Dollar heads for its strongest week in two months

Initial jobless claims rose to 200,000 from a revised 191,000, above the 195,000 forecast in a Reuters poll. The four-week average held at 195,250, while continuing claims fell from 1.717 million to 1.697 million, below the 1.710 million forecast. The figures followed the October jobs report covered in our November 9 market review. Existing-home sales fell 5.5% in October to an annualized pace of 3.75 million, below the 3.85 million forecast and the lowest since August 2010. New York Fed President John Williams said further rate increases were likely as the central bank works to bring inflation down. Cleveland Fed President Beth Hammack favored smaller, more frequent hikes to give households and businesses time to adjust.

Eurozone

The euro edged higher against sterling and the yen and traded in a narrow range against the dollar early on Friday.

Eurozone GDP rose 0.4% in the third quarter, down from 0.6% in the second quarter. Annual growth picked up from 1.2% to 1.3%, according to Eurostat. In France, consumer prices rose 0.4% in October after falling 0.3% in September, while annual inflation accelerated from 3.1% to 3.4%. The EU-harmonized index also rose 0.4% on the month after a 0.3% decline, and its annual rate increased from 3.4% to 3.7%, according to INSEE. The figures keep inflation in focus ahead of the European Central Bank’s December meeting.

United Kingdom

Sterling slipped against the euro and traded with little direction against the dollar and the yen.

UK GDP growth accelerated from 0.5% to 0.7% in the third quarter, its fastest quarterly pace since early 2024. Annual growth picked up from 1.4% to 1.9%, and output rose 0.2% in September, according to the Office for National Statistics. AI-related investment helped support growth, while high energy prices and borrowing costs could weigh on activity in the fourth quarter. Chancellor John Healey said the government would seek closer cooperation with the EU on food and farming to cut red tape and lower costs for businesses and consumers.

Japan

The yen slipped against the euro, while USD/JPY hovered around 160 and sterling made little headway against the Japanese currency.

Economists polled by Reuters expect Japan’s core consumer inflation, which excludes fresh food, to reach 2.3% year on year in October. That would put it above the Bank of Japan’s 2% target for a second straight month. Preliminary third-quarter GDP is due on Monday, November 16, at 01:50 (GMT+2). Economists expect growth to slow from 0.4% to 0.1% quarter on quarter, equivalent to a slowdown from 1.4% to 0.3% at an annualized rate. A weak reading could add pressure on the yen.

Australia

The Australian dollar weakened against the US dollar, the euro, sterling and the yen.

National Australia Bank CEO Andrew Irvine told a parliamentary committee that Australia’s economy was slowing as households faced higher inflation, interest rates and living costs, including fuel. He pointed to stronger productivity growth as a priority for lifting living standards and sustaining growth.

Oil

Brent and WTI moved in opposite directions in European trading, with Brent slightly higher and WTI slightly lower.

The International Energy Agency (IEA) expects the global oil market to return to surplus in the fourth quarter as Middle Eastern exports recover faster than demand, despite continued attacks on shipping. The agency projects supply of 105 million barrels per day, exceeding demand by 1.7 million barrels per day. A further 71 million barrels from emergency reserves are set to become available by the end of February 2027, including 15 million barrels of diesel, according to Reuters’ coverage of the IEA report.