Surprise RBI Governor Pick Signals India May Cut Rates as Soon as February, Economists say

Central Bank

Summary:

Sanjay Malhotra will take over as the Reserve Bank of India's new governor at a tumultuous time for the economy in the face of slowing growth, sticky inflation and a depreciating rupee. Some experts say his appointment could represent a shift towards a more dovish monetary policy and strengthens expectations of rate cuts early next year.

India has appointed a new central bank governor to replace longstanding chief Shaktikanta Das in a surprising move that some market watchers say strengthens the outlook for rate cuts early next year.

The new Reserve Bank of India governor, Sanjay Malhotra, currently serves as Revenue Secretary in the Ministry of Finance and will have to deftly balance the need to prevent one of the world's fastest growing major economies from stuttering while keeping a lid on doggedly high inflation.

Malhotra, an alumnus of the elite Indian Institute of Technology and Princeton University, has recently raised concerns over the health of the economy. Analysts say Malhotra's surprise appointment could initiate a shift toward a more dovish monetary policy in an economy that is expected to become the world's third-largest before the end of the decade.

Das, on the other hand, has been widely considered the most hawkish member of the RBI's Monetary Policy Committee, thus his departure could influence the MPC's overall stance, said Shilan Shah, deputy chief EM economist at Capital Economics in a note on Monday.

"The appointment of Mr Malhotra could set a new direction for the RBI," Shah added.

Economists at Capital Economics are now expecting a 25-basis-point cut in India's repo rate at Malhotra's first MPC meeting in February, if not in an unscheduled meeting earlier. The group had previously predicted the rate cut would come in April under Das' leadership.

Economists at Citi, who were already predicting an interest rate cut from the RBI in February, reiterated that view. Markets also appear to be sharing their expectations regarding a looser monetary policy.

India's 10-year bond yields were down 2 basis points at 6.699% on Tuesday, signaling market expectations of a rate cut, while the rupee was hovering near record lows at 84.83 against the dollar, according to data from LSEG.

Changing of the guard

Das will leave his post as one of the RBI's longest-serving governors since India gained independence from Britain in 1947.

During his term, he led India's financial sector through a period of recovery, normalized the RBI's relationship with the government and steered the economy through the Covid-19 pandemic.

However, the economic backdrop has become more challenging recently. India's economy grew at its slowest pace in seven quarters in the three months through September, while inflation edged above the central bank's 6% tolerance band for the first time in over a year in October.

The weakness in the economy had spurred calls for lower rates, including from senior government officials.

As per local media reports, in November, Union Minister for Commerce and Industry Piyush Goyal urged the RBI to cut rates to boost growth, while Finance Minister Nirmala Sitharaman also called for more affordable interest rates to support local industries.

In its December meeting, the MPC voted by a margin of 4:2 to keep the policy repo rate unchanged at 6.50%.

While the central bank had revised India's GDP growth outlook for fiscal year 2025 down to 6.6% from 7.2% in October, Das had expressed confidence that a slowdown in the domestic economy had "bottomed out" in the September quarter.

However, the Ministry of Finance has held a less positive view of growth than the RBI, which could influence incoming governor Malhotra's thinking as he heads into his first monetary policy meeting, according to Dhiraj Nim, India FX Strategist and Economist at ANZ.

Already, the ANZ was predicting that RBI would carry out a total of three rate cuts starting February 2025, with inflation, excluding food, weak enough to pursue rate cuts to support growth.

"The incoming governor's appointment has only boosted expectations that it will happen," said Nim.

Source:CNBC

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Owen Li

Economic

The process, known as the democratic consent motion, was first agreed between the UK and EU in the 2020 Withdrawal Agreement to give local politicians a say in the new post-Brexit trading rules.

The arrangement, the Windsor Framework, was agreed between the UK and EU in 2023 and effectively keeps Northern Ireland inside the EU's single market for goods.

The vote will decide if the arrangements will continue to operate for another four years.

Several parties at Stormont tabled a motion to the assembly as part of the process that guarantees MLAs a say on whether to maintain some of the arrangements.

No cross-community support needed

The motion was tabled jointly by Sinn Féin, Alliance and the SDLP.

But controversially, unlike other votes at Stormont, there is no requirement for cross-community support for the motion. A simple majority will suffice.

The DUP and other unionist parties have argued the vote creates a democratic deficit as the concerns of unionists, who are in the minority at Stormont, can be ignored.

If the vote is carried without cross-community support, the government has committed to ordering an independent review of the post-Brexit arrangements and their implications.

The Alliance leader, Naomi Long, has confirmed her party would vote in favour of retaining the framework.

"The Windsor Framework remains the only viable option to help Northern Ireland navigate the chaos brought about by Brexit," she said.

Long said those voting to remove it would be causing more instability at a time when people need the opposite.

The Leader of the Opposition, the SDLP's Matthew O'Toole, said that the Assembly should use the debate "as an opportunity to discuss the potential that exists within our future relationship with Europe".

"Northern Ireland has a unique relationship with the EU, not just because of the protocol but because our people have EU citizenship by birth right and the right to re-enter the EU automatically after a referendum."

O'Toole said if an independent review is called after the vote, the party will make the case to maximise opportunities with the EU, including a voice in the European Parliament.

The DUP's Sammy Wilson has called on the Chancellor Rachel Reeves to "press the European Union" to remove trade barriers between Great Britain and Northern Ireland.

The East Antrim MP said that his Assembly party colleagues would vote against the continuation of the arrangements.

"We have consistently warned about the unfairness of the Democratic Consent vote since October 2019, despite unionists voting against, this vote has been rigged to get the desired outcome," he added.

On Monday, loyalist activist Jamie Bryson's legal action against the Stormont vote was dismissed by the High Court.

Mr Bryson claimed Secretary of State Hilary Benn had acted unlawfully by initiating the democratic consent process to maintain the Windsor Framework for another four years.

But a judge refused to grant leave to seek a judicial review after declaring the challenge "untenable".

Mr Justice McAlinden said: "There is no arguable case with a reasonable prospect of success."

What is the Windsor Framework?

In 2023 the Northern Ireland Protocol became the Windsor Framework.

It means that the goods trade across the border with the Republic of Ireland, an EU country, has remained undisturbed by Brexit.

The flipside is that goods arriving from elsewhere in the UK are subject to controls and checks—what is known as the Irish Sea border.

For the EU, the new framework left the basic architecture of 2019's protocol intact, creating a trade border between Great Britain and Northern Ireland to prevent a hard land border between Northern Ireland and the Republic of Ireland.

Source:BBC

To stay updated on all economic events of today, please check out our Economic calendar

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Justin

Commodity

Gold has started the week on the offensive as the stars have somewhat realigned for the precious metal. The regime change and geopolitical developments in Syria coupled with a Chinese monetary policy shift and a weaker US Dollar has reignited the appeal of the precious metal.

There was also the announcement by China that they would be starting a probe in AI leader Nvidia, over alleged anti-monopoly law. This could be seen as a sign of what is to come from a trade war moving forward between the US and China and has added to the haven demand narrative.

Together with Friday’s US jobs data, markets have also come to terms with another 25 bps rate cut by the Fed in December. This is also underpinning Gold prices and is likely to limit downside potential.

China Resumes Gold Purchases

China, who had been a major buyer of Gold this year but remained on the sidelines since May, has resumed Gold purchases. The People’s Bank of China said on Saturday that it bought 160,000 troy ounces of gold in November. This ends a six-month break in purchases.

What followed was the announcement yesterday regarding the loosening of monetary policy by the Politburo. This comes as Chinese inflation data remained weak, highlighting slow demand. Markets will no doubt be hoping that stimulus will lead to an uptick in demand and keep the Chinese Central Bank buying the precious metal.

US Dollar to Continue Poor December Performance?

The US Dollar has had a mixed December so far as it looks to buck its historic trend of poor performance in December. The index is advancing this week and this could also be down to its haven appeal.

It may be that the rate cut in December has largely been priced in and thus the US Dollar is experiencing a rally. I think the closer we get to the Christmas break is when the US Dollar will really be tested. As institutions begin to close shop for the festive break, many will look to reposition themselves and their portfolios ahead of 2025.

The US Dollar is primed to enjoy a positive 2025 but we may still see some volatility the closer we get to Christmas.

Looking ahead and the biggest impact on Gold this week from a data perspective is likely to come from US CPI numbers out on Wednesday.

The print is unlikely to alter the Fed decision on December 18, but it could stoke some short-term price swings and volatility.

Technical Analysis Gold (XAU/USD)

From a technical analysis standpoint, Gold on a daily timeframe is trading above the range it held last week but below a key resistance area around the 2675 handle.

Immediate support from the range break rests at 2656-2660 which for now appears to be holding firm and thus supporting a bullish narrative.

I would say caution will be key as the precious metals may face a host of challenges gaining acceptance above the 2700 handle once more.

Immediate resistance rests at 2675 and 2685 before the 2700 handle grabs the attention.

Are we going to see more choppy price action like last week, or will the geopolitical risk drive the bullish rally beyond the 2700 handle?

Gold (XAU/USD) Daily Chart, December 10, 2024

Source: TradingView (click to enlarge)

Support

2656

2639

2624

Resistance

2675

2685

2700

Source: ACTIONFOREX

Risk Warnings and Disclaimers

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Owen Li

Central Bank

Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. are enjoying record earnings. Selling off cross-shareholdings is bringing in even more money. Even as they reward shareholders with buybacks and higher dividends, they are determined to fund overseas expansion.

Their primary focuses are on the US and India, respectively the world’s largest economy and the fastest-growing. While the banks have had a presence in the two countries for decades, this year has seen a fresh push in investment and hiring. Buying stakes in local companies also puts their excess funds to work as the banks are under pressure from the Tokyo Stock Exchange to boost their valuations.

“Their investment strategy including M&A is key to whether the banks can reach the next level of growth,” said Nana Otsuki, a senior fellow at Pictet Asset Management Japan Ltd. “Given their price-to-book ratios still aren’t comfortably above one, it’s a priority to better utilize their capital.”

All of the companies have more cash on their balance sheets than their target common equity tier 1 ratios and have plans to reduce their strategic holdings over the next several years. MUFG aims to cut its stakes in clients by at least 700 billion yen ($4.7 billion) by March 2027. SMFG has a similar plan to dispose of 600 billion yen in such holdings by March 2029 and Mizuho’s aim is to reduce its cross shareholding by 300 billion yen by March 2026.

“We are now moving from the stage of capital buildup to the stage of striking a balance between growth investment and enhanced shareholder returns,” said Mizuho CEO Masahiro Kihara at an investor presentation on Nov 15.

In the race to deploy their excess capital, the hottest area for all three banks has been India. The country’s strong economic growth is fueling demand for loans to fund capital expenditure across industries. Consumer demand is creating additional opportunities for lending and a record amount of money is set to be raised in initial public offerings this year.

MUFG has singled the country out as a specific pillar of its Asia growth strategy. It has aggressively courted India’s top conglomerates including Reliance Industries and the Adani Group. The bank has a goal of doubling its loan exposure in India to about $30 billion over the next several years. MUFG and its Japanese rivals plan to keep business ties with Adani Group despite founder Gautam Adani facing bribery charges in the US.

Japan’s largest bank took a strategic investment with a $333 million stake in DMI Finance Pvt Ltd. That deal valued the Indian shadow bank at $3 billion. MUFG has made clear though that it’s appetite is much larger.

“If there are good opportunities, we can spend big money,” said Yasushi Itagaki, head of MUFG’s global commercial banking business, adding multi-billion deals are possible. He was commenting on both India and the bank’s expansion into the Asian digital industry and declined to talk about specific deals.

India’s white-hot market for IPOs is also drawing in the Japanese. Mizuho and Nomura Holdings Inc. are the leading bidders to buy control of Avendus Capital Pvt., one of the country’s biggest investment banks. The two companies are jockeying to purchase a 63% stake from KKR & Co., which is seeking at least $400 million, according to people familiar with the situation.

Retail loans for India’s growing middle class are another area where Japanese lenders anticipate high demand over the next decade. The country experienced strong credit growth in the last few quarters as retail customers borrowed for everything from buying homes and vehicles to funding holidays and impulse purchases. SMFG, Japan’s second-largest lender, spent $700 million in March to take full control of the local company formerly known as Fullerton India Credit Co. after first buying a $2 billion stake in 2021. The unit specializes in housing and car loans. Like MUFG, SMFG has singled India out as a key focus because of its high growth potential.

“We will keep allocating necessary resources to capture its high economic growth,” said Yoshihiro Hyakutome, Sumitomo Mitsui’s co-head of global banking unit.

Mizuho is also chasing Indian retail consumers. In February, it announced a deal to buy 15% in Kisetsu Saison Finance（India）Pvt. Ltd., an Indian unit of a Japanese financial company Credit Saison for about $145 million. In corporate and investment banking, Mizuho has also held internal discussions about focusing on winning firms that invest in private businesses, according to people familiar with the talks.

Apart from India, MUFG has made it a priority to invest in fintech companies in other Asian countries. The move represents a major shift in MUFG’s growth strategy in the region, where the bank has spent billions to buy big commercial banks in Thailand and Indonesia.

This year, the bank announced investments of $195 million in Thailand’s Ascend Money Co. and $393 million in the Philippines’ Globe Fintech Innovations Inc., both digital payment companies.

“In the power dynamics of Asia’s unicorn industry, they can raise funds from anywhere,” said MUFG’s Itagaki. “So they are examining who is the best to team up with to boost their value.” MUFG and SMFG have submitted separate preliminary proposals to buy PT Bank Pan Indonesia, according to people familiar with the matter. Singapore’s DBS Group Holdings Ltd. is also a suitor for the Jakarta-listed bank known as Panin Bank.

The US

The banks are following a different strategy in North America. There they are focusing on growth in corporate and investment banking, providing financing and advising companies and institutional clients. The playbook is the one pioneered by MUFG with its investment in Morgan Stanley in 2008, leaning hard on the experience and connections of a US partner.

Mizuho was the latest major bank to adopt this tactic with the completion of its purchase of the investment bank Greenhill & Co. for $550 million last December. It has been on a hiring spree since then, adding bankers for various sectors including financial institutions, health care and infrastructure.

“The Americas is the largest fee pool and Mizuho was historically underrepresented” in M&A advisory, said Jerry Rizzieri, CEO of Mizuho Securities USA. “Our objective is to be firmly entrenched as one of the top 10 corporate and investment banks in the Americas.”

In addition to fees, M&A advisory brings in other banking businesses, such as bridging loans, and underwriting bond issues as deal-making clients seek to finance acquisitions, according to Mizuho officials.

Mizuho has improved its position in some key areas this year, cracking the top ten rankings in several markets. In US corporate bonds, it jumped three spots to #7. In US loans, it rose four spots to #9 and it also ranked #8 in US investment grade corporate bonds, up a notch from the same period last year, according to data compiled by Bloomberg.

“Our product lineup allows us to access about 80% of CIB fee pool in the US,” said Hidekatsu Take, Mizuho’s deputy president and head of global corporate and investment banking.

At an earnings briefing in November, Mizuho CEO Kihara said the bank may consider further acquisitions after completing the post-merger integration of Greenhill. He also said investments in asset managers are possible, like what the bank did with private credit manager Golub Capital.

SMFG and Jefferies Financial Group Inc. are expanding their partnership and working together on corporate and investment banking deals. In the alliance, the Japanese bank brings its balance sheet and debt capital markets expertise while Jefferies adds M&A advisory and equity financing services. They have jointly worked on about 130 deals including M&A and debt and equity underwriting over the 12 months ending in September, compared with 30 deals as of September, 2023.

The two banks served as financial advisers to US property developer Alliance Residential Co. when it sold a minority stake to Japanese homebuilder Daiwa House Industry Co. Sumitomo Mitsui said the bank’s relationship with Daiwa and Jefferies’ ties with Alliance were utilized for the origination of the deal.

MUFG is expanding the areas of collaboration with Morgan Stanley in the US to the middle market, where the two companies aim to win more businesses in loans, M&A advisory and IPOs targeting smaller companies than they have been banking with so far. The company also recently hired a pair of senior bankers to expand the bank’s presence with mid-sized healthcare companies.

The Japanese banks’ overseas buildup has not been without setbacks. In 2021, MUFG agreed to sell its US regional lender Union Bank to U.S. Bancorp for $8 billion after it determined the unit lacked the scale to keep up with local competition amid growing IT and other necessary spending. The move sent shockwaves through the industry at the time, since Union Bank had long been considered a crown jewel of MUFG’s US operations.

The megabanks “have been doing overseas businesses for years but they haven’t quite done truly globalized management,” said Hideyasu Ban, a Bloomberg Intelligence analyst. “It’s still a challenge for them to secure good local talent and manage them effectively from Tokyo.”

Source:Bloomberg

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Warren Takunda

Stocks

December S&P 500 E-Mini futures are up +0.03%, and December Nasdaq 100 E-Mini futures are up +0.04% this morning after three major U.S. benchmark indices finished the regular session lower as investors grew more cautious ahead of Wednesday’s release of a key U.S. inflation report.

In yesterday’s trading session, the benchmark S&P 500 and tech-heavy Nasdaq 100 retreated from record highs, while the blue-chip Dow dropped to a 1-1/2 week low. Omnicom Group plunged over -10% and was the top percentage loser on the S&P 500 after agreeing to acquire Interpublic Group in a deal valued at $13.3 billion, excluding debt.

Also, Comcast slid more than -9% after the head of its cable business said the company expects a Q4 broadband subscriber loss of just over 100,000. In addition, Nvidia fell over -2% after China Central Television reported that the State Administration for Market Regulation had launched an investigation into the chipmaker over alleged violations of anti-monopoly laws.

On the bullish side, Hershey climbed more than +10% and was the top percentage gainer on the S&P 500 after Bloomberg reported that Mondelez International was exploring an acquisition of the chocolate maker.

Economic data released on Monday showed that U.S. wholesale inventories rose +0.2% m/m in October, in line with expectations.

Meanwhile, market participants are awaiting the U.S. consumer inflation report for November, due on Wednesday, that will help shape the outlook for Federal Reserve monetary policy. The CPI is expected to pick up slightly to +2.7% y/y from +2.6% y/y in October, while the core CPI is projected to remain unchanged from October at +3.3% y/y.

“This Wednesday’s inflation data may hold the key to the Fed’s next move,” said Jay Woods at Freedom Capital Markets. “So far results have been in line with economists’ expectations and haven’t scared the market. However, an upward surprise should raise eyebrows at the Fed and could put another rate cut on pause.”

U.S. rate futures have priced in an 86.1% chance of a 25 basis point rate cut and a 13.9% chance of no rate change at December’s policy meeting.

Today, investors will focus on U.S. Unit Labor Costs and Nonfarm Productivity data, set to be released in a couple of hours. Economists forecast final Q3 Unit Labor Costs to be +1.3% q/q and Nonfarm Productivity to be +2.3% q/q, compared to the second-quarter numbers of +0.4% q/q and +2.5% q/q, respectively.

Investors will also keep an eye on earnings reports from several notable companies today, including AutoZone , Ferguson , and GameStop.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.217%, up +0.41%.

The Euro Stoxx 50 futures are down -0.38% this morning, snapping an eight-day winning streak as optimism over China’s recent stimulus pledge waned following disappointing trade data. Mining stocks led the declines on Tuesday as investors digested weaker-than-expected trade data from China.

At the same time, healthcare and automobile stocks advanced. Final data from the Federal Statistical Office confirmed on Tuesday that Germany’s annual inflation rate was 2.2% in November, up from 2.0% in October. Meanwhile, investors are bracing for key U.S. inflation data on Wednesday and the European Central Bank’s monetary policy decision on Thursday.

The ECB is widely expected to lower its policy rate by 25 basis points for the fourth time this year amid a deteriorating economic outlook and ongoing political instability in France and Germany. In corporate news, Teamviewer Se plunged over -12% after agreeing to buy employee experience software maker 1E from Carlyle Group for $720 million.

Germany’s CPI and Italy’s Industrial Production data were released today.

The German November CPI arrived at -0.2% m/m and +2.2% y/y, in line with expectations.

The Italian October Industrial Production stood at 0.0% m/m, stronger than expectations of -0.1% m/m.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.59%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.53%.

China’s Shanghai Composite Index ended higher today after the nation’s top leaders signaled strong policy support next year to revive the struggling economy. Retail stocks outperformed on Tuesday. President Xi Jinping’s decision-making Politburo pledged to adopt a “moderately loose” monetary policy in 2025, as reported by the official Xinhua News Agency on Monday, signaling further rate cuts and marking a shift from the “prudent” strategy maintained for nearly 14 years.

The body also vowed a “more proactive” fiscal policy at its monthly meeting, fueling expectations that Beijing will widen the fiscal deficit from 3% at the annual parliamentary session in March. Meanwhile, trade data released on Tuesday pointed to softening demand in the world’s second-largest economy. China’s exports grew at a slower pace in November, while imports unexpectedly slipped into contraction.

Still, Chinese President Xi Jinping voiced confidence on Tuesday that the country will achieve its annual growth target. Investors are now turning their attention to the Central Economic Work Conference, set to begin on Wednesday, which will outline China’s economic priorities and targets for 2025. In corporate news, State Grid Information & Communication climbed over +4% after announcing plans to acquire SGCC Yili Technology in cash.

The Chinese November Trade Balance stood at $97.44B, stronger than expectations of $94.00B.

The Chinese November Exports came in at +6.7% y/y, weaker than expectations of +8.5% y/y.

The Chinese November Imports arrived at -3.9% y/y, weaker than expectations of +0.3% y/y.

Japan’s Nikkei 225 Stock Index closed higher today. The rally was fueled by optimism following China’s pledge to embrace a “moderately loose” monetary policy and a “more proactive” fiscal policy in 2025, lifting market sentiment across the region. Electronics stocks led the gains on Tuesday. Export-oriented stocks also gained ground thanks to a softer yen.

However, the benchmark index’s rise was capped as investors cautiously awaited next week’s Federal Reserve and Bank of Japan monetary policy meetings. Market expectations are split on the timing of the next BOJ rate hike, with forecasts ranging between December and January.

Meanwhile, HSBC Global Research economists stated on Tuesday that the BOJ could raise rates at the December meeting, citing recent hawkish-leaning remarks from officials.

Investors are also looking ahead to Japanese business sentiment data, set to be released later in the week, to gain further insight into the health of the economy. In corporate news, Bloomberg reported that Japan’s major banks, including Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho, are considering expansions in the U.S. and India amid record earnings. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +5.27% to 22.56.

Pre-Market U.S. Stock Movers

Oracle Corporation slumped over -8% in pre-market trading after the IT giant reported weaker-than-expected FQ2 results.

C3.ai Inc. climbed more than +6% in pre-market trading after the enterprise software company posted upbeat FQ2 results and raised its full-year revenue guidance.

Norwegian Cruise Line gained over +3% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral with a price target of $35.

Source: Barchcart

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Central Bank

One more rate cut before the year-end

On Wednesday, the Bank of Canada (BoC) will make its final interest rate decision for 2024. Financial markets and economists are widely anticipating another rate cut, with the consensus leaning toward a reduction of 50 basis points, bringing the policy rate down from 3.75% to 3.25%.

The BoC has already made significant cuts this year, including a 50-basis-point reduction in October. Several factors, including the latest job report that revealed weaker-than-expected employment growth, influence the decision to further cut rates. This has increased the likelihood of a more aggressive rate cut to support the economy.

Economic Outlook for 2024

Looking ahead to 2024, the BoC projects a gradual improvement in economic growth. The central bank’s October Monetary Policy Report forecasts GDP growth to pick up slowly, with inflation expected to remain around the 2% target. Core inflation is anticipated to decline gradually, reflecting easing price pressures in various sectors. The BoC’s outlook suggests that further rate cuts may be necessary to sustain economic momentum and achieve the BoC’s inflation target.

Several key factors are influencing the BoC’s decision-making process. Recent data shows that inflation has been relatively stable, but the Bank remains cautious about potential upward pressures. The labor market has shown signs of weakness, prompting concerns about economic growth. Policymakers are also considering the broader global economic environment, including the policies of other central banks like the Federal Reserve and the European Central Bank (ECB). Additionally, housing market trends, consumer spending, and business investment are all critical factors that the BoC monitors closely.

Impact on USD/CAD

The rate cut is likely to affect the dollar/loonie, potentially leading to a depreciation of the loonie. The pair reached the four-and-a-half-year high of 1.4176 early on Monday, endorsing the bullish outlook, with the next resistance coming from the April 2020 peak at 1.4265. Otherwise, a drop below the significant support line of the 20-day simple moving average (SMA) may show signs of a negative retracement until the 1.3980 and 1.3925 support levels.

BoC Decision: Another Rate Cut for the Final Policy Meeting of 2024_1

Source:XM

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Alex

Economic

Forex

(Dec 10): US small-business optimism surged in November to a more than three-year high in anticipation of more favourable economic policies after Donald Trump sealed his return to the White House.

The National Federation of Independent Business (NFIB) optimism index jumped 8 points, the most on record, to 101.7 — the highest reading since June 2021. The group’s uncertainty gauge dropped 12 points after reaching a record high prior to the presidential election.

“The election results signal a major shift in economic policy, leading to a surge in optimism among small-business owners,” Bill Dunkelberg, NFIB chief economist, said in a statement. “Owners are particularly hopeful for tax and regulation policies that favour strong economic growth as well as relief from inflationary pressures.”

Nine of the 10 components that make up the overall index increased in November, led by a 41-point improvement in the outlook for US business conditions. That was the biggest rise in monthly data back to 1986 and left the metric at a more than four-year high.

A net 14% of respondents believe it is a good time to expand operations amid expectations of major shifts in tax and regulatory policies under a second Trump presidency.

The net share of small-business owners expecting higher sales climbed to the highest level since the start of the pandemic. Since the beginning of 2022, firms on net consistently expected weaker sales.

Businesses continued to cite inflation and labour quality among their top problems. A net 28% said they planned to raise prices over the next three months, the largest share since May.

While a net 18% of owners plan to create new jobs in the next three months, up three percentage points from October, owners are still experiencing difficulty attracting good talent for open positions. Some 48% reported finding few or no qualified applicants.

Results of the NFIB survey were based on 532 respondents through Nov 29.

Source: Theedgemarkets

To stay updated on all economic events of today, please check out our Economic calendar

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Surprise RBI Governor Pick Signals India May Cut Rates as Soon as February, Economists say

Changing of the guard

Source:CNBC

Stormont Vote on Post-Brexit Trading Arrangements

No cross-community support needed

What is the Windsor Framework?

Source:BBC

Gold (xau/usd) Eyes $2,700 As Fed Rate Cut Looms, Geopolitics In Focus

China Resumes Gold Purchases

US Dollar to Continue Poor December Performance?

Technical Analysis Gold (XAU/USD)

Source: TradingView (click to enlarge)

Source: ACTIONFOREX

Japan's Megabanks Are Flush With Cash and Hunting Overseas Deals

The US

Source:Bloomberg

Stock Index Futures Muted as Cautious Mood Prevails Ahead of U.S. Inflation Data

Pre-Market U.S. Stock Movers

Source: Barchcart

BoC Decision: Another Rate Cut for the Final Policy Meeting of 2024

One more rate cut before the year-end

Economic Outlook for 2024

Impact on USD/CAD

Source:XM

Us Small-business Optimism Soars To Three-year High After Trump Win

Source: Theedgemarkets

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