The US dollar is experiencing pressure today. The recent stronger final PMI readings from Europe, coupled with a decline in US yields, have resulted in the greenback trading below last month’s lows against multiple G10 currencies. Even in instances where the data fell short, such as Australia’s Q3 GDP or Switzerland’s CPI, the currencies are still experiencing demand. Central European currencies are leading the way, resulting in an overall increase for most emerging market currencies, with Türkiye, Russia, India, and the Philippines standing out as exceptions. Equities displayed a mixed performance across the Asia Pacific region, while showing a firmer stance in Europe. Meanwhile, US index futures are experiencing slight gains. Chinese shares in Hong Kong and the mainland experienced a decline exceeding 1%, whereas the Nikkei and South Korea’s Kospi saw an increase of over 1%. The 0.30% increase in Europe’s Stoxx 600 has successfully propelled the benchmark back into positive territory for the week. Japan’s long-end bond yields increased by 2-4 basis points, whereas European benchmark yields are showing slight firmness. The 10-year US Treasury yield, which peaked at nearly 4.12% yesterday, currently stands at approximately 4.08%. Gold has encountered resistance close to yesterday’s peak (~$4236) and is now declining below $4200 during the European morning session. Copper has reached a new record high in trading. January WTI shows stability, maintaining its position within yesterday’s range and continuing to trade between $58-$60 for the fourth consecutive session.

The Dollar Index maintained significant support around 99.00 on Monday and briefly traded just above 99.55 yesterday, aligning with the (38.2%) retracement of the drop from the November 21 peak (~100.40). However, it ultimately closed at its lows and opened lower today. The range is established between the low from yesterday, just above 99.30, and the high from today, just below 99.30. The price is approaching 99.00 again, and a breach at this level could hold considerable importance. This level represents not only last month’s low but also the neckline of a potential double top, projecting towards approximately 97.70. This figure aligns with the (61.8%) retracement of gains since the year’s low was established on September 17 (Fed Day). Today, multiple high-frequency economic reports are being released. The market is likely to react more strongly to the ADP private sector jobs estimate and the ISM services index compared to the import/export prices and industrial output data for September. The final services and composite PMI are typically released but often do not garner the same level of attention as the relatively precise flash estimate.

Following yesterday’s consolidation and a strong close, today’s buying activity propelled the euro to approximately $1.1665, marginally surpassing last month’s peak. The buying activity today was supported by the stronger than anticipated final November services and composite PMIs. The upcoming target is approximately $1.1700. The aggregate composite PMI increased to 52.8, up from the initial estimate of 52.4 (which was 52.5 in October). Following the sixth consecutive monthly rise, this marks the highest level since April 2023. The final German composite PMI stands at 52.4, compared to the flash estimate of 52.1. The figure stood at 53.9 in October, marking the highest level since April 2023. The final French composite PMI is recorded at 50.4, surpassing the preliminary estimate of 49.7 and the October figure of 47.7. This marks the first reading above 50 since August 2024. Spain’s composite PMI decreased to 55.1 from 56.0, while Italy’s composite PMI increased to 53.8 from 53.1, marking its highest level since April 2023.

The dollar retreated from its advance towards JPY157.90 on November 20, reaching a low around JPY154.65 on Monday. The pullback reached the (38.2%) retracement target of the rally from the October 17 low, marking the last instance it traded below JPY150. However, the increase in US rates seemed to have provided support to the dollar. The dollar is stabilizing today within a narrow range of approximately half a yen above JPY155.50, which coincides with the position of the 20-day moving average. Options totaling nearly $1.3 billion are also set to expire today at that level. A break may indicate a re-test of Monday’s low. Japan’s final November services and composite PMI were reported today; however, the market had already reacted to the flash estimates, disregarding the final reading. The November composite PMI has been confirmed at 52.0, aligning with the year’s peak observed in both February and August. At present, the swaps market is pricing in approximately an 80% probability of an interest rate increase following the conclusion of its two-day meeting on December 19. The market anticipates an additional 25 basis point increase in 2026.

Sterling reached a four-day low around $1.3180 during the North American morning session yesterday. It rebounded but stayed constrained close to the session peak at approximately $1.3220. The stronger dollar overall, along with upward revisions to the flash PMI, has propelled sterling to nearly $1.3290. This aligns with the (38.2%) retracement of the declines observed since the peak on September 17 (~$1.3725). The 200-day moving average stands at approximately $1.3320, while the 50% retracement is just below $1.3370. The final November services and composite PMI for the UK were adjusted to 51.3 and 51.2, respectively, up from the preliminary estimate of 50.5. decreased from the October figures of 52.3 and 52.2 respectively. The swaps market exhibits a strong belief that the Bank of England will reduce the 4.0% base rate during its meeting on December 18. Another reduction is almost entirely priced in by the conclusion of April 2026.