The United States of America

USD is strengthening against EUR, JPY, and GBP.

The positive dynamics are developing against recent comments from leading US Federal Reserve officials, warning investors against overconfidence that the cycle of tightening monetary policy has already been completed. On Monday, the President of the Federal Reserve Bank (FRB) of Minneapolis, Neel Kashkari, hinted at the possibility of a return to “hawkish” rhetoric, and yesterday, US Federal Reserve Governor Michelle Bowman confirmed it, saying that the regulator could again raise interest rates if necessary, although the dynamics of inflation fall seems satisfactory. The head of the Dallas Fed, Lori Logan, noted that this figure is still too high and it is still moving towards 3.0%, and not towards the target level of 2.0%, the labor market remains strong, and in these conditions the economy's strict financial conditions are necessary. Chicago Fed President Austan Goolsbee commented on the situation most optimistically: in his opinion, the agency has achieved significant success in the fight against rising consumer prices, and now, it is worth paying attention to how long it will be possible to keep interest rates at the current level. During the day, investors are also expecting a speech from the head of the regulator, Jerome Powell, who is likely to support the opinion of most of his colleagues.

Eurozone

EUR is weakening against USD but strengthening moderately against GBP and JPY.

The German consumer price index fell from 0.3% to 0.0% MoM and from 4.3% to 3.0% YoY: inflationary pressures in the leading European economy are weakening but remain well above the target level of 2.0%. Eurozone retail sales adjusted by –0.3%, more than expected –0.2% MoM, and by –2.9% YoY, slightly better than expected –3.1%. Pressured by high retail prices and rising costs of living, consumers are forced to cut spending, raising concerns among businesses ahead of the Christmas shopping period. According to a September survey of European households on inflation expectations, conducted by experts from the European Central Bank (ECB), the majority of respondents believe that consumer price growth over the next 12 months will average 4.0%, while previously expected to increase by 3.5%, against which regulator officials may return to the “hawkish” rhetoric.

The United Kingdom

GBP is weakening against USD and EUR but has ambiguous dynamics against JPY.

Investors focus on the comments of leading representatives of the Bank of England: yesterday, the department’s chief economist, Huw Pill, noted that the opinion of financial market participants that the first interest rate cut could take place in August 2024 does not seem unreasonable to him, creating unprecedented pressure on the pound. In turn, the head of the regulator, Andrew Bailey, admitted that it was too early to count on a quick reduction in borrowing costs but also announced significant progress in the fight against inflation. The official hopes to reach the 2.0% target within the next two years, and until then, interest rates will remain high.

Japan

JPY is weakening against USD and EUR but has ambiguous dynamics against GBP.

Investors are focusing on the latest comments from the head of the Bank of Japan, Kazuo Ueda, who said that the current decline in real wages will not affect the regulator’s plans to move away from ultra-loose monetary policy. It will depend on whether the agency’s experts can confidently predict the start of growth this indicator against a positive economic cycle. The official did not say anything definite regarding the timing of the “hawkish” rhetoric introduction, noting that it will not occur before the start of stable inflationary growth. Most analysts expect steps to normalize monetary policy by April.

Australia

AUD is strengthening against JPY, GBP, and EUR but has ambiguous dynamics against USD.

The volume of building permits fell 4.6% in September after rising 8.1% the month before, while the figure for private homes corrected by –4.6% from 7.2% in August. The industry is showing signs of cooling amid inflationary pressures and the “hawkish” rhetoric of the Reserve Bank of Australia (RBA).

Oil

Oil prices are adjusted downwards.

Negative dynamics are developing after the publication of a report on oil reserves from the American Petroleum Institute (API), which reflected an increase in the indicator by 11.9M barrels instead of the reduction of 0.3M barrels expected by experts. In addition, prices are under pressure amid renewed forecasts for demand for “black gold” from the Energy Information Administration of the US Department of Energy (EIA): analysts believe that during the year, it will adjust by –300.0K barrels per day, while previously it was assumed only –100.0K barrels per day.