Euro sharpens decline to three-week trough on European interest rate cut prospects
Euro fell in European trade on Thursday against a basket of major rivals, heading for the seventh loss in a row against the dollar and marking a three-week trough on prospects of early interest rates cuts by the ECB in 2024.
A string of cautious remarks by ECB officials came after euro zone inflation data showed prices hit 28-month lows.
EUR/USD
EUR/USD fell 0.1% to 1.0755, the lowest since November 14, with a session-high at 1.0772.
The pair lost 0.3% on Wednesday, the sixth loss in a row, the longest such streak of losses since September.
European Remarks
Banque de France's Governor François Villeroy de Galhau said that cutting European interest rates is likely in 2024 as the economy shrinks faster than expected.
European Central Bank member Isabel Schnabel said on Tuesday that more interest rate hikes in the euro zone "are unlikely", following the inflation data in November.
She said the data shows that inflation is losing steam but without the risk of long-term recession with it.
She believes that inflation is going in the right tract but there's need for progress in other major sectors.
The Timing of European Interest Rate Cut
The European Central Bank is expected to hold interest rates flat at the December meeting next week at 4.5%, already the highest in 22 years.
The probability of an ECB 0.25% interest rate cut at the March 2024 meeting stands at 85%.
Nickel climbs as dollar loses ground while markets assess Chinese data
Nickel prices rose on Wednesday as the dollar loses ground against major rivals while markets assess the impact of Chinese data.
Recently, an agreement was reached between global mine workers and Chinese refineries to cut down the fees of processing and refining copper in 2024.
Such developments could underpin copper prices, as China remains the world's largest copper consumer.
Copper recently hit a four-month high at $8640 a tonne amid concerns about supply disruptions in Panama, before falling to a two-week trough at $8313 after Moody's warned of downgrading the credit rating of China.
Separately, the US economy grew at a brisk 5.2% in the third quarter, the best rate since the last quarter of 2021.
At the London Metals Exchange, aluminium fell 0.2% to $2156 a tonne, while nickel rose 2.2% to $16,490, while tin rose 1.8% to $24415.
Lead fell 0.5% to $2042 to near June 8 lows as daily inventories grow at the London Exchange.
Otherwise, the dollar index fell 0.1% as of 15:14 GMT to 103.9, with a session-high at 104.1, and a low at 103.8.
On trading, nickel spot futures rose 0.6% to $16.5 thousand a tonne in American trade.
Loonie resumes gains before BOC decision
Canadian dollar rose in American trade on Wednesday against a basket of major rivals, resuming gains and approaching three-month highs.
The gains come ahead of Bank of Canada's policy decisions later today, expected to result in no changes in interest rates.
USD/CAD
USD/CAD fell 0.3% to 1.3552, with a session-high at 1.3595, after closing down 0.4% on Tuesday on profit-taking off three-month highs at 1.3480.
Canadian Interest Rates
Canada's interest rates have settled at 5%, already the highest since 2001 in order to control record inflation rates.
Expectations
We here expect the BOE to confirm the end of the current cycle of policy tightening and might even pave the way for early interest rate cuts in 2024 to prop up the economy.
Dollar gives up two-week high ahead of US private sector jobs data
Dollar fell in European trade on Wednesday against a basket of major rivals for the first session in three days off two-week highs on profit-taking.
The losses come ahead of US private sector employment data for November, which will provide clues on the resilience and the strength of the US economy in the fourth quarter.
The Index
The dollar index fell 0.1% to 103.89, with a session-high at 104.07, after rising 0.3% on Tuesday, the second profit in a row, marking a two-week high at 104.09 following strong US services data.
The ISM institute reported the services PMI at 52.7 in November, beating estimates of 52.2.
US Rates
There's zero chance for a US interest rate hike at the December Federal Reserve meeting according to the FedWatch tool.
Odds for a 0.25% interest rate cut in March 2024 surged to 55%, while odds for such a cut in May rose to 80%.
US Data
Now markets await important data on the US labor sector this week to gauge the strength of the economy and the likely path ahead for policies.
US private sector employment is expected up 131 thousand in November, compared to a 113 thousand addition in October.