JPY was the biggest benefactor of yesterday's trade and GBP was broadly lower across the G10 after Bank of England (BoE) Chief Economist Huw Pill commented that last month's budget measures will have only a small impact on inflation and employment. As a result, markets are now anticipating a 75 bps rate cut trajectory extending into 2025.
Last night's Federal Reserve (Fed) minutes failed to tell us anything we didn’t already know - Fed officials prefer rate cuts to be gradual. USD was unmoved.
*Daily move - against G10 rates at 7:30am, 27.11.24
** Indicative rates - interbank rates at 7:30am, 27.11.24
JPY has started the day strong as markets have raised the odds of a rate hike in December, and the EUR is on the front foot after European Central Bank (ECB) member Isabel Schnabel suggested the ECB needs to be wary of cutting rates too much.
Whilst today is not the official last working day of the month, stateside traders will likely be treating it as such given it's Thanksgiving tomorrow. Therefore, given the extent of the currency's gains, any downside surprises on today's core PCE number from the US could see more profit-taking on USD long positions. As a result, should we see core PCE surprise to the downside, could see a higher GBPUSD and EURUSD.
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