149.5 per dollar in a muted market reaction after data showed that Japan’s headline inflation rate accelerated to 3.3% in October from 3% in September, pointing to the highest reading since July. Preliminary figures also showed that business activity in Japan slowed to an 11-month low in November amid persistent weakness in the manufacturing sector. The Bank of Japan reaffirmed its commitment to accommodative monetary policies during its October policy meeting, and made only minor adjustments to yield curve controls. The BOJ re-defined 1% as a loose "upper bound" rather than a rigid cap on 10-year JGBs and removed a pledge to defend the level with offers to buy an unlimited amount of bonds. Externally, investors continued to assess the outlook for Federal Reserve monetary policy amid mixed economic data in the US.

Japanese Yen Muted After Inflation Data

The dollar index steadied around 103.8 on Friday, holding recent gains as stronger-than-anticipated data prompted traders to reassess the outlook for Federal Reserve monetary policy. Still, trading volume remains thin due to the Thanksgiving holiday. Data on Wednesday showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week. Inflation expectations for both the near and long term also climbed, raising concerns that interest rates could stay higher for longer. Adding to the upward momentum, the latest FOMC minutes showed that policymakers favored maintaining a restrictive monetary policy and gave no indications that rates would fall soon. Markets still see the Fed keeping rates unchanged in December, while traders scaled back bets for rate cuts in March.

Dollar Holds Steady in Thin Holiday Trade

The Mexican peso steadied around the 17.2 per USD level, remaining near a one-month high of 17.1 reached on November 20th as markets assessed the next steps for the Bank of Mexico. Minutes from the latest meeting showed that Banxico policymakers acknowledged that while remaining high, inflation has shown signs of slowing and rate cuts are likely for 2024. Still, the central bank revised its inflation projections for 2024 from 3.50% to 3.87%, which remains above the 3.00% target. Additionally, mid-month headline inflation for November was slightly ahead of estimates at 4.32%, marking the acceleration in consumer prices since January 2023 for the mid-month gauge.

Mexican Peso Holds Steady

The Brazilian real hovered close to 4.9 per USD, remaining near the two-month high of 4.86 touched on November 15th amid elevated foreign currency inflows, while pessimism over the country’s fiscal balances strengthened bets of prolonged restrictive interest rates. The latest data showed that the Brazilian trade surplus soared by nearly 160% in October amid soaring iron ore prices, sugar prices, and robust soybean crops. In the meantime, the federal government announced that its budget deficit for this year is expected to be much wider than anticipated earlier in the year, as spending overshot estimates and revenues are likely to miss targets. The primary deficit is expected at BRL 204 billion instead of earlier forecasts of 141 billion. The Brazilian central bank previously stated that unsustainable borrowing was an upside risk to inflation, warranting higher interest rates.

Brazilian Real Holds Near 2-Month High

The South African rand traded around 18.8 per USD, up slightly from a near one-month low of $18.9 hit on November 22nd, after the South African Reserve Bank decided to keep its repo rate steady for the third consecutive time at 8.25%. The central bank was slightly hawkish in tone, feeding expectations that rate cuts are still a while away. Governor Lesetja Kganyago said that while economic uncertainty persists in South Africa, and risks are to the upside, the current interest rate levels remain restrictive and are consistent with the inflation outlook. He noted that South Africa’s headline inflation rate has increased more gradually than in many other emerging and advanced economies but still remains sensitive to shocks.

South African Rand Firmer

The euro remained above $1.09, heading towards its highest level since late August, following the release of ECB meeting minutes. Policymakers emphasized the importance of keeping the possibility of a further rate hike on the table, even if additional tightening wasn't their primary scenario. Simultaneously, the latest PMI survey revealed a slower contraction in Eurozone business activity for November, despite declining employment levels since the beginning of 2021 and a six-month high in input cost inflation. Earlier this week, dovish comments from ECB policymaker Mario Centeno contrasted with Joachim Nagel's view on rates, suggesting they are close to their peak, and ECB President Christine Lagarde's warning against premature celebration.

Euro Remains Above $1.09 as ECB Leaves Door Open for Further Hikes

The Indian rupee was steady at the 83.3 per USD mark in late November, holding near the record-low that has been repeatedly tested since September, as sustained capital outflows offset support from the RBI. Persistent reports that foreign investors liquidate rupee-denominated assets furthered concerns of unbalanced capital flows in the Indian economy, pressured by relatively low real interest rates by the RBI. Also lifting the amount of rupees sold for foreign currencies, volatile oil prices increased India’s vulnerability to high import inflation, magnifying selling pressure on the currency. Still, traders refrained from taking overly bearish positions on the rupee as the RBI has repeatedly sold off foreign exchange reserves to prevent the rupee from falling below the 83.3 level. The pattern was noted on multiple occasions since the third quarter of 2022, with data showing that the RBI sold more than $23 billion worth of foreign exchange in the last four months.

Indian Rupee Retests Record Low

The Turkish lira edged slightly higher to below 28.8 per USD after the central bank of Turkey raised interest rates for the sixth consecutive time and by a bigger-than-expected 500bps in its November meeting. Investors were mostly expecting a 25bps hike. Over the past three months, the currency has consistently hit daily record lows, with average daily losses just above 0.1%, confined to a narrow range, indicative of a controlled devaluation directed by the central bank. Reserve requirements for the lira have been tightened to absorb liquidity in the interbank market, elevating local rates and bringing them more closely to the cost of lira borrowing abroad. The lira has depreciated by over 50% against the USD since the start of 2023.

Turkish Lira Rebounds After CBRT Decision

The British pound solidified its gains above the $1.25 mark, reaching its highest level since early September, amid shifting expectations about the Bank of England's interest rate cut timeline after stronger-than-anticipated flash PMI data. The recent survey revealed that the UK's private sector activity stabilized in November, surpassing market predictions and concluding a three-month period of contraction. Investors now perceive the likelihood of a 25 basis-point BoE rate cut as surpassing 50% for the August meeting and are fully factoring it in for September. On Wednesday, finance minister Jeremy Hunt announced measures to bolster the country's sluggish economic growth, with the latest OBR forecasts indicating weaker-than-initially projected growth for 2024 and 2025, alongside a significant upward revision in next year's inflation.

Sterling Appreciates After PMI Data

The euro strengthened above $1.09, heading towards its most robust position since late August, following data indicating a potential easing of the downturn in the Eurozone economy. The latest PMI survey unveiled a slower contraction in the bloc's business activity in November, despite a decline in employment levels since the start of 2021 and a six-month high in input cost inflation. Investors are now eagerly anticipating the release of the European Central Bank's minutes from its October policy meeting later in the day. Earlier this week, dovish comments from ECB policymaker Mario Centeno contrasted with Joachim Nagel's view on rates, suggesting they are close to their peak, and ECB President Christine Lagarde's warning against premature celebration.

Euro Gains After PMI Data

The Australian dollar rose to around $0.655, hovering near its highest levels in over three months as Reserve Bank of Australia Governor Michele Bullock warned domestic demand has been contributing increasingly to inflation, requiring a “substantial” response from interest rates. Markets now see a 60% chance of another rate hike to 4.6% next year, up from 40% prior. Earlier in November, the RBA raised the cash rate by 25 basis points to 4.35% as inflation proved more persistent than anticipated a few months ago. On the data front, Australian manufacturing and services activities contracted further  in November due to deteriorating demand conditions. Externally, investors continued to assess the outlook for Federal Reserve monetary policy as mixed economic data in the US.

Australian Dollar Gains on Hawkish Bullock Remarks

The Kiwi dollar was trading around $0.604 on Thursday after slipping to as low as $0.599 in the previous session, supported by optimism that the Reserve Bank of New Zealand next week will reaffirm its commitment to fight against sticky inflation. Last month, the central bank left cash rates unchanged for the third straight meeting at 5.5% but cautioned that inflation remained too high, and interest rates need to stay at a restrictive level for longer to bring back inflation to an intended range of 1 to 3%. In China, the government ramped up pressure on banks to fill an estimated USD 446 billion shortfall in funding needed to stabilize the property industry while finalizing a draft list of 50 developers eligible for financial support, including Country Garden Holdings Co and Sino-Ocean Group. Meanwhile, the dollar index eased slightly following gains in the prior two sessions, amid thin trading due to holidays in the US and Japan.

New Zealand Dollar Strengthens

The dollar index held around 103.8 on Thursday after rising for two straight sessions, underpinned by stronger-than-anticipated data which prompted traders to reassess the outlook for Federal Reserve monetary policy. Still, trading volume is expected to remain thin due to holidays in Japan and the US. Data on Wednesday showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week. Inflation expectations for both the near and long term also climbed, raising concerns that interest rates could stay higher for longer. Adding to the upward momentum, the latest FOMC minutes showed that policymakers favored maintaining a restrictive monetary policy and gave no indications that rates would fall soon. Markets still see the Fed keeping rates unchanged in December, while traders scaled back bets for rate cuts in March.

Dollar Holds Gains in Thin Holiday Trade

The Brazilian real, trading around the 4.9 per USD level, retreated from the near-two-month high of 4.86 USD reached on November 15th, driven by a generally weak US dollar and fiscal concerns from the Brazilian government. Still, traders proceeded with caution as recent US data and Fed minutes pointed out that the Fed is not yet ready to loosen its monetary policy, giving the greenback some relief. Domestically, Brazil's headline inflation dropped to 4.82% in October from the previous month's 5.19%, marking the first slowdown since June and fostering hopes of disinflation, aligning with the central bank's signal of ongoing interest rate cuts for at least the next two meetings. The currency now faces renewed pressure from fiscal concerns in regards to their budget and spending as the latest estimates pointed to less revenue but increased spending.

Brazilian Real Steadies Around 4.9 USD

The dollar index edged higher to around 103.8 on Wednesday and is on track to gain for a second consecutive session, after weekly claims fell much more than expected. Also, the FOMC minutes showed the Fed will keep monetary policy restrictive and will proceed carefully, while providing no indication that interest rates could be cut soon.

Dollar Rises for 2nd Day

The British pound held above the $1.25 mark, hovering around its highest level since early September, helped by general dollar weakness and as Finance Minister Jeremy Hunt delivered the Autumn Statement to parliament. In his address, Hunt forecasted a decrease in inflation to 2.8% by the end of 2024, a stark contrast to March's estimate of 0.9%, indicating a more persistent inflationary trend than initially anticipated by the OBR in spring. Looking ahead to 2025, inflation is projected to meet the Bank of England's 2% target. Despite earlier predictions of a 0.2% contraction, the economy appears set to grow by 0.6% this year, while projections for both 2024 and 2025 underwent substantial downward revisions, with GDP anticipated to expand by 0.7% and 1.4%, respectively.

Sterling Holds at Over 2-Month High

The dollar index edged higher to around 103.9 on Wednesday and is on track to gain for a second consecutive session, after the FOMC minutes showed the Fed will keep monetary policy restrictive and will proceed carefully, while providing no indication that interest rates could be cut soon. Bets of a rate cut as soon as March edged lower to about 28% after the FOMC release. Traders will now keep a close eye on initial claims and durable goods orders later in the day for another update on the economic performance, but trading is likely to remain subdued ahead of the Thanksgiving holiday. The biggest buying activity was against the Euro and the kiwi dollar.

The New Zealand dollar eased to $0.603 on Wednesday after hitting an over 3-month high of around $0.607 in the previous session, amid bets that the RBNZ could leave cash rates unchanged for the fourth straight meeting next week as cost pressures moderated further following a cumulative 525bps of interest rate hikes in the past two years. Meantime, the US dollar tried to recover from its lowest in 2-1/2 months, after minutes from the Federal Reserve policy meeting in November reiterated recent comments by policymakers that more tightening could come if progress in controlling inflation faltered. The foreign exchange market is quiet ahead of the US Thanksgiving holiday. In China, Beijing is set to appoint Zhu Hexin, a veteran banker and chief of state-run financial conglomerate Citic Group, as the new head of its foreign exchange regulator.

Kiwi Dollar Softens Slightly

The Japanese yen depreciated again past 148 per dollar, retreating slightly from two-month highs as minutes of the US Federal Reserve’s last meeting revealed that monetary setting will likely stay restrictive, giving no indication that interest rates could start falling soon. Domestically, investors look ahead to preliminary manufacturing and services PMI figures and inflation data in Japan this week to guide the economic and monetary policy outlook. Last week, data showed that Japan’s economy contracted faster than expected in Q3 amid slowing global demand and rising domestic inflation. Also, the Bank of Japan reaffirmed its commitment to accommodative monetary policies and made only minor adjustments to yield curve controls. The BOJ re-defined 1% as a loose "upper bound" rather than a rigid cap on 10-year JGBs and removed a pledge to defend the level with offers to buy an unlimited amount of bonds.

Japanese Yen Slips After Fed Minutes

The Australian dollar eased to around $0.655, retreating slightly from over three-month highs as minutes of the US Federal Reserve’s last meeting revealed that monetary setting will likely stay restrictive, giving no indication that interest rates could start falling soon. Domestically, investors digested data showing Australia’s leading economic index deteriorated in October amid various headwinds. On the monetary policy front, the Reserve Bank of Australia raised the cash rate by 25 basis points to 4.35% during its November meeting as inflation proved more persistent than anticipated a few months ago. However, the RBA replaced a previous statement that “some” further tightening may be needed with “whether” a move would be necessary depending on incoming data.

Australian Dollar Eases After Fed Minutes

The dollar index steadied around 103.5 on Wednesday after gaining some ground in the previous session as the Federal Reserve signaled in its latest minutes that monetary policy will remain restrictive and gave no indication that it could start cutting interest rates soon. Still, the index traded close to its lowest levels in nearly three months, facing pressure from bets that US interest rates could start falling next year following a series of softer-than-expected economic data. The central bank is widely expected to keep rates unchanged again in December, while markets see a 30% chance that the Fed could begin lowering rates as early as March 2024. Investors now look ahead to more US data including durable goods orders, initial jobless claims and preliminary manufacturing and services PMI figures for further guidance.

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Canadian Dollar Strengthens to 2-Month High

DXY Hits 15-week Low

Dollar Index Hits 15-week Low

Euro Touches $1.1

Euro traded above 1.1

Euro Hits 15-week High

Sterling at 3-Month High

Euro Holds at Over 3-Month High Ahead of Inflation

Japanese Yen Gains on Dollar Weakness

Chinese Yuan Steadies Amid PBOC Remarks

Australian Dollar Hits Near 4-Month High

Dollar Hovers Three-Month Lows

Mexican Peso Holds Near 2-Month High

New Zealand Dollar Rises for 3rd Session

South African Rand Slightly Stronger

Euro Holds Above $1.09

DXY Falls Further

Chinese Yuan Slips on Softer Fixing

New Zealand Dollar Eases

Dollar Steadies as More Data Eyed

Hong Kong Dollar Hits 47-week High

Canadian Dollar at Over 1-Month High

Mexican Peso Approaches 2-Month High

Dollar Edges Down in Thin Trade

Canadian Dollar Hits 5-week High

Indian Rupee Falls to Record Low

Sterling Rises on Hawkish Comments from Pill, Strong PMI Data

Euro Stabilizes Around $1.09

Kiwi Dollar Set to Post Solid Gains Weekly

Japanese Yen Muted After Inflation Data

Dollar Holds Steady in Thin Holiday Trade

Mexican Peso Holds Steady

Brazilian Real Holds Near 2-Month High

South African Rand Firmer

Euro Remains Above $1.09 as ECB Leaves Door Open for Further Hikes

Indian Rupee Retests Record Low

Turkish Lira Rebounds After CBRT Decision

Sterling Appreciates After PMI Data

Euro Gains After PMI Data

Australian Dollar Gains on Hawkish Bullock Remarks

New Zealand Dollar Strengthens

Dollar Holds Gains in Thin Holiday Trade

Brazilian Real Steadies Around 4.9 USD

Dollar Rises for 2nd Day

Sterling Holds at Over 2-Month High

Dollar Rises for 2nd Day

Kiwi Dollar Softens Slightly

Japanese Yen Slips After Fed Minutes

Australian Dollar Eases After Fed Minutes

Dollar Remains Under Pressure