Both Sterling and Japanese yen are among the weakest-performing currencies today, following their respective central banks meetings. BoE left rates unchanged at 4.75%, but the surprise came from a dovish shift in the MPC, with three members voting for a cut. While BoE reiterated that a “gradual approach” to easing remains appropriate, rising concerns over […]

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Fed’s hawkish rate cut overnight sparked an outsized market reaction, with DOW plunging over -1100 points and NASDAQ losing -3.5%. Fed’s messages didn’t deviate from expectations leading to the meeting, indicating a slower easing path in 2025 with likely just two more rate cuts and a terminal rate near or above 3.0%. But markets responded […]

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Germany’s GfK Consumer Sentiment Index for January rose to -21.3, improving from December’s -23.1. December’s subindices reflected mixed dynamics: economic expectations moved into positive territory at 0.3, up from -3.6, and income expectations increased to 1.4 from -3.5. Willingness to buy also ticked higher to -5.4 from -6.0, while willingness to save fell sharply to […]

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In focus today Focus today will be on tonight’s FOMC meeting. We expect a 25bp cut, which is also fully discounted by markets. Apart from the rate decision, market attention will be on the updated rate projections, and especially on the FOMC’s latest view on the terminal rate level. We think Chair Powell will aim […]

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Markets Relative market calm this morning was already disturbed sooner than expected by the publication of the UK labour market data. The unemployment rate remained unchanged at 4.3% and November payrolls declined a bigger than expected 35k. However, it was wage growth data catching the eye just two days before the final BoE policy meeting […]

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Canadian Dollar trades broadly lower today while commodity currencies are generally soft. Canada’s CPI report reinforced the outlook of stable inflation hovering around target. BOC has likely completed its aggressive rate-cutting phase and pauses in policy easing are anticipated at some meetings next year. Nonetheless, the direction remains clear: further rate reductions are expected to […]

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The December ZEW Economic Sentiment survey delivered a notable improvement in outlook for both Germany and the Eurozone, driven by optimism surrounding interest rate cuts and policy shifts. German ZEW Economic Sentiment index surged to 15.7 from 7.4, far exceeding expectations of 7.0. However, Current Situation Index continued to deteriorate, slipping further to -93.1 from […]

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German Ifo Business Climate Index declined to 84.7 in December, missing expectations of 85.6 and falling from 85.7 in November. This drop highlights persistent economic challenges in Europe’s largest economy, with sentiment continuing to slide amid growing uncertainty. While Current Assessment Index surprised to the upside, rising to 85.1 (above forecasts of 84.0), Expectations Index […]

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In focus today In the afternoon, US November retail sales and industrial production are due for release. Leading soft indicators gave very conflicting signals in November, so the Fed will closely follow hard data releases for stronger conviction on the direction of the economy. In Germany, we receive two growth and sentiment indicators from Ifo […]

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Markets German and EMU yields on Friday initially only showed minor gains, but finally extended the rebound that gradually developed earlier last week. US yields added 5.4 bps (2-y) to 6.9 bps (10-y). There were no important US data, but markets apparently are pondering whether recent solid US activity data, slightly higher inflation and uncertainty […]

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China’s latest efforts to convince investors that it will boost its economy with great stimulus measures had the same reaction than the previous ones: disappointment. On Friday, the Chinese authorities repeated that they will boost consumption but the lack of details reversed the pre-announcement enthusiasm and sent the CSI 300 more than 2% lower. And […]

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Markets European yields and the euro today gained minor further ground after succeeding an intraday reversal yesterday after the ECB 25 bps cut (to 3.0%). First post-meeting comments from ECB policy makers confirmed that more easing will follow. Internal debate on the pace (Kazaks still keeps the door open for a bigger step) and the […]

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European majors are broadly under pressure today, with Swiss Franc leading losses. SNB’s unexpected 50bps rate cut caught markets off guard, and its significantly downgraded inflation projections suggest more easing is on the table for 2025. Meanwhile, Euro managed to hold steady after ECB’s widely anticipated 25bps cut. ECB demonstrated clear confidence in its inflation […]

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Germany’s economy is forecast to contract by -0.1% in 2024, according to the Ifo Institute. The economy has been “treading water for five years”, with growth stalled amid structural challenges. The institute presents two possible trajectories for 2025: sluggish growth of just 0.4% if structural issues persist, or a recovery to 1.1% if economic policy […]

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Markets German Bunds outperformed US Treasuries and UK Gilts yesterday as we approach final policy meetings of respective central banks which are set to widen their diverging views. The ECB will on Thursday conduct a third consecutive (and 4th in total) 25 bps rate cut. A possibly slightly lower GDP and CPI outlook is covered […]

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The euro is slightly higher on Tuesday. In the European session, EUR/USD is trading at 1.0528, down 0.23% at the time of writing. German inflation climbs to 2.2% Germany, the largest economy in the eurozone, remains a shadow of what was once the undisputed locomotive of Europe. Economic growth has sputtered and there is political […]

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Commodity currencies found significant support today after China pledged to intensify its economic stimulus efforts, aiming to secure next year’s growth targets. Australian Dollar led the charge, followed by New Zealand Dollar and Canadian Dollar, as risk-sensitive assets reacted positively to the news. Meanwhile, Hong Kong’s HSI surged, reflecting optimism in the region, though gains […]

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Markets US November payrolls cemented the case for a 25 bps rate cut by the Fed. That scenario wasn’t completely discounted (70%) ahead of the numbers. While headline payrolls growth rebounded to 227k (with an additional 56k upward revision to September & October figures), the accompanying household survey made a more grim reading. With a […]

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In focus today The main data event will be the US Jobs Report for November. We expect Nonfarm Payrolls growth to recover to 160k (cons: 200k, prior: 12k) after temporary weather-related effects have reversed. We anticipate average hourly earnings growth moderated to +0.2% m/m SA and unemployment rate remaining steady at 4.1%. Preliminary results from […]

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GER40 index rises vertically, unlocks 20,000 number Short-term bias is positive, but caution is necessary The German 40 index surged into uncharted territory, finally breaking above the 20,000 number on Tuesday despite the Eurozone’s biggest economy facing a gloomy economic and political outlook. After a strong rally, the index could face a pullback, especially as the RSI and the […]

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