EUROPEAN FX UPDATE: USD broadly softer vs. peers, EUR/USD reclaims 1.05

USD: DXY -0.1%; 106.24

• USD softer vs. peers (ex-JPY) as markets digest comments from the influential Waller at the Fed who stated that he is leaning in favour of a cut for the December meeting. Accordingly, the odds of a cut in December have now risen to 70% from around 60%. For today's agenda, JOLTS is the notable highlight with traders set to use the release as an insight into the labour market ahead of NFP on Friday. Elsewhere, Fed's Goolsbee and Kugler are due to speak. DXY is holding above the 106 mark and within yesterday's 105.78-106.73 range.

EUR: EUR/USD +0.2%; 1.0520

• EUR has been granted some reprieve vs. the USD. Albeit, it remains to be seen how long this will last given French political issues. The latest reports note that a no-confidence vote will take place @ 15:00GMT on Wednesday. From a broader perspective, markets still await clarity on the size of the ECB's December cut after Kazaks said a larger cut will likely be discussed. Around 28bps of loosening is priced for the meeting. EUR/USD is back on a 1.05 handle and within yesterday's 1.0460-1.0587 range.


• EUR/USD opex: 1.0470 (726mln), 1.0500 (1.4bln), 1.0520-25 (387mln), 1.0550 (290mln), 1.0565 (734mln), 1.0580 (612mln).

JPY: USD/JPY +0.2%; 149.83

• JPY is the only of the majors to be softer vs. the USD with the recent downtrend in USD/JPY currently pausing for breath. The fate of the pair in the coming weeks will depend on NFP and the Fed and BoJ rate decisions. On the latter, expectations remain in favour of a BoJ hike on 19th December. USD/JPY remains below the 150 mark and within yesterday's 149.07-150.70 range.

GBP: GBP/USD +0.2%; 1.2683

• GBP firmer vs. the broadly softer USD with UK-specific drivers on the light side. As mentioned yesterday, it is a quiet week for UK events aside from the BoE's DMP survey on Thursday. As such, it is likely that events stateside will continue to dictate the state-of-play for Cable which is currently sat within yesterday's 1.2617-1.2742 range.

Antipodeans: AUD/USD +0.3%; 0.6493. NZD/USD +0.3%; 0.5895

• Both near the top of the G10 leaderboard despite AUD facing some soft domestic data overnight and a softer CNY. The uptick in AUD/USD briefly led the pair back above the 0.65 mark after delving as low as 0.6442 yesterday. The next upside targets comes via yesterday's peak @ 0.6514 and the 21DMA @ 0.6522. NZD/USD has been pivoting around the 0.59 mark and is currently just south of its 21DMA @ 0.5902 and tucked within yesterday's 0.5862-0.5915 trading band.

CHF: EUR/CHF +0.1%; 0.9316

• CHF is modestly softer vs. the EUR following the latest Swiss inflation metrics which saw the Y/Y rate print at 0.7% vs. exp. 0.8% (prev. 0.6%) and fall short of the SNB's Q4 average expectation of 1.0%. In response to the release, market pricing is now in favour of a 50bps cut at the 13th December meeting; priced at 71%. Capital Economics notes " would not be surprised if Switzerland recorded deflation in some months next year due to easing price pressures in the services sector". EUR/CHF is currently tucked within yesterday's 0.9289-0.9324 range.

03 Dec 2024 - 10:20- ForexResearch Sheet- Source: Newsquawk