The US dollar remains under pressure, with both the Governor of the Reserve Bank of Australia and the Bank of England cautioning that higher rates may still be necessary. Despite this, there are signs that the momentum behind these warnings may be slowing. Concurrently, the short squeeze is persisting, propelling the Japanese yen to its strongest level in two months.
Equities present a mixed picture, with markets in Japan, China, and Hong Kong experiencing declines, while Taiwan's index surges to new 19-month highs on the back of demand for AI-related chip plays. In Europe, the Stoxx 600 hovers around unchanged levels, and US index futures show narrow mixed trends.
The softer dollar and interest rates are contributing to the rise in gold, approaching $1995, its highest level since November 3. Oil prices are consolidating after a 6.3% rally over the past two sessions, driven by speculation of further OPEC+ cuts expected to be announced this weekend.

Asia Pacific
The 10-year JGB yield and the yen against the dollar are both at notable levels, with the JGB yield near its two-month low and the yen at its strongest since early October. The necessity for intervention in the foreign exchange or bond market has significantly diminished. Despite improved market dynamics, Prime Minister Kishida faces weakening public support.
The dollar dipped to a low near JPY148.10.

The Reserve Bank of Australia anticipates inflation returning to the top of its target range by late 2025, contingent on one to two more rate hikes. RBA Governor Bullock attributes Australian inflation primarily to supply-driven factors.
The Australian dollar extended its recovery, reaching nearly $0.6465 before retreating to around $0.6560 before European trading.

Europe
The economic calendar in Europe remains light until Thursday when the preliminary November PMI is scheduled. Expectations are for a slight firming of the preliminary PMI. The European Central Bank is not set to meet until December 14, with no anticipated policy changes.
The euro approached the $1.0960 area in North America, marking a (61.8%) retracement of the mid-July high sell-off. It reached $1.0965 in Asia before easing back to around $1.0940 in early European trading.

Ahead of the UK's preliminary PMI on Thursday, Chancellor of the Exchequer Hunt will deliver the Autumn Statement around midday in London tomorrow.
Sterling rose to almost $1.2520, with follow-through buying pushing it to nearly $1.2545 today, a level not seen since September 11.

America
Today's reports include the Chicago Fed's National Activity Index, Philadelphia's Fed non-manufacturing activity, and existing home sales. Later in the session, the FOMC minutes from the earlier month's meeting will be released.

Canada reports October CPI today, and the Canadian dollar continues to lag, being the only G10 currency unable to gain against the dollar in Q4, with a decline of about 1%.