EUR/USD has held onto its gains this week – though that largely looks a function of the slightly softer dollar. Yesterday's release of the German ZEW expectations index for November was not particularly encouraging. However, the aggregate ZEW figure for the eurozone as a whole ticked up, questioning whether Germany is increasingly becoming an outlier.
The carry trade suffered a stress test yesterday, when one popular target currency, the Hungarian forint, had to cope with prospects of wider budget deficits. After selling off 0.7%, the forint is already coming back bid. With volatility expected to stay low, it's hard to see any major unwinds of carry strategies in the near term
We think markets are right to price in more Bank of England easing, but the upcoming budget on 26 November can still bring both bullish and bearish surprises. Meanwhile, concerns around the US job market are offsetting the positive impact of a likely government reopening on risk sentiment
The oil market rallied yesterday, boosted by the strength of the refined products market
South Korea’s jobless rate rose in October, but it remains below 3%. The Bank of Korea is expected to keep policy unchanged in November amid concerns about property risk and volatile foreign exchange markets
Inflation in Hungary showed signs of stagnation in October, yet this is still not a success story. With price pressures still above the central bank’s target, it is highly unlikely that we will see any interest rate cuts until autumn next year
Real retail sales growth came in weaker than expected, implying stagnation since April. This warrants some caution regarding the consumption outlook. Still, households have relatively strong resources which could support robust spending as the year approaches an end
Third-quarter GDP growth disappointed at 4.0% YoY, dragged down by weak investment and softer government spending, while exports provided temporary support. We downgrade our 2025 growth forecast to 4.7% (from 5.2%) as sentiment weakens and tariff headwinds loom, reinforcing our call for a 25bp central bank rate cut in December
It has been a mixed week for the dollar, where early-week strength finally eased a little yesterday on indications of softer US jobs data. Yet with the US government shutdown ongoing, we are still in the dark about the true labour market picture. Expect more $ consolidation and focus on regional stories such as soft China trade data and the Canada jobs release
Today's data is more evidence of the small rebound of the German economy after the summer. However, the September increase in exports is too weak to dispel concerns about persistent structural weakness
In the Eurozone, ECB’s Schnabel sees money market rates rising as system reserves decline, with banks then turning to the ECB for liquidity. It is part of the plan and could happen in mid-2026, but is more likely to happen later. Meanwhile, US Treasuries are being buffeted by contrasting impulses. It's been quite a week, but we broadly end where we started
China's deflation is expected to continue, while the government releases data on retail sales, fixed asset investment, and industrial production. South Korea will release the unemployment rate
Oil prices settled lower yesterday with a large increase in US crude oil inventories, while surplus expectations for the global oil market will also be providing some headwinds
Despite good ADP and ISM services data, the USD has corrected lower. With equities re-stabilising, the risks remain of further USD pullbacks after a rally that has exceeded what rate differentials can justify. Today, we see the BoE on hold despite mounting speculation of a pre-Budget cut. Norges Bank is likely to hold too, with low risks of guidance tweaks
Fed Chair Powell's reticence to cut in December remains a driver of sentiment. Nevertheless, Treasuries are interpreting the various crosswinds as supportive of a rise in yields. We don't think the Bank of England will cut, but markets are not fully convinced. Gilt yields have little room to move lower as the Budget risk premium has already fallen
It's the expected rebound in industrial production in September. However, it's a rebound which is too weak to mark any turnaround. Instead, even with some cyclical rebound in the making, structural weaknesses will put a lid on German industrial production for a while
As expected, NBP policymakers delivered their fourth consecutive 25bp rate cut in November, extending the scale of monetary easing this year to 150bp. Rate-setters reacted to lower current inflation, but may pause before a final adjustment to monetary policy. We see two more cuts in the first half of next year, with the target rate at 3.5-4% in 2026
In our latest update, we reassess our Hungarian economic and market forecasts at a time when we are still waiting for the end of stagnation and hoping for better days to come. The economy is starving for those order book fillings, and also a big dollop of extra confidence
Today marks the start of the US Supreme Court hearings regarding the legality of some of the US administration’s tariffs. A ruling is expected before the end of the year
Unlike the Fed or the Bank of England, the ECB looks to have more time before excess reserves reach levels where bigger shifts in banks' behaviour will become obvious. Recourse to the ECB facilities remains relatively low and upward pressure on short-term rates is still very gradual