note the weekly initial jobless claims figure dropped more than expected, implying some sort of tightness in the US employment market that supported the USD somewhat.<\/p>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2023\/11\/image-124.png\")
<\/figure>\n\n\n\nGBP \u2013 Fundamentals to lead the way<\/h2>\n\n\n\n
The pound is about to end the week higher against the USD, the EUR and JPY in a sign of broader strength. On a fundamental level, we note the UK finance minister Hunt\u2019s Autumn Statement on Wednesday. The UK finance minister, recognising a possible slowdown of the economy, tended to highlight tax-cuts, which could characterise a potentially expansionary fiscal policy. Yet the finance minister also announced plans to reduce debt which may curtail expenditure somewhat. Overall, we tend to see the tone of the announcement as being supportive for the pound at a fiscal level. Further statements of UK government officials pointing towards an expansionary fiscal policy may add more support for the pound. On a monetary level, we note that BoE Governor Bailey warned the markets not to expect inflation to fall quickly and thus tended to dismiss any idea of an early rate cut by the bank. Hence should BoE policymakers continue leaning on the hawkish side, we may see the pound getting some support on a monetary level. On a macroeconomic level, we note that November\u2019s trend for industrial orders indicator dropped deeper into the negatives, implying an expectation for a deterioration of economic activity in the sector. Yet what really caught the market\u2019s eye in the past few days was the release of UK\u2019s November preliminary PMI figures which tended to rise more than what the market expected, improving the economic outlook of the UK.<\/p>\n\n\n\n JPY is about to end the week relatively unchanged against the USD and the EUR but is losing ground against the pound. On a monetary level, we note that discussions among analysts for BoJ to end its negative rates monetary policy in 2024 have been enhanced in the past week. It should be noted that BoJ Governor Ueda, tended to note that a weak Yen does not have only a negative aspect, which may have sounded a bit dovish. Yet, overall we tend to see the market\u2019s expectations being enhanced for the bank to proceed with its first rate hike being expected in Spring next year, although some analysts mention the January meeting as a possible pivot point for the bank. Overall any comments by BoJ policymakers supporting the idea of a policy normalisation may provide substantial support for JPY in the coming week. On a fundamental level, we note JPY\u2019s dual nature as a safe haven and a national currency, with any possible tensions providing some support for the yen and a more risk on approach by the market may weaken it. On a macroeconomic level, the acceleration of Japan\u2019s CPI rates for October as released during today\u2019s Asian session tends to support the idea that BoJ should start normalising its monetary policy, as it implies a resilience of inflationary pressures in the Japanese economy and thus tends to support JPY. On the other hand, economic activity seems to weaken in the crucial manufacturing sector for November, according to the month\u2019s preliminary PMI figures, which tends to intensify the worries for the outlook for the Japanese economy.<\/p>\n\n\n\n The common currency is about to end the week at about the same levels as the week began against the USD and JPY, yet is losing ground against the GBP. On a political level, yesterday\u2019s riots in Dublin and the recent Dutch elections highlighted the deep rift among Europeans about immigration once again an issue that is tantalizing the Eurozone on a political level. For the time being we expect no major market reaction on the issue. On a monetary level, we note that the minutes of ECB\u2019s October meeting showed a hawkish predisposition of the bank\u2019s policymakers, with some not being quite convinced that another rate hike is not necessary. Yet at the same time, it seems that worries of ECB policymakers about the economic outlook of the Eurozone were extensive. It\u2019s characteristic that ECB Nagel hinted that the ECB is close to its terminal rate, implying that the bank may need to hike at least one more time, and as such his comments may be perceived as slightly hawkish. On the other hand, we note also France\u2019s central Bank Governor Villeroy de Galhau who stated yesterday that the ECB is not to hike rates again should there be no surprises highlighting the power struggle within the bank. Furthermore, the minutes of the meeting tended to shed light also on the worries of the bank for the economic outlook of the Eurozone. Yet on a macroeconomic level, there seems to be a ray of hope, as the Eurozone\u2019s November preliminary PMI figures, despite implying another contraction of economic activity the situation is slightly improving and the relevant indicators seem to be bottoming out. In the coming week, we note the release of France\u2019s final GDP rate for Q3 and we highlight the release of November\u2019s preliminary HICP rates for November and a possible failure of the rates slowing down could provide substantial support for the common currency.<\/p>\n\n\n\n AUD is about to end the week higher against the USD for a second week in a row. On a monetarry level, we note RBA\u2019s worries for inflationary pressures in the Australian economy. It\u2019s characteristic that RBA Governor Michelle Bullock stated that \u201cthe remaining inflation challenge we are dealing with is increasingly homegrown and demand driven\u201d. It\u2019s as if the bank\u2019s Governor is preparing the markets for another rate hike, or at least underscoring the bank\u2019s hawkish tilt. For the time being the market seems to maintain the expectation for the bank to hike rates in early Spring next year. Overall should there be further signs of a hawkish stance on behalf of the bank, we may see AUD getting some support in the coming week. On a more fundamental level, given the perception of the market for AUD as a riskier asset given it being a commodity currency, a positive, more optimistic market view could provide some support for the Aussie and vice versa. At the same time, we highlight any developments in China\u2019s economy, given the close Sino-Australian economic ties. According to various media outlets, China is preparing packages to aid its property developers, as fears continue to mount about the resilience of the Chinese economy. Such a move could potentially aid in economic development in China, which in turn may provide some support for the Aussie.<\/p>\n\n\n\n The Loonie is about to end the week relatively stronger against the USD. On a monetary level, it seems that BoC\u2019s hawkishness has eased somewhat and may have clipped any gains for the Loonie. It\u2019s characteristic that BoC Governor Tiff Macklem implied that the bank may have reached its terminal rate and further rate hikes may not be needed by stating that \u201cinterest rates may now be restrictive enough to get us back to price stability\u201d. The market seems to be in line with such a scenario and currently seems to expect that the bank may proceed with a rate cut in April. On a more fundamental level, we note that oil prices tended to edge a bit higher for the week, yet nothing material. Oil market fundamentals tend to be drawn between OPEC+\u2019s intentions for lower production levels or not, a slack in the US oil market and doubts about worries for the demand outlook of the oil market particularly from China. Should oil prices strengthen in the coming week, could provide some support for the CAD given that Canada is a major oil-producing economy. Furthermore, a positive market sentiment in the coming week could support the CAD as a commodity currency. On a macroeconomic level, we note that after the slowdown of inflationary pressures in October, attention now turns to growth thus we note the release of the GDP rate for Q3 on Thursday and another contraction could weaken the Loonie. On Friday we get November\u2019s employment data and should they show that the employment market remains tight we may see the CAD getting some support.<\/p>\n\n\n\n In the coming week, we expect the FX market to remain rather balanced given the low number of high-impact financial releases stemming from the US. Yet we would like to make a comment about RBNZ\u2019s interest rate decision on Wednesday. The bank is widely expected to remain on hold at 5.5% and the market is expected to have reached its terminal rate. Yet market analysts tend to highlight the possibility of extensive rate cuts in the coming year. Should the bank in its accompanying statement more or less maintain a cautious tone, foreshadowing an early cut in the official cash rate, we may see the Kiwi retreating. As for US equities markets, we note that the earnings release season is drawing it a close as most high-profile companies have released their earnings reports. Overall we expect the US equities markets to be driven by fundamentals and may focus also on the Fed\u2019s intentions. As for gold, we note that the negative correlation between the precious metal and the greenback seems to be functioning as the USD\u2019s slippage against its counterparts seems to be benefiting gold\u2019s price. The slight drop of US yields may also have provided some support for gold\u2019s price. Should in the coming week, the USD\u2019s weakening be enhanced, we may see gold\u2019s price rising.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2023\/11\/image-125.png\")
<\/figure>\n\n\n\nJPY \u2013 BoJ\u2019s outlook a key factor for JPY<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2023\/11\/image-126.png\")
<\/figure>\n\n\n\nEUR \u2013 Preliminary November HICP rates to move EUR<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2023\/11\/image-127.png\")
<\/figure>\n\n\n\nAUD \u2013 CapEX, Building Approvals and Chinese PMI figures in sight<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2023\/11\/image-129.png\")
<\/figure>\n\n\n\nCAD \u2013 GDP and employment data to gain attention<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2023\/11\/image-130.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n