- Ahead of the blackout period before the Federal Reserve’s December policy meeting, officials remain tight lipped about a final cut of 2024. Fed Reserve Bank of San Francisco President Mary Daly stuck to the recent script yesterday saying, “There’s no sense of urgency, but we do need to continue to carefully calibrate our policy and make sure it’s in line with the economy we have today and the one we expect to have going forward.” Chairman Jerome Powell gave little away at a speech yesterday saying that policymakers can move cautiously as they continue to lower interest rates, given the strong US economy. Mixed US data yesterday gave us few extra clues, with markets still split on a cut or a pause later this month.
- Speaking yesterday, BoE Governor Andrew Bailey signalled that MPC policymakers still believe that four interest rate cuts of 25bp next year is the most likely scenario as he said that UK inflation has come down “faster than we thought it would.” Money markets are currently pricing around 83 bp of easing next year, suggesting a split between three or four cuts of 25bp. The pound initially fell on the news with GBPUSD dropping to test support at 1.2630 before rebounding to once again trade above 1.27.
- The euro is trading above 1.05 against the greenback despite the French government’s vote of no confidence. The vote passed with 331 votes against the required 288 with President Macron now looking for a new Prime Minister who can pass a 2025 budget through an increasingly divided parliament. 1.0575 remains initial resistance ahead of 1.06 with markets treading water ahead of tomorrow’s US employment report.
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