Morning Market Review for 10.12.2024

EUR/USD

The EUR/USD pair shows ambiguous trading dynamics, holding near 1.0555. Market activity remains moderate as traders prefer to wait for the publication of macroeconomic statistics on inflation in the US. On Wednesday, at 15:30 (GMT+2), the market will receive November data on the Consumer Price Index, which, according to forecasts, will accelerate in annual terms from 2.6% to 2.7%, and in monthly terms will remain unchanged at 0.2%, while the Core CPI excluding Food and Energy will grow by another 0.3% in monthly terms and 3.3% in annual terms. Statistics on the Producer Price Index will be released on Thursday: analysts expect the figure to rise in November from 2.4% to 2.6% year-on-year and from 0.2% to 0.3% month-on-month, while the annual Core PPI will rise from 3.1% to 3.3% and in monthly terms will be adjusted from 0.3% to 0.2%. However, this data is unlikely to significantly change expectations regarding the next meeting of the US Federal Reserve, which is scheduled for December 17-18. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of a 25-basis-point interest rate cut is estimated at 80.0%, but at the beginning of 2025 the regulator will probably try to take a wait-and-see position. In turn, today, at 09:00 (GMT+2), in Germany, inflation data was released: the Consumer Price Index in monthly terms fell from 0.4% to –0.2%, and in annual terms it increased from 2.0% to 2.2%, justifying preliminary estimates. The European Central Bank (ECB) meets on Thursday and analysts are confident that officials will adjust the interest rate by –25 basis points to 3.15%, which could put further pressure on the euro.

GBP/USD

The GBP/USD pair consolidates around 1.2745 during the Asian session. Trading activity remains low at the start of the week, and investors continue to evaluate the November report on the US labor market. The American economy managed to create 227.0 thousand new jobs outside the agricultural sector, which was significantly higher than the October figure of 36.0 thousand with a forecast of 200.0 thousand, the Average Hourly Earnings consolidated at the previous levels of 0.4% in monthly terms and 4.0% in annual terms, while analysts expected a slowdown to 0.3% and 3.9%, respectively, and the Unemployment Rate expectedly accelerated from 4.1% to 4.2%. Overall, these statistics have increased expectations for a possible 25-basis-point interest rate cut at the US Federal Reserve meeting scheduled for December 17-18. The Chicago Mercantile Exchange (CME Group) FedWatch Tool currently estimates the probability of such an outcome at more than 80.0%, but November data on consumer and industrial inflation dynamics could affect the forecasts. On Friday, at 09:00 (GMT+2), October data on UK Gross Domestic Product (GDP) will be released, with analysts expecting the national economy to accelerate by 0.2%, after –0.1% a month earlier. Investors will also be looking at Industrial Production data, which is forecast to rise 0.3% after falling 0.5% in September, and to increase 0.2% year-on-year after falling 1.8%.

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Publication date:

10 December 2024 - 15:20 (GMT)

The AUD/USD pair is showing a confident decline, leveling out the results of yesterday's session, when the instrument demonstrated quite active growth and managed to update local highs from December 4. The Reserve Bank of Australia's (RBA) interest rate decision put pressure on quotes. The regulator kept the rate at the current level of 4.35% for the ninth time in a row, which coincided with forecasts. In the follow-up statement, officials noted that the current monetary policy is fully consistent with the economic situation in the country. There is no need to further reduce the cost of borrowing, since inflation risks remain quite high, and the rate of economic growth so far allows the officials to refrain from easing monetary conditions. Market participants also paid attention to the publication of macroeconomic statistics: the National Australia Bank's Business Confidence index fell from 5.0 points to –3.0 points in November, and the National Australia Bank's Business Conditions index fell from 7.0 points to 2.0 points. On Thursday, investors will be assessing November statistics on the Australian labour market, with forecasts suggesting Employment Change will rise from 15.9 thousand to 25.0 thousand, and the Unemployment Rate will be adjusted from 4.1% to 4.2%. In turn, the US will present data on consumer inflation tomorrow, and on Thursday — on producer inflation. Analysts expect this to further weigh on expectations for a possible 25-basis-point rate cut by the US Federal Reserve at its December meeting, with the likelihood of such a scenario exceeding 80.0%, according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool.

The USD/JPY pair shows mixed trading: market activity remains quite low on Tuesday morning, with the instrument holding above 151.10, not far from the local highs of November 28. In the near future, US investors will focus on November consumer and producer inflation data, which could further impact the likelihood of a 25-basis-point rate cut by the US Federal Reserve at its December 17-18 meeting: according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the likelihood of such a scenario exceeds 80.0%. Meanwhile, statistics released yesterday from Japan provided moderate support to the yen: the national economy's growth rate in the third quarter in annual terms amounted to 1.2%, which was significantly higher than the previous estimate of 0.9%, and in quarterly terms, Gross Domestic Product (GDP) increased from 0.2% to 0.3%. Bank Lending volumes also increased significantly in November, from 2.6% to 3.0%, the Eco Watchers Current Situation Index rose from 47.5 points to 49.4 points, contrary to forecasts of a slowdown to 47.3 points, and the Eco Watchers Outlook rose from 48.3 points to 49.4 points. The Bank of Japan's fourth-quarter business activity data and October industrial production data are due out on Friday.

The XAU/USD pair is showing moderate growth, again testing 2670.00 for a breakout. The instrument is supported by expectations of monetary policy easing by leading global regulators, which will reduce the attractiveness of their currencies compared to gold, which does not generate interest income. The Bank of Canada, the Swiss National Bank and the European Central Bank (ECB) are expected to cut borrowing costs this week. Also in focus is the US Federal Reserve meeting next week, December 17-18. Following the release of the November labor market report last Friday, the probability of a –25-basis-point interest rate adjustment rose to nearly 90.0%, according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool. The American economy managed to create 227.0 thousand new jobs outside the agricultural sector, which was significantly higher than the October figure of 36.0 thousand with a forecast of 200.0 thousand, the Average Hourly Earnings consolidated at the previous levels of 0.4% in monthly terms and 4.0% in annual terms, while analysts expected a slowdown to 0.3% and 3.9%, respectively, and the Unemployment Rate expectedly accelerated from 4.1% to 4.2%. Tomorrow, at 15:30 (GMT+2), investors will turn their attention to the US Consumer Price Index for November, which is projected to increase from 2.6% to 2.7% on an annual basis and remain at 0.2% on a monthly basis. The Core CPI excluding Food and Energy may amount to the previous 3.3% and 0.3%, respectively. On Thursday, at the same time, the Producer Price Index will be published: experts expect the indicator to accelerate from 2.4% to 2.6% and from 0.2% to 0.3% in annual and monthly terms, respectively, and the Core PPI may increase from 3.1% to 3.3% in annual terms, but slow down from 0.3% to 0.2% in monthly terms.