UK Chancellor Emphasizes Strengthening Economic Ties with the EU
On December 10th, UK Chancellor Rachel Reeves told European financial leaders that closer economic ties between the UK and the EU would help drive economic growth. This was Reeves' first speech to a eurozone organization since Brexit. She highlighted that improving relations means "breaking down trade barriers" and helping "businesses sell in each other's markets." Although the Labour Party ruled out the possibility of rejoining the EU, Reeves reiterated the UK's desire to deepen its relationship with the EU.
The Conservative Party stated that the Chancellor should focus on addressing the "devastating budget measures" that have undermined market confidence. Shadow Business Secretary Andrew Griffith criticized Reeves by saying that if she cares about economic growth, she should suggest that the UK Prime Minister strike a trade deal with the US instead of pulling the UK back into the EU's low-growth zone.
Eurozone Investor Confidence Falls to Over a Year Low
According to the latest data, the Sentix investor confidence index for the eurozone fell to -17.5 in December, marking its lowest level since November 2023. In comparison, the November index was -12.8, with a larger drop than the anticipated -13.5. The survey indicates that market confidence did not recover after Germany announced it would hold early elections in February 2024, raising concerns about Germany's economic outlook. Germany's investor confidence index also fell to -33.2, further indicating the country's economy still faces recession risks.
Today's Focus on Data and Central Bank Decisions
Today, the market will focus on Germany's November CPI YoY final value, the US November NFIB Small Business Confidence Index, and the US Q3 non-farm productivity revised value. The Reserve Bank of Australia will also announce its rate decision midday, with the market paying close attention to its guidance for future monetary policy.
The US Dollar Shows Strength, Influenced by Economic Data and Geopolitical Situations
The US dollar index rose yesterday, with the current exchange rate trading around 106.20, closing slightly higher on the daily chart. Recent strong US non-farm employment reports and economic data have supported the dollar. Moreover, heightened geopolitical tensions have led to increased risk aversion, further supporting the dollar's rise. Today's focus is on the resistance level around 106.70 for the dollar index, with support near 105.70.
EUR/USD Remains Under Pressure, Investors Focus on Technical Support
EUR/USD fell slightly yesterday, with the current exchange rate trading around 1.0550. The dollar's strong performance and weak eurozone economic data have pressured the euro, particularly with technical selling pressure forming near the 1.0600 level. Today, EUR/USD faces resistance at 1.0650, with support around 1.0450.
GBP/USD Slightly Recovers, Market Continues to Focus on UK Economic Outlook
GBP/USD consolidated in a choppy session yesterday, with the current exchange rate trading around 1.2740. Although the strong dollar limited the pound's upside, short cover and technical buying pressure at the 1.2700 level supported the pound's rebound. A cooling of expectations for a Bank of England rate cut also provided some support for the pound. Today, GBP/USD will face resistance at 1.2850, with support at 1.2650.
Against the backdrop of escalating global economic and geopolitical uncertainties, the UK Chancellor's remarks and the decline in eurozone investor confidence will be highlighted by the market. The rise in the US dollar index and the technical volatility between the dollar and euro indicate market divergence on US economic recovery and eurozone prospects. Investors will closely monitor upcoming economic data and the Reserve Bank of Australia's monetary policy decision.
