The USD strengthens, oil prices firmed, equity markets are up, and US yields rise as geopolitical tensions ease. The USD recovered after a three-day slide, while the GBP eased despite domestic inflation levels topping 2%. Investor tensions eased after the Russian foreign minister said the country would "do everything possible" to avoid the onset of nuclear war, hours after Moscow announced it would lower its threshold for a nuclear strike. US treasuries climbed after falling yesterday as investors fled to safe-haven assets. Equity markets rebounded as risk-on sentiment returned, with investors focusing on Nvidia's quarterly results to see if the chip maker will have a fifth consecutive earnings beat. Elsewhere, Bitcoin set another all-time high, boosted by expectations that the Trump administration will support the crypto industry. Oil prices firmed as Russian nuclear tensions eased, while silver & gold prices weakened. Another light day on the US economic front, so investors will remain focused on Trump picks and speeches from a flurry of Fed speakers and ECB President Lagarde to provide intraday direction to currency markets.
In other news. ECB warns low growth and high debt risk a Eurozone crisis. Marc Rowan emerges as a top contender to be Trump's Treasury secretary. Hong Kong media tycoon Jimmy Lai denies foreign Collusion in security trial. UK inflation climbs more than forecast to 2.3% on higher energy costs. Canadians favor government intervention in Canada Post and port labor disputes, according to recent polls. UK house prices rise, but London bucks the trend. Chinese vessel spotted where Baltic Sea cables were cut. Italy puts the brakes on 'reckless' e-scooter use with new helmet & insurance rules. Bitcoin breaches $94,000 for the first time. US shuts Kyiv embassy due to 'potential significant air attack.'
In currency markets. G10 currencies come under fresh selling pressure as the USD rebounds. CNY eases 0.1%, while Asian currencies weaken by 0.3% on average against the USD. Trading currencies come under fresh selling pressure, with JPY, NOK & SEK tumbling 0.75%, NZD & MXN weakening 0.6%, AUD & ZAR falling 0.45%, and CHF easing 0.35% against the USD.
In commodity markets. Oil prices firmed by 0.5%. Natural Gas prices rallied 4%. Gold is flat. Silver and Soybean prices tumbled 1%. Copper prices gained 0.35%, and Wheat prices weakened by 0.7%.
CAD gave back some of Tuesday's gains as the USD gained momentum in early trading as the focus shifted from geopolitical concerns and investors resumed the "Trump Trade." Tuesday saw the loonie rally nearly 1% following Canada's stronger-than-expected annual inflation increase to 2% in October from 1.6% in September. The hotter inflation number saw money markets reduce their expectations to 23% from 38% of a 50 bps rate cut at the BoC meeting on December 12th. Intraday, investors will be focused on the flurry of Fed speakers, alongside Trump picks to help drive the intraday direction for the loonie.
EURCAD continues to weaken, down 2.6% in November and testing a fresh 4 1/2 month low as the eurozone continues to suffer weakening economic conditions and concern over fresh tariffs under a Trump presidency.
EUR holds on to 1.0550 despite a strengthening USD. The euro found some support against the USD after the ECB reported that Negotiated Wage Rates rose to 5.4% in Q3. The resurgence of the USD, alongside US Treasury yields, is expected to keep pressure on the single-currency, opening up the prospect of a fresh test of 1.0500 next. With the lack of any high-tier US economic releases, markets will be focused on a flurry of Fed speakers and EBC President Lagarde's comments at the ECB conference on financial stability and macro-prudential policy in Germany to guidance today.
GBPEUR extends gains, up 1.1% in November after UK inflation levels rose to 2.3%, providing the pound an extra boost.
GBP slips towards 1.2650 as the stronger USD offsets the UK CPI gains. The pound was unable to hold on to early gains following the stronger-than-expected annual CPI report, which saw inflation rise to 2.3% in October versus 1.7% in September. The focus will be on BoE deputy governor Ramsden and Breeden's comments today to see if they soften their dovish tone following today's CPI report.
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