Daily Currency Update

USD - US Dollar

The USD is rising before today's US PPI data and the Fed meeting, with notable gains against the NZD and GBP due to weaker domestic reports. Global stocks are mostly up, except in China, and major bond markets and crude oil are steady. The FOMC decision at 14ET could increase market volatility before the holidays. Recent US data shows progress in controlling inflation, but the November Beige Book suggests a possible year-end slowdown. The Fed is expected to maintain its current policy, signaling the end of the tightening cycle. No easing is anticipated in the policy statement, but it might hint at no further rate hikes. The dot plot and SEP forecasts are key today, with potential dovish adjustments. Chairman Powell's press conference is at 14.30ET.

CAD - Canadian Dollar

This morning, the CAD remains virtually unchanged, with its value hovering around the 1.36 mark. While today's focus is on the Fed, attention is gradually shifting to the upcoming year-end speech by BoC Governor Macklem on Friday. This event could serve as an opportunity for the Bank to counter expectations of easing by emphasizing the need for further progress in controlling inflation than what has been observed so far. Observe USD/CAD trends.

EUR - Euro

Industrial Production in the Eurozone declined by a greater-than-anticipated 0.7% in October and was down 6.6% annually, slightly improving from the revised 6.8% decrease in the previous September year. This drop to a three-year low in overall output is likely to heighten recession concerns. However, the upcoming ECB meeting tomorrow is not expected to yield to the growing expectations of rate cuts in early 2024, which could provide some support to the EUR.

GBP - British Pound

Sterling has declined after today's data showed a surprising 0.3% fall in October's monthly GDP, leading to no growth over three months compared to the expected 0.1% increase. October's Industrial Production also fell more than expected, by 0.8%, as sectors like Manufacturing, Construction, and Services experienced downturns from rising interest rates. Although this weak data might suggest rate cuts in 2024, the forthcoming BoE policy statement is expected to focus more on inflation than on these growth issues.