EUR

Comments from the FED’s Williams on Friday reignited the possibility of a rate cut next month, as he noted there is "still room for a further policy adjustment in the near term." This led to pricing for December’s meeting shifting from 6bps to 16bps. Looking back two weeks, FED pricing remains unchanged despite 2-year US yields being approximately 10bps lower than before the NFP print, with the DXY also unchanged during this period. Although volatility has been present, the lack of clear direction leaves me uninspired about the USD. The Williams-induced equity rally on Friday and the VIX now at a 22 handle prompted me to re-sell EURSEK. The critical level for the cross remains at 11.10, but with high-beta assets trading stronger, re-engaging seems sensible. NOK presents a less clear picture; while equity strength this morning typically supports NOK, Ukraine-Russia peace talks are weighing on energy prices (gas prices have dropped to levels last seen in May 2024). US Secretary of State Marco Rubio noted “a tremendous amount of progress,” and President Zelensky remarked there are “signs that Trump’s team is hearing us,” raising tentative hopes for peace, which is likely to keep NOK subdued. Currently, I hold minimal USD exposure and maintain a tactical approach, focusing on potential MSCI re-weighting flows today, US corporate value date month-end tomorrow, RBNZ on Wednesday morning, JPM’s 2026 outlook, and the Cowboys/Chiefs game on Thursday.

GBP

GBP Sharp repricing of December Fed expectations following Williams’ comments on Friday might suggest USD weakness, yet G10 currencies remain largely stagnant as we approach month-end and Thanksgiving. Indeed, net USD flows were muted on Friday. Meanwhile, as Wednesday’s Budget delivery from Reeves approaches, the rate of detail leakage is accelerating, as expected. With immense focus on Reeves and Starmer, I doubt there will be surprises left. While opinions on the OBR vary, I believe the Gilt reaction to the smaller fiscal gap and income tax re-think has room to reverse, potentially offering short-term relief for the pound. I will look for opportunities to re-sell leading into the December MPC. Key levels for GBPUSD remain at 1.3000/20 for support and 1.3320 for resistance. EURGBP levels are familiar at 0.8750/65 for support and 0.8865/75 for resistance.

JPY

The Nikkei article released on Friday caused a significant stir. Bank of Japan (BoJ) Board member Masu stated that the decision to raise interest rates "is approaching." However, this was not promptly or clearly reported in English, leading to speculation about a potential rate check, which likely fueled market reactions. Personally, I don't assign much weight to this, given the phrasing, but December BoJ pricing continues to edge higher (alongside USD/JPY), currently sitting at 10 basis points. Japanese markets were closed today for Labor Thanksgiving, which limited activity. This week, we have a Thanksgiving-affected month-end, which is expected to bring some corporate USD demand on Wednesday. Meanwhile, an MSCI rebalance is anticipated to conclude today, which could provide some support for the JPY. My outlook remains unchanged: I expect the Ministry of Finance (MoF) to face continued testing as we approach the December central bank meetings. The next resistance level is at 158.90, while support holds at 155.80/00.