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Ukraine's future hangs in the balance amid fraught diplomatic negotiations.
Currency markets were in thrall to politics again on Monday, as a low-key start on the economic data front meant the focus fell squarely on Ukraine. Kyiv’s future looks increasingly uncertain amid pressure from the United States to reach a peace deal with Russia, although Europe’s leaders used a summit in London to discuss financial and diplomatic levers they might be able to pull.
The euro weakened against both the pound and the US dollar, the implications of a fait accompli in Ukraine being most severe for the European economy. Sterling would also weaken against the US dollar ahead of Friday’s growth data and more troubling news from UK employers.
Demand for permanent workers in Britain declined again in November, according to the KPMG and REC report. The market is showing some signs of stabilising, REC CEO Neil Carberry said, but vacancies continued to decline as salary inflation hit its highest in five months.
Overnight, the Reserve Bank of Australia stood firm to announce its fourth interest rate hold on the spin. The Aussie dollar was stable as the news broke, with that decision widely expected by those in the know.
China’s trade surplus topped $1 trillion for the first time this year. A weaker Chinese currency has facilitated this, with over-capacity manufacturers desperate to rid their stock even as domestic demand dwindles on lower household savings.
American farmers – one of the groups most harshly affected by Donald Trump’s tariff agenda – will soon benefit from a $12 billion aid package as reduced export demand bites. In Trump’s first term, the president gave agriculture almost $30 billion in a similar move designed to shield producers of soybeans, pork, and other goods.
And we reported yesterday on Netflix’s megadeal to take over Warner Bros. Well, after an intervention by the president, it seems they may have been gazumped by Paramount. The eyewatering cash offer of over $100 billion gate-crashed what had looked to be a done deal. There may well be another chapter or two in this unfolding saga.
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GBP: Getting in early
The pound was pressured by some early risk management trades on Monday. With more than a week to go until the Bank’s last policy meeting of 2025, some traders are positioning themselves for a quarter-point cut that might see sterling end the year on the back foot.
GBP/USD: the past year
EUR: German exports ramp up
Germany’s trade surplus widened to €16.9 billion in October. That was caused by a surprise fall in imports coinciding with a surprise uptick in exports. October’s report marked the largest trade surplus since May.
GBP/EUR: the past year
USD: Risk-off tone helps dollar
Monday began on a more cautious note than last time out, as is typically the case before a bid Federal Reserve decision. Slowness out the gate was a welcome help for the US dollar and allowed it to record marginal daily advances over both the pound and the euro.
EUR/USD: the past year
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