The New Zealand dollar held its recent decline to around $0.587 on Thursday as investors anticipated a more dovish stance from the Reserve Bank of New Zealand at its policy meeting next week. Currently, markets are implying a 26% chance of a 75bps rate cut to the 4.75% cash rate, while a 50bps reduction is already fully priced in. This shift in expectations followed a downbeat economic outlook from New Zealand Treasury, which cautioned that the anticipated economic recovery could be delayed. Externally, the Kiwi faced added pressure from a rebound in the US dollar amid speculation that the Federal Reserve may hold off on cutting interest rates in December.

Kiwi Holds Decline Amid Expectations of Dovish RBNZ

The South Korean won continued its recent decline toward 1,400 per dollar, heading back to its lowest level since late October 2022, as the US dollar strengthened bolstered by the momentum of President-elect Trump’s proposed policies. Traders now await clarity of Trump’s policies that could reignite inflation and gauge the Federal Reserve’s future rate cuts. Furthermore, rising tensions between Russia and Ukraine, which is a positive signal for the dollar, may put further pressure on the won. Domestically, investors await the Bank of Korea's rate decision next week, with expectations to keep rates at 3.25% after the October cut. However, growing speculation suggests the central bank may adopt a more dovish stance next year, potentially lowering the benchmark rate to 2.5% as inflation stabilizes.

South Korean Won Slips Further on Dollar Strength

The Japanese yen rose to around 155 per dollar on Thursday, recovering some ground after losses in the previous session. However, uncertainty surrounding the Bank of Japan’s future interest rate hikes continued to weigh on the currency. BOJ Governor Kazuo Ueda suggested on Monday that any rate hikes would be gradual, depending on economic conditions, but he provided no specific timeline for when such hikes might occur. Meanwhile, recent verbal warnings from Japanese authorities appeared less effective in curbing market concerns, with traders eyeing the 160 level as a potential trigger for further government intervention. Investors are now awaiting Japan's October inflation data, due for release on Friday, to help shape the economic outlook. Meanwhile, the yen remains under pressure from the US dollar, bolstered by expectations that Trump’s policies could reignite inflation and limit future interest rate cuts by the Federal Reserve.

Japanese Yen Rises, But BOJ Uncertainty Persists

The Australian dollar rose back above $0.65 on Thursday, recovering from losses in the previous session, driven by a hawkish stance from the Reserve Bank of Australia. The minutes from the RBA’s November meeting revealed that the central bank remains cautious of inflationary pressures, noting that monetary policy should stay restrictive until inflation is on a clear path to its target. However, the RBA emphasized that future policy adjustments will depend on incoming economic data. Earlier in the week, the Aussie came under pressure from the US dollar as rising tensions in the Russia-Ukraine conflict boosted demand for safe-haven assets. The US dollar also continued to be supported by expectations that Trump’s policies could reignite inflation, potentially limiting future interest rate cuts by the Federal Reserve.

Aussie Dollar Rebounds on Hawkish RBA Outlook

The dollar index held above 106.5 on Thursday after rebounding in the previous session, underpinned by expectations that Trump’s policies could fuel inflation, potentially limiting the Federal Reserve's future interest rate cuts. Investors are now focusing on Trump’s potential cabinet nominees to assess whether the incoming administration will follow through on its campaign promises. On the monetary policy front, conflicting signals emerged from Fed governors Michelle Bowman and Lisa Cook, who offered divergent views on inflation and the potential for further easing in separate statements on Wednesday. Looking ahead, investors are awaiting key data, including initial jobless claims and existing home sales, as well as more commentary from the central bank. The dollar also benefited from renewed safe-haven demand, fueled by rising tensions between Russia and the West. As a result, the dollar strengthened across the board, with the euro, kiwi, and yen seeing the most significant declines.

Dollar Strengthens on Trump, Fed Outlook

The British pound reversed early gains to trade below $1.27, approaching again a six-month low touched last week, amid mounting tensions between Russia and Ukraine. Reports emerged that Ukraine had fired UK cruise missiles into Russia for the first time. Early, the pound touched $1.271 after a hotter-than-expected inflation print reinforced the Bank of England's cautious stance on future interest rate cuts. Annual inflation rate in the UK went up to 2.3% in October, the highest in six months, compared to 1.7% in September, exceeding both the BoE's target and market expectations of 2.2%. Services inflation, which the central bank view as a key measure of domestically generated price pressure, edged up to 5% from 4.9%. Markets now see just a 14% chance of a further quarter point trim this year and only two cuts in 2025.

British Pound Pares Gains

The Euro fell to $1.052, the lowest level since mid-October 2023, pressured by a general dollar strength, mounting tensions between Russia and Ukraine, and growing concerns about downside risks to the Eurozone economy. Reports emerged that Ukraine had fired UK cruise missiles into Russia for the first time. Meanwhile in its annual Financial Stability Review, the ECB highlighted that heightened geopolitical tensions and policy uncertainties are amplifying sovereign vulnerabilities, while rising global trade tensions are increasing the likelihood of adverse economic shocks. On the other hand, negotiated wages in the Euro Area rose 5.4% yoy in Q3, the most since the euro was introduced, complicating the ECB’s plans for interest rate cuts. The central bank is still expected to deliver its fourth 25 bps rate cut in December.

Euro Extends Losses to Over 1-Year Lows

The dollar index extend gains to around 106.7 on Wednesday, rebounding from a three-day drop, and approaching two-year highs touched early in the month, amid escalating Ukraine-Russia tensions after reports that Ukraine fired UK cruise missiles inside Russia for the first time. Early in the week, President Putin has updated Russia’s nuclear doctrine to expand the conditions for using atomic weapons, minutes before it was reported that Ukrainian forces launched their initial attack on a Russian border area utilizing missiles supplied by the West. In addition, markets are also closely watching for Donald Trump’s nominee for Treasury Secretary, with former Federal Reserve Governor Kevin Warsh and Apollo Global Management’s Marc Rowan emerging as leading contenders. The dollar gained the most against the Euro after the European Central Bank warned about the risks to financial stability in the euro zone posed by trade tensions.

Dollar Pauses 3-Day Decline

The Mexican peso weakened past 20.23 per USD, retreating from a near two-week high of 20.1 on November 19th, as heightened geopolitical risks and concerns about overly optimistic domestic forecasts weighed on sentiment. Russia's announcement of changes to its nuclear doctrine amplified global risk aversion, pressuring riskier currencies. Despite recent gains driven by expectations of steady interest rates and improved fiscal plans for 2025, these advances are now challenged by Moody's recent downgrade of Mexico's credit rating, citing fiscal risks. The Mexican peso has risen over the past five days as the USD's Trump-driven strength faded. However, potential risks loom from the anticipated clarification of U.S. trade tariffs. Speculation about Robert Lighthizer, a known trade hawk, as U.S. Trade Representative and Marco Rubio's appointment as Secretary of State, with his tough stance on Latin America and ties to Beijing, could further pressure the peso.

Mexican Peso Retreats on Risk Aversion

The euro weakened to below $1.055, approaching again one-year lows touched last week, pressured by a general dollar strength and mounting concerns about the downside risks to the Eurozone economy. In its annual Financial Stability Review, the European Central Bank (ECB) highlighted that heightened geopolitical tensions and policy uncertainties are amplifying sovereign vulnerabilities, while rising global trade tensions are increasing the likelihood of adverse economic shocks. Additionally, the prospect of an escalation in the Russia-Ukraine conflict further weighed on the common currency. On the other hand, negotiated wages in the Euro Area rose 5.4% yoy in Q3, the most since the euro was introduced, and led by Germany, complicating the European Central Bank’s plans for interest rate cuts. The central bank is still expected to deliver its fourth 25 basis point rate cut in December.

Euro Falls Below $1.055

The dollar index edged up to 106.5 on Wednesday, rebounding from a three-day drop, as traders remained focused on the economic and monetary policy outlook while keeping a close eye on escalations in the Russia-Ukraine conflict. Markets are also closely watching for Donald Trump’s nominee for Treasury Secretary, with former Federal Reserve Governor Kevin Warsh and Apollo Global Management’s Marc Rowan emerging as leading contenders. Comments from several Fed officials will also be in the spotlight, with the odds for a 25bps reduction in the fed funds rate next month currently standing around 59%. The dollar strengthened broadly, posting its largest gains against the euro and the Japanese yen.

Dollar Rebounds from 3-Day Drop

The South African rand traded lower at around 18.1 per USD, pressured by a stronger dollar and a risk-off sentiment towards emerging market assets, after Russia's war in Ukraine took a more perilous turn with escalating nuclear rhetoric. Also, lingering concerns about President-elect Trump’s upcoming policies and the prospect of fewer US interest rate cuts weighed. On the domestic economic front, South Africa's annual inflation slowed sharply to an over four-year low of 2.8% in October, easing from 3.8% in September, paving the way for another rate cut by the South African Reserve Bank.

South African Rand Under Pressure

The British pound strengthened to above $1.27, moving further away from a six-month low touched last week, after a hotter-than-expected inflation print reinforced the Bank of England's cautious stance on future interest rate cuts. Annual inflation rate in the UK went up to 2.3% in October, the highest in six months, compared to 1.7% in September, exceeding both the BoE's and market expectations of 2.2%. Services inflation, which the central bank view as a key measure of domestically generated price pressure, edged up to 5% from 4.9%. Meanwhile, the sterling remains under pressure from the broader strength of the US dollar amid expectations that Donald Trump’s policies could push US inflation higher, potentially limiting the Federal Reserve's capacity to cut interest rates.

British Pound Strengthens After Hot Inflation

The New Zealand dollar held its recent advance to around $0.591 on Wednesday, supported by a slightly weaker US dollar. Investors are awaiting comments from Federal Reserve officials to gauge the outlook for US policy easing, while also closely watching President-elect Donald Trump's pick for U.S. Treasury Secretary. Meanwhile, geopolitical risks stemming from the escalation of the Ukraine-Russia conflict are weighing on risk-sensitive currencies like the Kiwi. Domestically, investors remain confident that the Reserve Bank of New Zealand will implement another 50bps rate cut at its meeting next week. Markets are also assigning an 84% probability of a further 50bps reduction in February, with expectations that rates could approach 3.25% by the end of next year.

New Zealand Dollar Holds Gains

The Australian dollar climbed above $0.653 on Wednesday, marking its fourth straight session of gains, supported by a weaker US dollar and a hawkish outlook on Reserve Bank of Australia policy. The greenback ran into some profit-taking in recent sessions following a strong rally, while investors awaited news on US President-elect Donald Trump’s pick for Treasury Secretary. On the domestic front, minutes from the RBA's November policy meeting indicated that the central bank intends to maintain a restrictive monetary policy until it is confident that inflation is sustainably moving toward its target, while remaining vigilant about upside risks to inflation. However, the RBA stressed that it is not ruling anything in or out regarding future policy adjustments. Currently, markets are pricing in a 37% chance of an RBA rate cut in February, and a 58% probability by April. A 25 basis point reduction to the 4.35% cash rate is not fully priced in until May.

Aussie Dollar Climbs for Fourth Session

The offshore yuan depreciated past 7.24 per dollar, marking its second consecutive session of losses, as the People's Bank of China opted to leave key lending rates unchanged in its November fixing, in line with market expectations. The central bank maintained the one-year loan prime rate, a benchmark for most corporate and household loans, at 3.1%, while the five-year rate, a reference for property mortgages, remained steady at 3.6%. Both rates continue to sit at record lows following cuts in October and July. These decisions highlight the PBoC's ongoing assessment of the impact of earlier stimulus measures, as China intensifies efforts to counter its economic slowdown and achieve its 2024 growth target of around 5% despite persistent challenges. Meanwhile, attention has turned to an investment summit in Hong Kong, where top Chinese officials reaffirmed their unwavering commitment to driving capital market reforms and broadening access to the financial sector for foreign investors.

Offshore Yuan Extends Losses

The Japanese yen weakened again towards 155 per dollar on Wednesday, retracing some of its recent gains as verbal interventions from Japanese authorities appeared to lose their effectiveness. Markets are now watching the 160 level as a potential trigger for further government intervention, similar to the action taken in July. On the economic front, data showed that Japanese exports rose by 3.1% in October, reversing a 1.7% decline in September and surpassing forecasts of a 2.2% increase. Imports also edged up by 0.4%, defying expectations for a 0.4% drop. Meanwhile, Bank of Japan Governor Kazuo Ueda indicated on Monday that any future rate hikes would be gradual, depending on economic developments, though he provided no specific timeline for when these hikes might occur. Externally, the yen briefly strengthened on Tuesday as tensions in the Russia-Ukraine war spurred safe-haven buying, before reversing those gains as geopolitical concerns subsided.

Yen Eases as Verbal Warnings Lose Effect

The South Korean won held its recent decline past 1,390 per dollar on Wednesday as investors awaited the Bank of Korea's interest rate decision next week. The central bank is widely expected to keep rates unchanged after cutting its benchmark rate to 3.25% in October. However, growing speculation suggests the Bank of Korea may adopt a more dovish stance next year, potentially lowering the benchmark rate to 2.5% as inflation stabilizes. This aligns with recent data showing South Korea's producer inflation holding steady at its lowest level since November 2023. The won also remains pressured by the US dollar's strength, fueled by expectations of slower Federal Reserve rate cuts, “Trump trades,” and a brief safe-haven boost amid rising tensions between Russia and Ukraine.

South Korean Won Holds Losses

The dollar index held its recent decline to around 106.1 on Wednesday as the initial boost to safe-haven currencies, driven by escalations in the Russia-Ukraine conflict, faded. On Tuesday, the dollar briefly rallied following Russia’s decision to lower the threshold for a potential nuclear strike in response to Ukraine’s use of US missiles. However, geopolitical concerns eased after Russia's foreign minister stated that they would “do everything possible” to avoid a nuclear war, while the US said it saw no reason to adjust its nuclear posture. With these tensions subsiding, investors are now focused on upcoming remarks from Federal Reserve officials for insights into the timing and scale of future interest rate cuts. Additionally, markets are closely monitoring political developments surrounding Donald Trump’s potential appointments, particularly for Treasury Secretary. While the dollar lost ground against most major currencies, it gained some strength against the yen.

Dollar Subdued as Safe-Haven Demand Fades

The Russian ruble weakened past 100 per USD, the lowest in over one year, tracking the declines in other Russian assets following the aggressive escalation in the war against Ukraine. President Putin updated the country's doctrine to expand scenarios that warrant the use of atomic weapons in the same morning that Ukraine fired at Russian territory with US-supplied missiles for the first time since the start of the war. The developments added to pressure on the ruble amid the relaxation of capital controls by the Russian government as a weaker currency aids the Kremlin’s ability to finance its budget. Moscow eased mandatory conversion further to 25% of revenues for top export businesses, compared to 80% of revenues from earlier in the year, significantly reducing demand for rubles. Further, the ruble was also pressured by the pessimistic outlook of the Chinese economy, limiting expectations of foreign demand for Russian goods.

Russian Ruble Slides Past 100 per USD

The Canadian dollar strengthened past 1.4 per USD, recovering from the May-2020 low of 1.41 touched on November 15th, as hot inflation data tempered the magnitude of rate cuts by the Bank of Canada. The trimmed-mean core inflation rate, the BoC’s preferred measure of underlying inflation, rose to 2.6% in October from the three-year low of 2.4% in September, surpassing expectations of 2.6%. This followed resilient economic indicators, including lower-than-expected unemployment and strong PMI readings, which further dampened prospects for significant rate cuts. However, the loonie’s gains were capped by U.S. dollar strength driven by expectations of a less-dovish Fed, concerns over U.S. import sanctions affecting Canadian exports, and demand for safety amid escalating warfare in Ukraine.

Canadian Dollar Rebounds from Over 4-Year Low

The dollar index strengthened to approach 106.5 on Tuesday, after falling in the previous two sessions, amid a general flight to safety as concerns mount about an escalation over the Ukraine-Russia conflict. Tensions have intensified following President Vladimir Putin’s revision of Russia’s nuclear doctrine to expand the conditions for using atomic weapons, coupled with reports of Ukraine’s first strike on a Russian border region using Western-supplied missiles. Meanwhile, traders remain focused on Donald Trump’s political appointments, particularly for Treasury Secretary. Additionally, market participants are closely monitoring speeches from several Fed officials to assess the Fed's plans for the remainder of the year. The dollar strengthened across the board but weakened against the yen after Japan's finance minister suggested that the government might intervene if the yen continues to depreciate too quickly.

Dollar Moves Higher

The Swiss franc strengthened to around 0.88 per USD, up from recent three-month lows, as investors rushed into safety amid a worrying escalation of rhetoric and positioning in the ongoing war between Russia and Ukraine. President Vladimir Putin signed a revised nuclear doctrine declaring that a conventional attack on Russia by any nation that is supported by a nuclear power will be considered a joint attack on his country. Meanwhile, the ongoing strong US economic data and potential inflation from proposed tariffs have fuelled speculation that the Fed would slow the path of rate reductions. Domestically, Switzerland's inflation rate unexpectedly slowed to a more than three-year low of 0.6% in October, raising expectations of another rate cut in December. However, SNB Vice Chairman Antoine Martin recently cautioned that the central bank is not committed to further cuts in December, noting that decisions will depend on economic conditions at the time.

Swiss Franc Firmer

The euro weakened to $1.0559, nearing an over-one-year low of $1.0496 hit last week, as concerns over US trade tariffs' impact on Eurozone growth and geopolitical tensions weighed on sentiment. Investors sought safer assets after Ukraine used Western-made missiles to strike Russia, and President Vladimir Putin expanded Russia’s nuclear doctrine to permit nuclear responses to major conventional attacks. Also, ECB officials including Vice-President Luis de Guindos and Bundesbank President Joachim Nagel warned that new US trade tariffs could harm economic growth in the Eurozone, downplaying inflation concerns. The ECB has cut rates three times since June as inflation nears its 2% target, but growth forecasts have been downgraded twice. Markets largely expect a 25-basis-point rate cut next month, with a smaller chance of a larger move. Investors now await euro area wage data on Wednesday and PMI figures on Friday.

Euro Weakens Toward 1-Year Low

The South African rand was trading around 18.1 per USD, pulling back from a one-week high of 17.95 reached on November 18th following an uplift from S&P Global Ratings’ revision of South Africa’s debt outlook to "positive" from "stable. However, the currency saw renewed pressure from a strengthening dollar. The rand has shown heightened volatility since the U.S. election on November 5, 2024, amid concerns about President-elect Trump’s upcoming policies and the prospect of fewer US interest rate cuts. On the domestic monetary policy front, the South African Reserve Bank is expected to announce another 25 basis point rate cut at its upcoming November meeting, following a drop in inflation below the midpoint of its target range. This would mark the second rate reduction in the current cycle, which began in September when the central bank lowered rates by 25 basis points, its first cut in over four years.

South African Rand Loses Ground

The euro slipped below $1.058, edging closer to the over-one-year low of $1.0496 hit last week, pressured by a strong dollar, as traders follow Donald Trump's political appointments for his new administration and the potential repercussions of his presidency for Europe, particularly concerning tariffs on the EU and China. Investors are also closely monitoring Trump's decision on his Treasury Secretary pick, as his proposed policies such as tariffs and debt-funded tax cuts, could fuel inflation, potentially diminishing the Federal Reserve's need for further rate cuts. In Europe, a sluggish economic outlook continues to limit expectations for significant changes in ECB policy. Markets are awaiting key data, including Eurozone negotiated wage growth and upcoming PMI figures. The ECB is anticipated to cut its deposit rate by another 25 basis points in December, with forecasts suggesting it could drop to approximately 1.9% by July.

Euro Remains Under Pressure

The offshore yuan weakened past 7.23 per dollar, hovering close to its lowest level in over three months, as concerns over potential US tariffs continue to cloud its outlook. Traders expect the yuan’s weakness to extend into next year, with the possibility of higher tariffs under Donald Trump’s presidency threatening to further strain China’s fragile economic recovery. Investors are also awaiting the People's Bank of China’s LPR decision on Wednesday, with expectations that both the one-year and five-year rates will remain unchanged at 3.1% and 3.6%, respectively. Moreover, markets are closely watching an investment summit in Hong Kong, where top Chinese officials and leaders of key economic and financial institutions will discuss recent developments in China’s financial sector. Meanwhile, the yuan received support from firmer-than-expected official guidance and tighter offshore liquidity, with the PBOC setting its midpoint fixing at 7.1911 per dollar to curb further weakness.

Offshore Yuan Slips on Fragile Outlook

The Japanese yen strengthened to around 154 per dollar on Tuesday, recovering from four-month lows, as Japanese authorities stepped up verbal warnings against excessive forex moves. Japanese Finance Minister Katsunobu Kato reiterated that despite the yen’s brief rebound, the government would continue to monitor exchange rate movements and take action as needed. In addition, MUFG noted that Japan may accelerate interest rate hikes due to persistent inflationary pressures. However, Bank of Japan Governor Kazuo Ueda stated on Monday that any future rate increases would be gradual, depending on how the economy develops, though he offered no specific timeline for when these hikes might occur. The yen has fallen more than 10% from its September highs amid growing uncertainty about the BOJ's rate-hike plans. The yen’s decline was further exacerbated by the dollar’s rally, which was fueled by expectations of a less aggressive rate cuts from the Fed and so-called “trump trades.”

Japanese Yen Strengthens on Intervention Fears

The New Zealand dollar held its recent advance to around $0.589 on Tuesday, as the US dollar paused its rally. However, a dovish outlook for the Reserve Bank of New Zealand continued to weigh on the Kiwi. Markets are fully pricing in that the RBNZ will cut its 4.75% cash rate by 50 basis points at next week's policy meeting, with the possibility of another 50-basis-point reduction early next year. This expectation aligned with the country’s inflation slowing to its lowest level in more than two years, while GDP growth is anticipated to show only a modest recovery in Q3 and remain weak through the final quarter of 2024. Adding to the pressure, declining investor confidence in China, New Zealand's largest trading partner, is further weighing on the Kiwi.

The Australian dollar climbed above $0.65 on Tuesday, rising for the third straight session as investors reacted to the Reserve Bank of Australia’s November policy meeting minutes. The minutes revealed that the central bank plans to maintain a restrictive monetary policy until it is confident inflation is sustainably moving toward its target, while also remaining cautious of upside risks to inflation. Still, the RBA emphasized that it is not ruling anything in or out regarding future policy adjustments. Markets currently do not see an RBA rate cut until May next year, with a move in February priced in at a 38% probability. Investors are now focused on upcoming manufacturing and services activity reports for November, which could provide further insights into the broader economic outlook. Despite the recent gains, the Australian dollar remains near its weakest levels in over three months, weighed down by a strong US dollar, economic uncertainties in China, and softer commodity prices.

Aussie Dollar Gains on Hawkish RBA Minutes

The South Korean won tumbled to around 1,390 per dollar on Tuesday, as investors shifted their attention to the Bank of Korea's upcoming interest rate decision. While policymakers are widely expected to keep rates unchanged next week, speculation is growing that the central bank could adopt a more accommodative stance next year, potentially lowering the benchmark rate to 2.5% as inflation in South Korea continues to stabilize. At the same time, investors are awaiting South Korea’s producer inflation data, set for release on Wednesday, which could provide further insights into the country’s economic trends. Meanwhile, authorities have recently pledged to intensify efforts to maintain stability in the foreign exchange markets after the won hit its lowest level in two years. The currency’s weakness has been exacerbated by the persistent strength of the US dollar, fueled by expectations of a slower pace of Federal Reserve rate cuts and the resurgence of "Trump trades."

South Korean Won Tumbles

The dollar index held around 106.2 on Tuesday after sliding for two straight sessions as the currency ran into profit-taking following a strong rally. Still, the index is up about 6% from the low made in September on expectations of fewer rate cuts from the Federal Reserve and bets on US economic outperformance under Trump’s upcoming presidency.  While markets continue to anticipate a quarter-point rate cut in December, expectations for further rate reductions through late 2025 have been trimmed to under 80 basis points, down from over 100 basis points just a few weeks ago. Meanwhile, the dollar weakened against the yen after Japan's finance minister suggested that the government might intervene if the yen continues to depreciate too quickly. The greenback also softened against the euro, as comments from top ECB officials indicated greater concern over the potential impact of new US trade tariffs on eurozone growth than on inflation.

Dollar Holds Losses on Profit-Taking

The Indian rupee held near the record low of 84.4 per USD in November, refraining from extending its plunge from earlier in the month amid the hawkish outlook for the Reserve Bank of India. Domestic inflation surged to 6.2% in October, overshooting the RBI’s target band for the first time in over one year, and delaying expectations on the start of the central bank’s rate cuts. In turn, the currency pair was supported by a soaring dollar as the outlook of expansionary fiscal policy and tariffs in the US ahead of Trump’s commencement drove investors to trim the magnitude of cuts expected by the Fed. Meanwhile, concerns that India’s economy will not be able to sustain its aggressively high growth momentum in upcoming years drove investors to reduce their positions in domestic capital markets. Net outflows aligned with the rebound for G-Sec yields and the decline in the Sensex and the Nifty since reaching their record highs in September.

Indian Rupee Holds Near Record Low

The Brazilian real strengthened to 5.76 per USD in November, as hawkish bets on the Brazilian central bank coincided with expectations surrounding the announcement of significant fiscal spending cuts by the government. Brazil’s Finance Ministry revised its 2024 GDP growth forecast to 3.3%, slightly above the prior 3.2% estimate, with inflation anticipated near the upper range of the central bank's target. Meanwhile, Finance Minister Haddad confirmed that the finalized spending cuts package, pending minor adjustments with the Ministry of Defense, aligns with the government's economic framework to ensure fiscal sustainability and credibility. While these fiscal measures aim to strengthen public finances and boost confidence in the real, the currency remains under pressure from a broader selloff in risk assets. Additionally, a stronger US dollar, bolstered by concerns over tariffs under a potential second Trump presidency and a less-dovish Federal Reserve, exacerbates the real's weakness.

Brazilian Real Strengthens to 5.76 USD

The euro climbed to $1.0557, slightly recovering from last week’s one-year low of $1.0496, as investors assessed global market shifts following Donald Trump’s U.S. presidential election win. The currency has been pressured by Trump's victory, which raised fears of potential tariffs on the EU and China, a major trading partner for Europe. Investors are also watching closely to see whom Trump will choose as Treasury Secretary, with reports mentioning former Fed governor Kevin Warsh and billionaire Marc Rowan as potential picks. Analysts believe Trump’s policies, such as tariffs and tax cuts funded by debt, could drive inflation, reducing the Federal Reserve's need for more rate cuts. Meanwhile, a sluggish economic outlook in Europe has kept expectations low for changes in ECB policy. Markets are waiting for data on euro area wages and upcoming PMIs, with the ECB's deposit rate expected to be around 1.9% by July and chances of a rate cut later in the year being cautiously priced in.

Euro Edges Up from 1-Year Low

The British pound held steady at $1.262, staying near its lowest level since mid-May, as the dollar strengthened following Donald Trump's victory in the US presidential election. Investors anticipated that Trump's policies, such as trade tariffs and tax cuts, would stimulate growth and inflation, potentially reducing the need for Federal Reserve interest rate cuts. While the pound has fallen 2.7% since the election, it has fared better than the euro, which could be more affected by the tariffs targeting China, the EU, and Mexico. On the monetary policy front, traders see an 80% chance of another rate cut by the BoE next month, expecting rates to fall to just above 4% by the end of 2025. Data on Friday showed the UK economy contracted unexpectedly in September and growth slowed to just 0.1% over the third quarter. Investors are now focused on October inflation, which is expected to be 2.2%, and expect retail sales to decline after three months of growth.

Sterling Hovers at 6-Month Low

The offshore yuan weakened to around 7.24 per dollar, heading back to its lowest level in over three months, as investors await China’s Loan Prime Rate decision this week. Markets expect the People’s Bank of China to keep its one-year and five-year LPRs at 3.1% and 3.6%, respectively. Last week, investors reacted to mixed economic data, indicating that Beijing’s stimulus measures may not yet be delivering the expected results. While China’s retail sales exceeded expectations in October, industrial production slowed, highlighting manufacturing challenges. Moreover, real estate investment fell sharply, deepening the property market slump. Meanwhile, the PBOC conducted its largest single-day cash infusion since 2020 through seven-day reverse repos to offset maturing loans and tax payments. Elsewhere, higher US tariffs under Donald Trump's presidency could extend the yuan’s weakness into next year, putting further pressure on China’s fragile economic recovery.

Offshore Yuan Falls Ahead of LPR Decision

The South Korean won held its recent gains around 1,390 per dollar on Monday, following a pledge from authorities last week to intensify efforts to maintain stability in the foreign exchange markets. This came after the won had reached its lowest level in two years, weighed down by the ongoing strength of the US dollar, driven by expectations of slower Federal Reserve rate cuts and "Trump trades." Domestically, investors are awaiting the Bank of Korea’s interest rate decision next week, where it is expected to hold rates steady. However, the won faces pressure from speculation that the central bank will implement looser monetary policy next year, potentially lowering the BOK’s benchmark interest rate to 2.5%, as inflation in the country shows a clear trend of stabilization.

South Korean Won Holds Gains

The New Zealand dollar fell to around $0.586 on Monday, despite stronger-than-expected domestic data. Recent reports showed that New Zealand's producer output prices rose 1.5% year-on-year and 1.9% quarter-on-quarter in the three months to September, both surpassing market expectations and accelerating from the previous period. Additionally, although remaining in contraction, the country’s services sector performance index improved to 46 in October, up from 45.7 in September. This data comes just ahead of the Reserve Bank of New Zealand's monetary policy decision next week, further supporting expectations of the widely expected 50 bps rate cut. The Kiwi also remained under pressure due to the continued strength of the US dollar, driven by robust US economic data and hawkish remarks from Federal Reserve Chair Powell.

NZ Dollar Falls Despite Strong Data

The Australian dollar stabilized above $0.645 on Monday, supported by a hawkish view on Reserve Bank of Australia monetary policy. Last week, RBA Governor Michele Bullock stated that interest rates are sufficiently restrictive and will remain at current levels until the central bank gains confidence in the inflation outlook. Investors are now looking ahead to the release of the latest RBA meeting minutes this week for further guidance on the central bank’s policy direction. Additionally, markets are focused on upcoming manufacturing and services activity reports for November to assess the broader economic outlook. Despite stabilizing, the Aussie dollar remained near its lowest levels in over three months, pressured by the stronger US dollar, which has gained on expectations of fewer Federal Reserve interest rate cuts and optimism over US economic performance under a Trump presidency.

Aussie Dollar Stabilizes on Hawkish RBA View

The Japanese yen weakened again to around 155 per dollar on Monday, paring gains from the previous session as investors reacted to comments from Bank of Japan Governor Kazuo Ueda. The central bank chief reiterated that they will raise interest rates gradually should the economy develop as expected, but provided no guidance on the timing of future rate hikes. Ueda also said they are paying attention to various risks, including for the US economy. On Friday, the yen had rallied over 1% after Finance Minister Katsunobu Kato hinted at possible intervention if the currency depreciates too rapidly. The warning came as the yen declined to a near four-month low, driven by growing uncertainty about the BOJ's rate-hike plans. Meanwhile, the dollar has strengthened on expectations of fewer Federal Reserve rate cuts and optimism about US economic performance under a Trump presidency.

Japanese Yen Slides on Ueda Remarks

The dollar index held steady around 106.6 on Monday, trading close to its highest levels in two years amid expectations of fewer Federal Reserve interest rate cuts and bets on US economic outperformance under a Trump presidency. Last week, Fed Chair Jerome Powell indicated that the central bank has no immediate plans to lower rates, citing the economy's resilience, a robust labor market, and ongoing inflationary pressures. Stronger-than-expected reports on retail sales and inflation further supported a hawkish outlook on Fed policy. While markets still expect a quarter-point rate cut in December, expectations for rate reductions through late 2025 have been scaled back to 77 basis points, down from over 100 basis points just a few weeks ago. Meanwhile, investors are closely watching developments around Donald Trump’s potential pick for Treasury Secretary. Cantor Fitzgerald CEO Howard Lutnick and investor Scott Bessent are reportedly among the leading candidates for the role.

Dollar Hovers Near 2-Year Highs

The Mexican peso strengthened to 20.35 per USD, rebounding from its lowest since July 2022 of 20.59 seen November 12th, as investors reacted to Banxico’s decision to reduce its benchmark interest rate by 25 basis points to 10.25%. This move, aimed at advancing disinflation while maintaining a restrictive policy stance due to ongoing inflation risks, reassured investors, particularly with the projection of reaching the 3% inflation target by late 2025. Additionally, mixed signals from the U.S. Federal Reserve regarding future rate hikes exerted downward pressure on the U.S. dollar, indirectly benefiting the peso. Meanwhile, concerns about stricter trade policies resurfaced, driven by speculation surrounding Robert Lighthizer’s potential reappointment as Trade Repressentative under Donald Trump and the possibility of a Republican-controlled Congress imposing tougher tariffs, which could pressure the peso.

Mexican Peso Rebounds from Over 2-Year Lows

GBPUSD decreased to a 19-week low of 1.26. Over the past 4 weeks, British Pound US Dollar lost 2.78%, and in the last 12 months, it increased 1.81%.

British Pound Hits 19-week Low

The dollar index slipped to 106.5 on Friday, breaking a 5-day winning streak, yet held near 2-year highs. It was on track to notch a weekly gain of 1.6%, marking its 7th consecutive week of growth. The greenback’s strength was underpinned by robust economic data and hawkish remarks from Fed Chair, which tempered expectations for rate cuts. Retail sales exceeded forecasts, signaling continued resilience in the consumer sector and the NY Empire State Manufacturing Index reported a surprising surge in business activity. Earlier in the week, headline and core producer prices increased as expected, but annual growth rates surpassed projections, contrasting with the CPI data, which met forecasts across the board. On Thursday, Powell reiterated that there is no urgency to cut rates, citing the economy's strength, a solid labor market, and persistent inflationary pressures. As a result, market expectations for a 25bps rate cut in December dropped to 62%, down from 86% early in the week.

Dollar Holds Close to 2-Year Highs

USDHKD increased to a 7-week high of 7.78. Over the past 4 weeks, US Dollar Hong Kong Dollar gained 0.17%, and in the last 12 months, it decreased 0.22%.

Hong Kong Dollar Hits 7-week Low

The British pound continued its decline to below $1.27 for a sixth consecutive session, marking its lowest level since July, after data showed the UK economy grew just 0.1% in the third quarter, weaker than forecasted, impacted by a surprise contraction in September. This contraction was mainly due to lower manufacturing output and reduced activity in information and communication services. The pound is heading for its worst streak in a decade, down 2% this week and poised for its seventh consecutive week of losses, the longest since 2014. The decline is also pressured by a strong US dollar, driven by expectations that policies linked to Donald Trump’s administration could boost inflation and restrict the Federal Reserve’s ability to lower interest rates.

Sterling Down for 6th Day after GDP Miss

The New Zealand dollar edged higher to around $0.586 on Friday, after hitting a one-year low in the previous session. The Kiwi finds some support from China’s mixed economic data, where retail sales growth significantly exceeded forecasts, while industrial output and property sector activity fell short of expectations. However, the strong US dollar continued to weigh on the local currency following hawkish comments from Federal Reserve Chair Jerome Powell. Powell indicated that the US central bank is in no hurry to keep lowering interest rates, given ongoing economic growth, a solid job market, and persistent inflationary pressures. Domestically, the Reserve Bank of New Zealand will meet later this month and is seen to deliver a 50bps rate cut to its 4.25% cash rate. The New Zealand dollar has fallen 1.8% so far this week, its worst week in over a month.

New Zealand Dollar Stabilizes

The offshore yuan rose to around 7.24 per dollar after hitting a more than three-month low in the previous session, as traders reacted to a fresh wave of economic data. On Friday, China reported that retail sales growth in October far exceeded market expectations, marking the fastest pace since February and reflecting the impact of support measures implemented by Beijing in late September. Additionally, the jobless rate in October dropped to its lowest level in four months, signaling some stabilization in the labor market. Industrial production also rose, though more slowly than expected, and softening from a four-month high in the previous month. Meanwhile, new home prices shrank for the 16th consecutive month in October, marking the sharpest drop since April 2015, despite Beijing’s efforts to revive the struggling property sector through mortgage rate cuts and reduced home-buying costs.

Offshore Yuan Gains Amid China Data

The Australian dollar traded around $0.645 on Friday and was set to lose nearly 2% over the week, weighed down by a strengthening US dollar amid expectations of fewer rate cuts from the Federal Reserve. This sentiment followed comments from Fed Chair Jerome Powell on Thursday, stating that the central bank is in no rush to reduce rates given the strength of the US economy. The Aussie also faced pressure this week from weaker commodity prices and ongoing concerns about China’s economic slowdown. Domestically, Reserve Bank of Australia Governor Michele Bullock reaffirmed that interest rates are sufficiently restrictive and will remain at current levels until inflation is under control. Meanwhile, Australian labor market data showed the unemployment rate held steady at 4.1% for the third consecutive month in October, in line with expectations. However, employment growth was slower than anticipated, with an increase of just 15,900 jobs, well below the forecasted 25,000.

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Kiwi Holds Decline Amid Expectations of Dovish RBNZ

South Korean Won Slips Further on Dollar Strength

Japanese Yen Rises, But BOJ Uncertainty Persists

Aussie Dollar Rebounds on Hawkish RBA Outlook

Dollar Strengthens on Trump, Fed Outlook

British Pound Pares Gains

Euro Extends Losses to Over 1-Year Lows

Dollar Pauses 3-Day Decline

Mexican Peso Retreats on Risk Aversion

Euro Falls Below $1.055

Dollar Rebounds from 3-Day Drop

South African Rand Under Pressure

British Pound Strengthens After Hot Inflation

New Zealand Dollar Holds Gains

Aussie Dollar Climbs for Fourth Session

Offshore Yuan Extends Losses

Yen Eases as Verbal Warnings Lose Effect

South Korean Won Holds Losses

Dollar Subdued as Safe-Haven Demand Fades

Russian Ruble Slides Past 100 per USD

Canadian Dollar Rebounds from Over 4-Year Low

Dollar Moves Higher

Swiss Franc Firmer

Euro Weakens Toward 1-Year Low

South African Rand Loses Ground

Euro Remains Under Pressure

Offshore Yuan Slips on Fragile Outlook

Japanese Yen Strengthens on Intervention Fears

New Zealand Dollar Holds Gains

Aussie Dollar Gains on Hawkish RBA Minutes

South Korean Won Tumbles

Dollar Holds Losses on Profit-Taking

Indian Rupee Holds Near Record Low

Brazilian Real Strengthens to 5.76 USD

Euro Edges Up from 1-Year Low

Sterling Hovers at 6-Month Low

Offshore Yuan Falls Ahead of LPR Decision

South Korean Won Holds Gains

NZ Dollar Falls Despite Strong Data

Aussie Dollar Stabilizes on Hawkish RBA View

Japanese Yen Slides on Ueda Remarks

Dollar Hovers Near 2-Year Highs

Mexican Peso Rebounds from Over 2-Year Lows

British Pound Hits 19-week Low

Dollar Holds Close to 2-Year Highs

Hong Kong Dollar Hits 7-week Low

Sterling Down for 6th Day after GDP Miss

New Zealand Dollar Stabilizes

Offshore Yuan Gains Amid China Data

Aussie Dollar Heads for Sharp Weekly Fall