Dollar Continues Momentum as Markets Await Key Inflation Data
GBP
GBP/USD is currently trading at 1.2901 (interbank), while GBP/EUR is trading at 1.2051 (interbank).
Last week, the BoE cut rates for only the second time since 2020, bringing them down to 4.75%, as it anticipates that the government’s new budget will contribute to higher inflation and growth.
The Monetary Policy Committee’s vote to reduce rates was 8-1, against the expected 7-2 outcome.
BoE Governor Andrew Bailey stated that while rates cannot be cut too drastically, gradual reductions are likely if economic conditions align with projections.
This week, markets will focus on UK employment data, with unemployment expected to nudge up to 4.1% for the three months to October, while wage growth, already slowing to 3.8%, may help ease inflationary pressures further.
No significant events are scheduled for today
EUR
EUR/USD is currently trading lower at the interbank level of 1.0700 (interbank).
The Euro is trading lower, impacted by the strong U.S. dollar following last week’s election results.
Furthermore, political changes in Germany are also weighing on sentiment, as Chancellor Olaf Scholz appointed a new finance minister after dismissing the previous one, dissolving the coalition government and prompting calls for fresh elections to stabilise the political landscape.
This week, Eurozone third-quarter GDP data will provide more clarity on regional growth, with the initial 0.4% quarterly increase indicating the strongest growth rate in two years.
Germany's ZEW Economic Sentiment Index for November is also set for release, and expectations suggest continued recovery in sentiment.
No significant events are scheduled for today
USD
The dollar index, which measures the U.S. against a basket of six other major currencies, is currently trading at 105.20, after gaining 0.6% last week.
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The U.S. dollar has been supported by gains following Donald Trump’s win in the recent U.S. election, where focus now shifts to whether Republicans will gain control of both the House and Senate.
The Republicans are on the brink of clinching control after and this would enable the Trump administration to advance its proposed tariffs and tax cuts, which could bolster investment, spending, and job demand, thereby heightening inflation risks.
Moreover, last week the Federal Reserve lowered interest rates by 25 basis points, as anticipated, with Chair Jerome Powell noting that the Fed’s policies would remain independent of political changes.
This week, U.S. inflation data will be a focal point for markets, with forecasts for the headline inflation rate to hold steady at 2.4% in October. The Producer Price Index (PPI), another key inflation gauge, will also be in the spotlight on Thursday.
No significant events are scheduled for today
CAD
USD/CAD is currently trading at 1.3922 (interbank), moving back in reach of the two-year low of 1.3959 reached on Nov 1st.
The Canadian dollar has softened against the U.S. dollar, moving closer to recent lows, as Canadian employment data bolstered expectations for another significant rate cut by the BoC next month.
Employment in October rose by 14,500, below forecasts, while wage growth for permanent employees continued amid a rapidly expanding labour force.
This week, economic health indicators will be closely watched, with Statistics Canada set to release manufacturing and wholesale trade data for September on Friday.
Meanwhile, oil prices have declined as fears of U.S. supply disruptions eased, and China’s latest stimulus measures fell short of market expectations. Brent crude is at $73.94 per barrel, with West Texas Intermediate at $70.36 per barrel.
No significant events are scheduled for today
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