Group 1 - The GBP/USD exchange rate slightly retreated to 1.3518 but remains above the 1.35 level, having previously reached a new high of 1.3502 for October, with an annual increase of over 8% [2] - The current exchange rate movement is driven by the divergence in monetary policy between the UK and the US, the performance of the dollar, and changes in market liquidity [2] - The Bank of England is expected to lower interest rates by 25 basis points in December, with noticeable internal disagreements among decision-makers, signaling a cautious approach to policy adjustments [2] Group 2 - The UK’s inflation rate fell to 3.2% in November, providing room for monetary policy adjustments, and the market anticipates a gradual pace of future rate cuts by the Bank of England, limiting pressure on the pound [2] - The weakening dollar, which has dropped over 9% this year, is another significant factor affecting the exchange rate, despite a strong GDP growth performance in the US for Q3 [2] - The strong performance of the pound against the weak dollar has contributed to the exchange rate surpassing the critical 1.35 level [2] Group 3 - From a technical analysis perspective, the GBP/USD is in a bullish trend after breaking 1.35, but short-term adjustments may occur due to reduced market liquidity during the Christmas holiday [3] - The 1.34 level is seen as a crucial support level, while the range of 1.3550 to 1.36 constitutes major resistance [3] - Technical indicators suggest a strong overall trend, but the upward momentum is showing signs of slowing down [3]

Core Viewpoint - The recent decline of the USD/CAD exchange rate reflects the differing economic expectations and monetary policy stances between the United States and Canada, with the USD under pressure and the CAD showing relative strength [1][3]. Economic Data - The U.S. GDP grew at an annualized rate of 4.3% from July to September, significantly exceeding market expectations of 3.3% and surpassing the previous quarter's growth of 3.8% [4]. - The core personal consumption expenditures price index rose by 2.9% quarter-on-quarter, aligning with market expectations, while the GDP price index increased by 3.7%, higher than the forecast of 2.7% [4]. - Despite strong economic data, there are concerns regarding sustainability, with some analysts noting that growth is partially reliant on healthcare spending and inventory depletion, limiting support for domestic demand [4]. Market Sentiment - The market is reassessing the future path of U.S. monetary policy, with expectations shifting towards potential rate cuts in 2026, which diminishes the medium-term attractiveness of the USD [3]. - The upcoming holiday season is expected to reduce market liquidity, making price adjustments more susceptible to changes in sentiment and expectations [4]. Canadian Economic Outlook - Canada's economy showed signs of recovery, with a preliminary estimate indicating a 0.1% month-on-month growth in November, following a 0.3% contraction in October [5]. - The Bank of Canada maintained its overnight rate at 2.25%, signaling a cautious approach to future policy decisions based on incoming data, which contrasts with the discussions surrounding potential rate cuts by the Federal Reserve [5].

December 19, 2025 03:31 PM GMT G10 FX Strategy | Global Our Latest Views Morgan Stanley's top G10 FX strategy views including key fundamental catalysts and technical levels to watch. Key Takeaways We are neutral on the DXY with a bearish skew as hawkish foreign central banks and soft US economic data keep risks to the downside. USD View: Neutral | Skew: Bearish DXY downside risks are growing, but muted price action in response to soft US labor market and inflation data and hawkish foreign central banks sugg ...

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the macroeconomic outlook, focusing on global rates, commodities, currencies, and emerging markets, with insights from J.P. Morgan Securities. Core Insights and Arguments US Rates - Hawkish developments across developed market (DM) central banks have led to underperformance in the intermediate sector, aligning with a forecast for modestly higher yields in 2026 as easing cycles wind down [3][14] - The Federal Reserve (Fed) is expected to ease rates in January 2026, with the effective funds rate projected to be 3.40% by mid-2026 [11][12] - Treasury yields are forecasted to reach 3.60% for 2-year and 4.25% for 10-year by mid-2026, with slight increases expected by year-end [9][11] International Rates - DM rates have generally sold off due to a hawkish shift in central bank tones and strong data momentum, leading to a lightening of risk in portfolios [4][39] - The Fed's recent actions have not met more hawkish market expectations, contributing to a bearish outlook for the USD [6][80] Commodities - Cocoa's re-inclusion in the Bloomberg Commodity Index (BCOM) is expected to drive significant buying, accounting for 22% of total open interest, overshadowing more modest buying in other commodities like corn and wheat [6] - Natural gas storage withdrawals in North West Europe (NWE) have exceeded forecasts, despite weaker demand trends [6] Currencies - The USD is under pressure due to a dovish Fed stance compared to hawkish developments in other G10 countries [75][79] - Event risks are elevated with upcoming US payroll releases, and a bearish outlook for the USD is contingent on data performance [79][80] Emerging Markets - The outlook for emerging markets (EM) in 2026 is positive, with lower macro volatility expected to support local markets. The recommendation is to stay overweight (OW) on EM FX and rates [6][11] - Growth and inflation are projected to remain stable, with limited central bank easing anticipated [6] Additional Important Insights - The Fed's policy path is now more aligned with J.P. Morgan's forecasts, indicating limited scope for further bearish impulses in the near term [14] - A significant funding gap is expected to emerge in 2027, with coupon size increases anticipated starting in November 2026 [22] - The demand for Treasuries is expected to remain stable, with mutual funds and ETFs likely absorbing 50% of net T-bill supply [32] - The anticipated cuts from the Fed and other central banks are expected to create a more favorable environment for high-yield currencies [68] This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the macroeconomic landscape and its implications for various asset classes.

Core Viewpoint - The case of illegal foreign exchange operations involving individuals identified as Tong and Chen has been successfully investigated by the Shenyang Public Security Bureau, highlighting the complexities of cross-border financial crimes and the importance of international cooperation in law enforcement [1][2][3]. Group 1: Case Development - In April 2024, a tip-off from the U.S. regarding Tong's involvement in money laundering for drug traffickers prompted a thorough investigation by Chinese authorities [1]. - The Shenyang police established a task force to address challenges such as fragmented leads and differences in legal systems between China and the U.S., leading to the collection of crucial evidence [1][2]. - By May 20, 2024, Tong and Chen were apprehended in Wuhan while attempting to flee the country, following extensive evidence collection across multiple provinces and cities [2]. Group 2: Criminal Activities - Since 2017, Tong and associates operated a car dealership in the U.S., initially providing currency exchange services before shifting to illegal foreign exchange operations [2]. - From January 2020 to June 2021, Tong directed Chen and others in China to facilitate illegal currency exchanges, amassing over 16 million RMB through domestic bank accounts [2][3]. - Tong also engaged in virtual currency transactions, purchasing Bitcoin and Tether to facilitate cash exchanges, primarily serving students and gamblers in the U.S. [3]. Group 3: Legal Proceedings - The case was transferred to the prosecutorial authority on November 26, 2024, and by September 2025, both Tong and Chen were sentenced to prison terms of 1 year and 7 months, and 1 year and 4 months respectively, along with fines for their illegal foreign exchange activities [3].

Group 1 - The USD/CAD exchange rate has entered a downward trend for the second consecutive trading day, hovering around 1.3780 during the Asian trading session [2] - The unexpected decline in the US November Consumer Price Index (CPI) to a year-on-year increase of 2.7%, significantly below the expected 3.1%, has raised market expectations for potential interest rate cuts by the Federal Reserve [2] - The core CPI, excluding volatile food and energy prices, rose only 2.6%, also failing to meet the 3.0% expectation, marking the lowest growth rate since 2021 and increasing uncertainty regarding the Fed's monetary policy path [2] Group 2 - President Trump's comments have intensified market expectations for interest rate cuts, suggesting that the next Federal Reserve chair will be someone who "clearly supports rate cuts," further pressuring the dollar [3] - The Bank of Canada (BoC) maintained its interest rate at 2.25%, indicating that the current policy setting is "generally appropriate," which supports the Canadian dollar amid resilient economic activity [3] - The ongoing weakness of the USD/CAD reflects the widening policy divergence between the two central banks [3] Group 3 - Upcoming economic data, particularly the US December Michigan Consumer Sentiment Index and Canadian retail sales figures, will be closely monitored as they may significantly impact the USD's trajectory [4] - A decline in the consumer sentiment index could exacerbate expectations for Fed rate cuts, putting additional downward pressure on the dollar [4] - Strong Canadian retail sales data could provide support for the Canadian dollar, potentially exerting downward pressure on the USD/CAD exchange rate [4]

December 12, 2025 03:08 PM GMT G10 FX Strategy | Global EUR/USD may re-test its previous highs should US labor market data disappoint and President Lagarde fail to explicitly push back on hike expectations from the ECB. JPY View: Neutral | Skew: Bullish We closely monitor upcoming US labor market data next week. Any further weakness in US labor market data can open the door for USD/JPY to go 150.00, as we expect the BoJ to express further normalization at the upcoming December MPM. Our Latest Views Morgan S ...

Core Insights - Trading in the Hungarian forint has more than doubled since the U.S. President Donald Trump's inauguration, with increased trader interest following his "Liberation Day" import tariffs announcement [1] - The forint has strengthened approximately 20% against the dollar in 2025, marking its best performance in nearly 25 years and positioning it as one of the top emerging currency performers [2] - The MSCI Emerging Market Currency Index reached a record high in July and is on track for its best year since 2017, having gained over 6% [2] Market Trends - The weakening dollar has prompted investors to reassess their exposure to the currency and consider diversifying into emerging markets, including Hungary and South Africa [3] - Analysts suggest that the long-standing bear market for emerging market currencies, lasting 14 years, may have turned, coinciding with a shift in the dollar cycle [4] - The geopolitical landscape and divergent central bank policies are expected to continue influencing price movements in the currency markets [5] Economic Implications - Currency appreciation and capital inflows have significant economic implications for governments, including reduced export appeal and enhanced capacity to raise and repay debt [6] - The International Monetary Fund has issued warnings regarding potential risks stemming from currency market volatility [6]

Core Viewpoint - The Australian dollar (AUD) shows a positive trend against the US dollar (USD) despite weak GDP growth data for Q3 from the Australian Bureau of Statistics [1] Economic Data Summary - Q3 GDP growth rate was 0.4%, down from 0.6% in Q2; annual GDP growth slowed from 1.8% to 2.1%, both below market expectations, leading to a brief sell-off of the AUD during Asian trading hours [1] - October's consumer price index (CPI) rose to 3.8% year-on-year, up from 3.5% in the previous month; adjusted average CPI increased from 3.2% to 3.3%, remaining above the Reserve Bank of Australia's (RBA) target range of 2%-3% [2] Central Bank and Inflation Insights - RBA Governor Michele Bullock indicated that the central bank is closely evaluating recent inflation data to assess the sustainability of price pressures, which could impact future monetary policy [2] - The statement reduced market expectations for further policy easing in the short term, providing support for the AUD [2] External Environment Impact - China's services PMI slightly decreased from 52.6 in October to 52.1 in November but remained above the expected 52.0, showing limited reaction from the AUD [3] - The USD index remains at a relatively low level, influenced by market expectations of a dovish policy from the Federal Reserve, with a 90% probability of a 25 basis point rate cut in December [3][4] Technical Analysis - The AUD/USD recently broke through a descending trendline resistance since September and is above the 100-day simple moving average, indicating positive momentum without entering overbought territory [5] - Key resistance levels are identified at 0.6535-0.6530; a breakthrough could lead to further gains towards 0.6600 and potentially challenge the yearly high around 0.6700 [7] - Important support is at the psychological level of 0.6500; a drop below this could lead to further declines towards the 200-day moving average around 0.6465 and the November low of 0.6420 [7]

Core Insights - U.S. equities experienced a strong performance last week, marking one of the most significant November turnarounds on record despite a shorter trading week [1] - The U.S. dollar struggled to maintain a key psychological level of 100 on the index, primarily due to the Federal Reserve signaling a potential rate cut in December [2] - Macro factors, rather than micro factors, influenced the market mood, with data easing hard-landing fears and supporting the case for easier policy [3] Market Conditions - Liquidity conditions were thin, and a significant technical incident occurred when several key futures and FX venues went offline due to a cooling failure at a CME Group data center [4][5] - The NZD/JPY pair broke out of a five-month range, closing above a key level of 89, indicating bullish momentum [6][8] - The EUR/AUD pair saw the Australian dollar recover due to rising commodity prices, with potential bearish signals if it breaks support around 1.76 [9][10] Upcoming Events - The upcoming week is critical for assessing the December rate cut narrative, with potential catalysts including high-profile U.S. data and political developments [11] - Key domestic focus will be on ISM manufacturing and services data, which could influence the Fed's reaction function [12] - Friday's Non-Farm Payroll report is expected to show a modest rebound, with implications for the rate-cut timeline and market sentiment [13]