- The US dollar remains well supported against its G10 peers as final US election results come in, with Trump winning all swing states and edging closer to overall control of Congress. The greenback is likely to range trade today with markets in the US closed for the Veteran Day holiday. The “Trump Trade” continues to drive markets as concerns over tariffs and a boost in inflation increase fears over the outlook for the economy. As the Fed looks set to follow its recent interest rate cut with another move in December, markets will look to this week’s inflation data for clues on the pace of cuts in 2025. Wednesday sees the release of the latest inflation report with headline and core CPI expected to remain at 0.2% and 0.3% in October. On a year-on-year basis, inflation looks set to rise to 2.6% (from previous 2.4%) with core coming in unchanged at 3.3%.
- Tomorrow sees the release of the latest UK labour market stats, with private sector pay growth expected to fall a touch. Pay gains are moving in the right direction, albeit slowly, giving the Bank of England further reason to remain cautious about the path of interest rates. GDP data released on Friday is expected to show that the UK economy is cooling with Q3 data expected to come in at 0.2% versus the previous reading of 0.5%. This comes ahead of the key CPI inflation report next week.
- The single currency remains in the doldrums against the greenback and markets will be scouring the account from the last ECB meeting for further clues on whether the central bank will lower rates again in December. A fourth cut of the year seems likely as disinflation and signs of weakness in the euro economy remain. Ahead of the release on Thursday, markets will also review tomorrow’s German ZEW survey and euro area Industrial Production which is out on Wednesday.
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