Market Outlook: European and Global Insights

By Wayne Cole

This week has started off relatively calmly for the markets, particularly in currencies. The dollar saw a modest increase against the yen, rising by 0.4% to reach 154.78 yen. This movement came after Bank of Japan Governor Kazuo Ueda left investors uncertain regarding the timing of potential rate hikes. While he remains open to gradual tightening aligned with the central bank's outlook, he did not indicate whether a hike would occur in December, disappointing market expectations.

Market pricing for a December hike remains at 54%, yet it won’t be fully recognized until March. In the U.S., futures suggest a 62% likelihood of a Federal Reserve rate cut next month, following a hawkish statement from Chair Jerome Powell last week. Several Fed officials are scheduled to speak this week, likely echoing caution regarding rapid cuts.

President-elect Donald Trump’s selection for Treasury Secretary may impact fiscal policy, as he considers candidates supportive of substantial tariffs and debt-driven tax cuts. Notably, former Fed Governor Kevin Warsh and billionaires Marc Rowan, Scott Bessent, and Howard Lutnick are being mentioned.

Additionally, a series of ECB speakers will present this week, while UK and Canadian inflation data are expected to provide insights into their respective rate plans. Early PMIs for November will also be released on Friday to gauge global sentiment post-Trump victory.

For Wall Street, attention focuses on Nvidia’s upcoming results on Wednesday, with options pricing suggesting a possible near 9% fluctuation in its share price. Analysts project Nvidia’s third-quarter revenue may exceed $32.9 billion, reflecting over 80% growth.

Key Developments Influencing Markets on Monday:

• Euro zone trade data for September
• Appearances by ECB officials: Christine Lagarde, Philip Lane, Claudia M Buch, and Luis de Guindos
• Fed Bank of Chicago President Austan Goolsbee's speech

(Edited by Edmund Klamann)