EUROPEAN FX UPDATE: USD stronger vs. all majors. EUR hit by French politics

USD: DXY +0.3%; 106.34

• USD firmer vs. all major peers following US President-elect Trump's latest tariff threat over the weekend in which he demanded that BRICS nations commit to not creating a new currency to challenge the US dollar or they will face 100% tariffs. DXY is also mechanically getting a lift from the softer EUR (see below for details). DXY has eclipsed the 27th November peak @ 106.41. Today's docket includes remarks from Fed's Waller and Williams. NFP on Friday looms large. A December cut is currently priced @ 61%.

EUR: EUR/USD -0.6%; 1.0515

• EUR near the bottom of the G10 leaderboard as political disruptions in France act as a drag on the wide currency with the far-right Bardella noting that a no-confidence motion will likely be passed unless there is a “last minute miracle”. ING is of the view that "French politics can help solidify EUR/USD resistance at 1.0570/1.0600 this week, while short-term support will be found in the 1.0465/1.0500 area". As it stands, EUR/USD has delved as low as 1.0497. Elsewhere, ECB's Lane noted over the weekend there is a little bit of distance to go before the ECB's inflation target is reached. He added that policy needs “to be driven by upcoming risks rather than being backward-looking”.

JPY: USD/JPY +0.4%; 150.38

• JPY is pressured vs. the USD with USD/JPY back above the 150 mark after. Fresh macro drivers for Japan were lacking over the weekend. However, focus remains on an expected imminent rate hike by the BoJ with Governor Ueda remarking on Friday that the timing of the next interest rate hike was "approaching". A December hike is now priced @ 58%. USD/JPY remains some way south of Friday's 151.53 peak.

GBP: GBP/USD -0.3%; 1.2702

• GBP on the backfoot vs. the USD alongside a lack of UK-specific drivers. This could remain the case with this week's calendar lacking in tier 1 UK data highlights. As such it is the USD side of the leg doing the heavy lifting. Cable is currently holding just above the 1.27 mark and sits within Friday's 1.2672-1.2750 range. GBP is faring better vs. the EUR with EUR/GBP back below the 0.83 mark; 2024 low sits @ 0.8260.

Antipodeans: AUD/USD -0.2%; 0.6499. NZD/USD -0.2%; 0.5904.

• Both softer vs. the broadly firmer USD but to a slightly lesser degree than most peers with some support being offered by Chinese PMI metrics from over the weekend. AUD also saw a deluge of data releases including better-than-expected Australian Building Approval and Retail Sales. AUD/USD is currently lingering around the 0.65 mark after delving as low as 0.6489 overnight. NZD/USD is just about holding above the 0.59 mark and is tucked within Friday's 0.5885-0.5929 range.

02 Dec 2024 - 10:05- ForexData- Source: Newsquawk