CPI inflation moderated below both our expectations and those of the market in October, thanks to a lower core rate, making yet another 25bp rate cut in November highly probable. Our baseline scenario had assumed a pause in monetary easing, but given Poland's ongoing disinflationary trend, we're bracing for another 25bp rate cut next week
The dollar enjoyed a second round of support yesterday as Powell's relatively hawkish press conference continued to resonate with data-starved markets. But the conditions for another big leg higher in USD aren't there, in our view. Meanwhile, Japan has intervened verbally to curb JPY volatility, and GBP is looking closely at Reeves' political position
The dollar is drifting lower ahead of tomorrow evening's FOMC meeting. Even the market's favourite high-yield currency play, the Turkish lira, got a lift following news of a delay in a political event risk. Today's focus will be on US retail sales and perhaps Canadian CPI as well, ahead of expected rate cuts in the US and Canada tomorrow
In a quiet start to the week for FX markets, EUR/USD is trading steady despite French debt being downgraded on Friday night by Fitch. That downgrade has already been priced into French debt markets, and instead, Wednesday's FOMC meeting is set to be the dominant event for EUR/USD this week. We also have central bank meetings in the UK, Japan, Canada and Norway
