Key Takeaways:
The euro is weakening against the US dollar due to France political turmoil and concerns of a government collapse.
Strong US manufacturing data is boosting the US dollar’s performance.
Federal Reserve Governor Waller supports a rate cut at the December meeting to maintain a restrictive monetary policy stance.
The markets have raised the odds of a 25-bp easing this month to 79%.
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The dollar may not weaken under Trump’s administration, relying on tariffs instead.
China’s yuan weakened due to anticipation of more tariffs and weak economic indicators.- Markets are pricing in a rate hike in Japan, with uncertainty surrounding U.S. employment data.
DAX hits new records despite political challenges in France
Eurozone manufacturing PMI fell to a two-month low in November- French Prime Minister’s budget concessions helped soothe markets
European Central Bank officials scheduled to speak before rate meeting
25 basis point cut expected at ECB meeting on 12 December
164 basis point cuts forecast by end of 2025- FTSE consolidating above support at 8000, aiming for 8600
DAX surging towards 20,000 with expectations of further gains- Break below 18,800 would indicate potential deeper pullback
Global Financial Markets Update:
The global financial markets are currently experiencing a mix of challenges and opportunities that are impacting various currencies and stock indices. Here are some key takeaways to keep in mind:
Currency Trends:
- The euro is facing weakening against the US dollar amid concerns over political turmoil in France.
- China’s yuan has also weakened due to anticipation of more tariffs and weak economic indicators.
- The US dollar, on the other hand, is performing strongly supported by robust manufacturing data.
Stock Market Performance:
- Despite political challenges in France, the DAX has hit new records, with expectations of further gains.
- The FTSE 100 is also peaking, consolidating above support levels and aiming for further growth.
- However, the Eurozone manufacturing PMI fell to a two-month low in November, indicating some challenges in the region.
Monetary Policy Outlook:
- Federal Reserve Governor Waller supports a rate cut at the December meeting to maintain a restrictive monetary policy stance.
- Markets are pricing in a rate hike in Japan, but there is uncertainty surrounding U.S. employment data.
- The European Central Bank is expected to announce a 25 basis point cut at the upcoming meeting on 12 December, with further cuts forecasted by the end of 2025.