Attention has been drawn to recent comments from San Francisco Federal Reserve President Mary Daly, who noted that the Federal Reserve’s decision to cut interest rates by 25 basis points was not an easy one. Inflation remains elevated despite signs of cooling in the labour market; however, policymakers ultimately viewed the inflation challenge as less pressing.

Daly expressed confidence that the measures taken leave policymakers with room to manoeuvre at the next meeting. US labour-market data for November will be released tomorrow at 15:30 (GMT+2). Unemployment is expected to remain at 4.4%, while employment is forecast to increase by 55,000. Such figures would confirm stabilisation in the sector and strengthen the position of those within the Fed advocating for a pause in monetary easing, which would support the dollar. Conversely, weaker data would reinforce expectations of further rate cuts next year, potentially weighing on the US currency.

Eurozone

The euro is strengthening against the US dollar, weakening versus the yen, and showing mixed dynamics against the pound.

October industrial production data for the euro area were released today. Output rose from 0.2% to 0.8% month-on-month and from 1.2% to 2.0% year-on-year, supporting the view that the bloc’s economy is beginning to recover after a significant slowdown caused by higher US trade tariffs.

German industry posted a strong 1.4% increase, while Italy recorded a 1.0% decline. Analysts nonetheless believe the recovery will remain modest and largely driven by domestic demand. Meanwhile, Germany’s producer price index held at 0.3% month-on-month in November and accelerated from 1.1% to 1.5% year-on-year, remaining below the European Central Bank’s target.

United Kingdom

The pound is strengthening against the US dollar, weakening versus the yen, and showing mixed performance against the euro.

The latest house price index from Rightmove Group Ltd. showed prices unchanged at –1.8% month-on-month, while the annual figure edged from –0.5% to –0.6%. Analysts note that asking prices fell more than usual for this time of year, reflecting heightened uncertainty and investor concerns linked to tax indexation in the new government budget.

The Bank of England is due to announce its monetary policy decision on Thursday. Given that the UK economy contracted by 0.1% in October, the regulator is widely expected to cut rates by 25 basis points to 3.75%, a move that could pressure the pound.

Japan

The yen is strengthening against the euro, the pound and the US dollar.

Investors and FX traders are assessing Japan’s fourth-quarter Tankan business sentiment survey. The index for large manufacturers rose from 14.0 to 15.0 points, the highest level since December 2021, while the index for non-manufacturing firms reached 34.0, slightly below expectations of 35.0.

According to Tankan analysts, corporate management expects capital expenditure to rise by 12.6% in the current fiscal year, above the previous estimate of 12.0%. The data strengthen expectations that the Bank of Japan could raise interest rates by 25 basis points to 0.75% at its December meeting.

Australia

The Australian dollar is strengthening against the US dollar but weakening against the euro, the pound and the yen.

Investors are preparing for the release of preliminary December business activity data at 00:00 (GMT+2) tomorrow. The services PMI is expected to rise from 52.3 to 53.0 points, manufacturing from 51.6 to 51.8, while the composite index is seen easing from 52.6 to 52.3, remaining in expansionary territory.

Overall, the indicators continue to point upward, providing another argument for the Reserve Bank of Australia to keep interest rates unchanged. Analysts do not expect any shift in RBA policy at least until mid-next year.

Oil

Oil prices are correcting modestly lower amid increased expectations of a potential resolution to the Russia-Ukraine conflict. Ukrainian officials recently signalled a willingness to forgo NATO membership in exchange for international security guarantees, a move analysts interpreted as a positive step toward negotiations.

Any compromise could lead to a partial easing of sanctions on Russia’s energy sector, increasing global supply. For now, however, pressure on Russian hydrocarbon exports is intensifying, limiting downside momentum. The EU today introduced measures targeting companies and individuals accused of using a “shadow fleet” of tankers to bypass Western restrictions, including business figures linked to Rosneft and Lukoil, as well as several shipping companies.