The US dollar is displaying a weaker performance against all G10 currencies as the market anticipates a subdued November CPI report, setting the stage for a potential shift by the FOMC tomorrow.
This softer dollar, coupled with lower interest rates, is contributing to the stabilization of gold, which had experienced a decline to nearly $1975 the previous day.
The S&P 500 concluded the previous session at a new high for the year, establishing a positive tone for today's gains in the Asia Pacific region. Conversely, Europe's Stoxx 600 is marginally softer after experiencing a 1% rally over the past two sessions. US index futures, on the other hand, are exhibiting a stronger bias.
Notably, an initial surge in crude prices occurred following an attack on an oil vessel in the Red Sea, with January WTI trading at a four-day high.

Asia Pacific
Tokyo's November CPI fell below expectations, and the larger-than-anticipated contraction in Q3 GDP suggests no immediate need for policy change next week. The yen has rebounded from its lows, and the 10-year JGB yield is approximately 0.75%, about 20 basis points below its recent peak, indicating limited pressure for immediate action.

The Australian dollar is comfortably consolidating within the range established last Thursday, roughly between $0.6525 and $0.6620.

Europe
While UK average wages growth slowed more than forecasted, it is unlikely to prompt the BOE to endorse an early rate cut during its upcoming meeting. Tomorrow's release of October GDP is expected to show a small contraction after a 0.2% expansion in September. The UK economy remained stagnant in Q3, and the consensus among economists in Bloomberg's monthly survey suggests a continuation of this trend in the current and upcoming quarter.

Ahead of the ECB meeting on Thursday, two notable data points include today's Germany December ZEW survey and tomorrow's release of October's aggregate industrial production.
The euro is approaching the high from last Thursday, just below $1.0820.

America
Price pressures in the US are easing at a faster pace than anticipated, a trend likely to be confirmed by today's November CPI and acknowledged by the Federal Reserve tomorrow. Headline CPI is expected to remain unchanged for the second consecutive month. In a broader context, goods prices have been declining, partly influenced by inventory accumulation unwinding. Analysts are closely monitoring shelter costs as the next potential driver for pushing inflation lower.

The US dollar appears range-bound, trading within a relatively narrow range of approximately CAD1.3550 to CAD1.3620.