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Key Takeaways
The dollar remained relatively stable after the U.S. CPI data confirmed expectations of a Fed rate cut next week
China is considering allowing the Yuan to weaken in 2025 to combat future trade tariffs under a second Trump presidency
The index of U.S. dollar was relatively stable, climbing slightly to 106.5
China-facing currencies like the Aussie and Kiwi fell on the news of a potential Yuan depreciation
Japan’s yen strengthened after data showed Japanese wholesale inflation rising, fueling speculation of a BOJ interest-rate hike next week
Expectations of a rate cut by the Bank of Canada kept the loonie near a 4-1/2-year low against the U.S. dollar
Busy week for monetary policy, with upcoming meetings by the ECB, SNB, and BoC.
Dollar strengthened ahead of US CPI report
Potential for China to reignite currency wars with significant yuan depreciation- BOJ might hold off on policy changes, USD/JPY moved on this news
- US futures cautious ahead of US CPI report
Gold trading around $2,700- BOC expected to announce 50 bps rate cut
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Past performance not indicative of future results, caution advised before investing- Dollar gained against European peers ahead of U.S. inflation reading
- Yuan fell as China considers allowing a weaker currency next year
- Euro and pound decreased ahead of European Central Bank meeting and U.S. CPI data
Economists expect a rise in both headline and core consumer prices in November- Traders assign 85% odds to a quarter-point rate cut by the Fed on Dec. 18
Concern about a strong CPI report disrupting Fed easing expectations supporting the dollar- China’s leaders considering yuan depreciation to combat bigger tariffs in second Trump presidency
Asian currencies lower after the report on potential yuan depreciation- China’s recognition of the need for bigger economic stimulus to counter tariff threats
Antipodean currencies fell along with the Aussie and kiwi touching year lows- Japanese yen strengthened as Japanese wholesale inflation accelerated
Bank of Canada expected to cut by a half point which may affect the loonie
Swiss franc held steady against the euro but softened on the dollar’s strength
Monetary Policy and Currency Movements
- The dollar remained relatively stable after the U.S. CPI data confirmed expectations of a Fed rate cut next week
- China-facing currencies like the Aussie and Kiwi fell on the news of a potential Yuan depreciation
Busy week for monetary policy, with upcoming meetings by the ECB, SNB, and BoC- US futures cautious ahead of US CPI report
Impact of China’s Actions on Regional Currencies
- China is considering allowing the Yuan to weaken in 2025 to combat future trade tariffs under a second Trump presidency
- Yuan fell as China considers allowing a weaker currency next year
- China’s leaders considering yuan depreciation to combat bigger tariffs in second Trump presidency
- Potential for China to reignite currency wars with significant yuan depreciation
Asian currencies lower after the report on potential yuan depreciation
Central Bank Policy Speculation and Its Effect
- The index of U.S. dollar was relatively stable, climbing slightly to 106.5
- Japan’s yen strengthened after data showed Japanese wholesale inflation rising, fueling speculation of a BOJ interest-rate hike next week
- Expectations of a rate cut by the Bank of Canada kept the loonie near a 4-1/2-year low against the U.S. dollar
- BOC expected to announce 50 bps rate cut
- BOJ might hold off on policy changes, USD/JPY moved on this news
- Bank of Canada expected to cut by a half point which may affect the loonie