The US dollar exhibits strength today. The currency has achieved a new ten-month peak against the yen, slightly exceeding JPY156, while the euro has encountered a five-day low close to $1.1565. Emerging market currencies are showing a varied performance. The PBOC established the dollar’s reference rate at a peak for the month. The flow of news is minimal. The October CPI in the UK aligned closely with forecasts, and market sentiment remains optimistic regarding a potential rate cut next month. Today, Richmond Fed’s Barkin and Fed Governor Miran will deliver remarks ahead of the release of the FOMC minutes from last month’s meeting.

Today, the majority of significant equity markets in the Asia Pacific region experienced declines; however, China’s CSI 300 (~0.45%) and India’s indices (~0.5%-0.6%) stand out as notable exceptions. Europe’s Stoxx 600 shows a slight improvement, remaining just above the flatline in late morning trading. The S&P and Nasdaq futures are approximately 0.30%-0.35% higher. Japanese bond yields are on the rise, while European 10-year benchmarks show a mixed performance. The 10-year Gilts yield is at the forefront of the gains, showing an increase of approximately 1.5 basis points, while the 10-year Swedish government bond yield has decreased by nearly the same margin. The 10-year US Treasury yield has relinquished yesterday’s safe haven appeal, currently standing at approximately 4.13%, following a near 4.08% observation yesterday. Gold has reached a three-day peak, approaching $4112. December WTI is currently experiencing subdued trading activity, fluctuating within the range of approximately $60.10 to $60.80.

The Dollar Index has been stabilizing within the lower portion of the range established between November 5 and November 13 (~99.00-100.35). The midpoint stands just above 99.65, the level at which DXY was trading yesterday, and it has increased to 99.75 today. The 200-day moving average stands at approximately 99.20. The current state of government data reporting remains inconsistent, and the timeline for normalization is uncertain. The latest ADP weekly estimate was released yesterday. Private sector job losses were estimated to average -2.5k per week during the four weeks ending November 1. It was observed that new hires are increasingly motivated by the need to replace existing employees rather than by business growth. Today, we will review the FOMC minutes from last month’s meeting, during which the second quarter-point rate cut of the year was implemented. Chair Powell’s press conference and subsequent official comments indicated that, while there was general agreement on the decision, backing for a third cut in three months is likely to be much more divisive. Tomorrow will present the postponed September employment report. The survey indicates an increase of 55k, following a rise of 22k in August. ADP estimated that the private sector lost 29k jobs in September, while the median projection from Bloomberg’s survey anticipates a 65k increase, aligning with this year’s average. Manufacturing jobs have experienced a decline for four consecutive months leading up to August, with the median forecast predicting an additional loss of 5,000 jobs.

Yesterday, the euro breached last Thursday’s low around $1.1580, reaching a low just above $1.1570. The losses have now reached approximately $1.1565 today, marking a slight new five-day low. The midpoint of this month’s range is approximately $1.1560, while the 61.8% retracement level stands at roughly $1.1540. Options are available at $1.16 for 1.4 billion euros, set to expire today. The eurozone’s CPI rose by 0.2% last month, confirming a year-over-year rate of 2.1% (with a core rate of 2.4%). The September current account surplus was reported at 23.1 billion euros. The eurozone’s current account surplus this year has decreased to 232 billion euros from 325 billion euros in the first nine months of 2024. The decline is significantly larger compared to the 3.8% decrease in the aggregate trade surplus, which stands at 130.75 billion euros versus 136 billion euros during the period of January to September 2024.

The Australian dollar experienced a decline, hitting an eight-session low yesterday around $0.6465, before rebounding to nearly $0.6520 during the North American afternoon session. Options for A$640 million at $0.6500 are set to expire today and may have been offset as of yesterday. Proximity to resistance is observed in the $0.6535 region. The Australian dollar is currently fluctuating within the range established yesterday, trading approximately between $0.6475 and $0.6510. In October, Westpac’s assessment of Australia’s leading economic indicators increased to 0.11, marking its first positive reading since July. The wage price index increased by 0.8% in the third quarter, maintaining a year-over-year growth rate of 3.4%, consistent with the second quarter. The threshold for another reduction in the upcoming months remains elevated, as highlighted by the minutes from the recent RBA meeting released yesterday.